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In this paper, we develop an account of the failure of private market-governance institutions to maintain market order by highlighting how control of their distributional function by powerful elites limits their regulatory capacity. We examine the New York Clearing House Association (NYCHA), a private market-governance institution among commercial banks in Manhattan that operated from 1853 to 1913. We find that the NYCHA, founded to achieve coordinating benefits among banks and to limit the effect of financial panics, evolved at the turn of the twentieth century into a device for large, elite market players to promote their own interests to the disadvantage of rival groups that were not members. Elites prevented the rest of the market from having equal opportunities to participate in emergency loan programs during bank panics. The elites’ control not only worsened the condition of the rest of the market by allowing non-member banks to fail; it also diminished the influence of the NYCHA and escalated market crises as bank failures spread to member banks. As a result, crises developed to an extent that exceeded the control of the NYCHA and ended up hurting even elites’ own interests. This paper suggests that institutional stability rests on a deliberate balance of interests between different market sectors and that, without such a balance, the distributional function of market-governance institutions plants the seeds of institutional destruction. [ABSTRACT FROM PUBLISHER]

This study of chain affiliation in the Manhattan hotel industry examines the benefits and drawbacks of affiliation with a chain, which can be a source of operating knowledge and economies of scale for components but also a potential source of strategic constraint. Our analysis demonstrates the effects of chain affiliation on the failure of component organizations and competitive dynamics in the Manhattan hotel industry from 1898 to 1980. Under most circumstances, chain affiliation improves the survival chances of component hotels in Manhattan. All chain memberships are not equal, however, and the survival benefits to components vary systematically with the nature of the operating experience and the number and distribution of components of hotel chains. Our findings show how understanding the role of chains can inform both learning and ecological models of organization. [ABSTRACT FROM AUTHOR]

In this study, we examine how experience at the level of the organization, the population, and the related group affects the failure of Manhattan hotels. We find organizational experience has a U-shaped effect on failure; that organizations enjoy reduced failure as a function of population experience before their founding, but not after; and that related organizations provide experience that lowers failure, but it matters whether their experience is local or non-local, and if it was acquired before or after the relationship was established. These results indicate both the difficulty of applying different types of experience to reduce the risk of organizational failure, and the relevance of experience for the evolution of organizational populations. [ABSTRACT FROM AUTHOR]