Organizational turnover as endogenous precursor of industry dynamics and organizational dissolution

Gino Cattani, Johannes Pennings and Filippo Carlo Wezel
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Filippo Carlo Wezel: Groningen University

No 02G39, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: This paper studies the effect of organizational turnover on firm survival within the Dutch accounting service industry during the period 1880-1986. We address three issues: (1) estimating the effect of organizational turnover on organizational dissolution; (2) showing the significance of propinquity in isolating that effect; (3) exposing population dynamics through different levels of analysis. The results of our analysis confirm that turnover is an important endogenous force shaping the evolution of localized populations of organizations. The risk of organizational dissolution increases when turnover entails losses of human and social capital (e.g. long-term owners) and disruption of organizational routines. The results also show that such risk is even higher when organizational members join a competitor or found a new venture within the same geographical area.

Date: 2002
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