Faculty Scholarship 1994 - Present

In Search of the "Inverted U" Relationship Between Population Density and Organizational Mortality

The "inverted U" relationship between population density and organizational mortality is one of the few theories in management that are based on formal, deductive logic. However, most studies of the relationship between population density and organizational mortality have found either "horizontal line" or "concave curve" relationships. To determine what causes the "inverted U", I analyzed every relevant study that has been published in English-language periodicals. The "inverted U" relationship is more likely to be found when a longer timespan is modeled, but is less likely to be found when there are statistically significant independent variables measuring other environmental characteristics. The "inverted U" relationship between population density and organizational mortality (Hannan & Freeman, 1989) is one of the few theories in management that are based on formal, deductive logic. Unfortunately, it's not very robust. As I shall demonstrate, most published studies of the relationship between population density and organizational mortality have failed to confirm an "inverted U" -shaped curve. The result of this exhaustive (and exhausting) search was 34 populations, published in 20 different papers. Table 1 summarizes the search results. The "inverted U" hypothesis presumes a negative coefficient for population density and a positive coefficient for population density squared. This occurred in only twelve of the 34 populations. In thirteen populations, a "horizontal line" relationship was found, in which both coefficients were insignificant. For eight populations, a "concave curve" relationship was found, in which the coefficient of denisty squared was positive and the coefficient of density was either positive or insignificant. In one population, a "convex curve" relationship was found, in which the coefficient of density was positve and the coefficient for population density squared was negative.