Unpacking the Liability of Aging: Toward a Socially-Embedded Account of Organizational Disbanding

Abstract

High rates of dissolution and bankruptcy among organizational startups have stimulated social scientific interest in the causes of disbanding for both business firms and NPOs (nonprofit organizations). While recent quantitative analyses have primarily addressed liabilities associated with organizational age and operational scale, some sociologists have considered a broader set of factors affecting the life chances of new startups. Following Stinchcombe (1965), these factors subsume such considerations as the resources that a startup has access to as a result of its status in a stratification system; the activities undertaken by organizational founders in their efforts to mobilize resources, secure legitimation, attract participants, and introduce new ways of doing things; and the extent to which organizational structures and routines tend to reflect idiosyncratic conditions prevailing at the time of founding. Using data on 766 business organizations, this chapter explores how unobserved temporal heterogeneity along these dimensions may account for ostensible liabilities of aging over the organizational life course. In the process, it seeks to develop fruitful connections between recent empirical work in organizational ecology and the 'old' institutionalist tradition. © 2002.