Published Online:https://doi.org/10.1287/mnsc.43.7.934

A simple model is developed to explore the interrelationship between processes of organizational level change and population selection forces. A critical property of the model is that the effect on organizational fitness of the various attributes that constitute an organization's form is interactive. As a result of these interaction effects, the fitness landscape is “rugged.” An organization's form at founding has a persistent effect on its future form when there are multiple peaks in the fitness landscape, since the particular peak that an organization discovers is influenced by its starting position in the space of alternative organizational forms. Selection pressures influence the distribution of the organizational forms that emerge from the process of local adaptation. The ability of established organizations to respond to changing environments is importantly conditioned by the extent to which elements of organizational form interact in their effect on organizational fitness. Tightly coupled organizations are subject to high rates of failure in changing environments. Furthermore, successful “reorientations” are strongly associated with survival for tightly coupled organizations, but not for more loosely coupled organizations that are able to engage in effective local adaptation.

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