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Organizational Turnover and the Evolution of Localized Populations (with
G. Cattani and F.C. Wezel), Organization Science, 2003.
This paper studies the effect of organizational turnover on firm survival within the Dutch accounting service industry during the period 1880-1986. We address four issues: 1) estimating the effect of organizational turnover on organizational dissolution; 2) uncovering this effect under variable conditions of firm vitality; 3) showing the significance of propinquity in isolating that effect; and 4) demonstrating this effect to be also a function of member status. The results of our analysis confirm that turnover is an important endogenous force shaping the evolution of localized populations of organizations. Controlling for firm vitality, the risk of organizational dissolution increases when turnover entails losses of valuable human and social capital (e.g., long-term owners) to peer firms. The results also show that such risk is even higher when organizational members join a competitor or found a new venture within the same geographical area. We discuss the implications of this multi-level analysis for exposing market processes or population dynamics.