Niche Theory
The theory fragment on niche width distinguishes broadly between two types of organizations: generalists and specialists. Specialist organizations maximize their exploitation of the environment and accept the risk of experiencing a change in that environment. On the other hand, generalist organizations accept a lower level of exploitation in return for greater security (Hannan and Freeman 1977: 948).
Niche theory shows that specialisation is generally favoured in stable or certain environments. However, the main contribution of the niche theory is probably the finding that “generalism is not always optimal in uncertain environments” (Hannan and Freeman 1977: 958). The exception is produced by environments which “place very different demands on the organization, and the duration of environmental states is short relative to the life of the organization” (Hannan and Freeman 1977: 958).
Thus, the niche theory explains variations in industrial structure in different industries. The theory shows how different structures in different industries (generalist vs specialist organizations) are shaped by relevant environments.
Read more about this topic: Organizational Ecology
Famous quotes containing the words niche and/or theory:
“They sat together halfway up a cliff
In a small niche let into it, the girl
Brightly, as if a star played on the place,
Paul darkly, like her shadow.”
—Robert Frost (1874–1963)
“every subjective phenomenon is essentially connected with a single point of view, and it seems inevitable that an objective, physical theory will abandon that point of view.”
—Thomas Nagel (b. 1938)