Organizational Form and Niche Overlap: The Dynamics of Surgery

The literature on organizational niche suggests that competition between firms that have overlapping niches tends to elevate exit risks. Thus, firms tend to enter markets that are relatively uncrowded in order to minimize direct competition with other firms. Although this research has focused on organizational “micro-niches, ” it has not been applied to organizational populations occupying different “macro-niches ” and possessing different organizational forms. We apply niche overlap theory to the market for outpatient surgical procedures in order to compare the entry and exit patterns of firms in a mature population of general hospitals to those of firms within a growing population of ambulatory surgery centers (ASCs). By manipulating patient-level datasets from the state of Florida, we were able to measure competition, market demand, and firm entry/exit with a high level of precision. We broke down our explanatory variables by facility type (ASC vs. hospital), and utilized Cox proportional hazard and negative binomial models to evaluate the impact of niche density on market entry/exit among ASCs and hospitals. Although hospitals tend to exit markets with high levels of ASC density, ASCs appear to be unaffected by the presence of nearby hospitals. This finding confirms the presence of asymmetric competition between these two organizational forms since specialized organizational forms representing “focused factories ” ar