Emergence and evolution of organizations out of garbage can dynamics: a few insights for the theory of the firm, entrepreneurship, and industrial economics.

This article presents an artificial ecosystem model in which hierarchical organizations emerge, grow, and dissolve based on the Garbage Can Model (GCM) of organizational choice developed by Cohen, March, and Olsen. The model simulates interactions among participants, problems, solutions, and choice opportunities, distinguishing two decision styles: decisions by resolution (problem-solving using available knowledge) and decisions by oversight (conformity to accepted customs). Organizations founded via resolution tend to exhibit a liability of adolescence with longer survival and larger size distributions, while those founded via oversight show a liability of newness with higher early mortality and smaller sizes. The model offers explanations for the coexistence of innovative and imitative firms, heterogeneity in firm size distributions across industries and regions, and the dynamics of flexible, flat organizations mobilizing internal resources, thereby extending evolutionary and resource-based views of organizational behavior.