Legitimation, Geographical Scale, and Organizational Density: Regional Patterns of Foundings of American Automobile Producers, 1885–1981

Do organizational processes of legitimation and competition operate within different boundaries corresponding to different geographical levels of analysis? Following Hannan et al. (1995), this analysis explores the possibility that legitimation operates on a broader geographical scale (less constrained by political and physical barriers) than does competition. We test the argument by examining founding rates of American automobile producers from 1885 to 1981, within the framework of density-dependent modeling. Our findings suggest that within the United States, legitimation operated on a national scale while competition proceeded primarily on a regional level. Comparison with automobile producer populations in Europe yields differences in application and interpretation of the theory.