Path-Dependence and the Dynamics of Organizational Mortality: Age-Dependence Revisited

This paper proposes a novel theoretical framework to model the dynamics of organizational mortality. The main theoretical contribution is a clarification of the relations between organizational fitness, endowment, organizational capital and mortality hazard. If the mortality hazard is a function of the stock of organizational capital, and the rate of accumulation of organizational capital is a function of the fitness level, organizational fitness becomes the key factor in predicting the evolution of the mortality hazard. The paper demonstrates how this new perspective can cast a new light on the much studied relation between organizational age and organizational hazard of mortality. It also introduces a novel approach to modeling organizational obsolescence as a consequence of drifting tastes and increasing organizational inertia.