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Density Dependence and Spatial Duality in Organizational Founding Rates: Danish Commercial Banks, 1846-1989

Alessandro Lomi

School of Economics, University of Bologna, Italy

This paper examines founding rates of commercial banking organizations in Denmark between 1846 and 1989 with two main analytical objectives. The first is to provide an empirical test of the claim that density-dependent legitimation operates more broadly than density-dependent competition in the context of processes of organizational founding. The second objective strictly connected to the first is to learn more about the implications of using alternative analytical strategies to capture the effects of legitimation on organizational founding rates in the context of a specific empirical study. Predictions of the standard model of density dependence in organizational founding rates are found to be strongly supported at more aggregate levels of analysis. Because founding rates of banks located in Copenhagen are negatively affected by national density, only partial support is found for the multilevel density-dependence model. Finally, the paper documents the effects of asymmetric patterns of community-like interdependence between organizational sub-populations defined on a spatial basis. The results of the study help to clarify selected aspects of the problematic relationship between density and legitimation across different levels of analysis.

Key Words: organizational ecology • organizational founding rates • density dependence • spatial heterogeneity • banks

Organization Studies, Vol. 21, No. 2, 433-461 (2000)
DOI: 10.1177/0170840600212006
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