Organizational Adaptation and Environmental Selection-Interrelated Processes of Change

Research on organizational change has been animated by two conflicting perspectives. One line of research has emphasized organizational adaptation (Cyert and March 1963, Lawrence and Lorsch 1967, Child 1972), while Hannan and Freeman (1977) have posed an alternative paradigm in which variation in organizational forms within a population is explained by differential rates of birth and death. Astley and Van de Ven (1983) and Scott (1987) have offered a reconciliation of these divergent perspectives, suggesting that they are in fact complementary. In particular, Scott (1987) argued that a selection perspective is useful in explaining the core features of organizations, the survival rates of relatively small organizations, and in accounting for changes over long periods of time. In contrast, Scott proposed that adaptation perspectives are a useful complement in examining peripheral features of organizations, survival of larger and more powerful organizations, and change over shorter periods of time. Much recent research has pursued an empirical agenda consistent with this idea that each approach has its own appropriate domain. Both variation in the frequency with which change occurs (Amburgey, Kelley and Barnett 1990; Baum 1990; Haveman 1990) and in the impact of change on the survival rates of organizations (Singh, House and Tucker 1986; Miner, Amburgey and Stearns 1990; Amburgey, Kelly and Barnett 1990) have been examined. As Winter (1990, pp. 292-293) notes, "the emerging consensus is not on a particular sweeping generalization about the levels of adaptability/rationality or inertia/irrationality that organizations display, but an emerging agreement that arguing about the generalizations is less interesting than sorting out the cases and testing the strength of competing interpretations." This essay proposes a different conception of the relationship of adaptation and selection processes. In reviewing some of the most recent advances in the literature, the essay uncovers a view of adaptation and selection not as mutually exclusive alternatives, each with its own domain of applicability, but rather as fundamentally interdependent processes. On the one hand, organizational learning contributes, in part, to organizational inertia, which, in turn, is the basis of selection processes. On the other hand, far from being incompatible with adaptive learning, inertial forces are a prerequisite for intelligent adaptation. In complex decision problems the discovery of the optimum is an extremely difficult task, with an astronomical numbers of alternatives. This makes it imperative to use building blocks derived from previous "good" solutions (Holland 1975) even though so doing contributes to inertia. Retaining elements of prior solutions enhances organizational reliability, as suggested by Hannan and Freeman (1984, 1989), and it also facilitates intelligent adaptation in that it allows for clearer inferences to be made regarding the efficacy of any experiment in organizational change. But the presence of such inertia implies that organizations cannot adapt perfectly to their