Environmental Conditions at Founding and Organizational Mortality: A Trial-by-Fire Model

Abstract

Unobserved heterogeneity in organizational frailty and population- level learning suggest a particular relationship between environmental conditions at founding and organizational mortality. Organizations founded in adverse environments experience higher initial mortality rates. However, beyond a certain age, survivors among such organizations have mortality rates that are lower than those of organizations founded in less adverse environments. These predictions are supported in analyses of the effects of population density and competitive intensity at founding on the mortality rate of U.S. brewery and Argentine newspaper organizations.