BUS 374 Lecture Notes - Lecture 3: Normative Social Influence, Nouvelle Cuisine, Whole Food

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 374
• Professor: Rajiv Kozhikode

Document Summary

Lecture #3: why are there so many firms, in an uncertain environment, it is difficult for anyone organization to be stable, meaning they die, multiply, and new ones come by, properties of aggregate organization. Increased inertial tendency: difficult to raise capital for small organizations. Increased rate of failure for older organizations as they may not stay up to date with the market. Incomplete info: bounded rationality, environment changes, organizational changes. Interaction with other populations determines the success and strength populations are linked: higher interdependence, failure of one population affects others, offers opportunity for entry, environmental processes. Hannan and freeman argue that organizations are largely inert, or can be treated as such. Building on stinchcombe (1965) they suggest that organizations are largely inert and detail a long-enumerated list on constraints leading to inertia. They also argue external pressures can force inertia.