Evolutionary Strategic Management based on Organisational Community Ecology: An Example from Saudi Real Estate

Abstract

Saudi Arabia’s Vision 2030 program dramatically, changes the organisational landscape for organisations. One of the programs aims at increasing the pilgrim numbers to 30 million by 2030. This holds significant implications for hotels and retail organisation located in Makkah, Saudi Arabia. Our research aims to quantify existing organisational selection measures in the presence of growing resource numbers, with the fundamental question: does selection take place even in an environment of rising resources?

We utilise organisation ecology, a well-known theoretical framework to analyse organisation-environmental relationships. It states that organisations are “selected” for removal upon the organisation achieving environmental non-alignment. Historically, this knowledge body has demonstrated the impact of selection due to changes in the understanding of organisation categories (organisation forms), change in number of organisations in a category (density-dependence), market partitioning, and impact of organisation age. Our research applied the same theoretical fragments amongst dissimilar organisations and a religious environment, bringing novelty in the existing organisation ecology research, to identify the selection pressures faced by such organisations.

Our research used data from private (Knight Frank and STR) and public sources (Saudi Arabian Government Bodies) to develop an understanding on Makkah's hotela and retail organisations to research nine (9) hypotheses to explicate issues pertaining to organisational schematisation, vital rates, appeal structures, organisational diversity, and niche structures.

Our researched yielded some interesting results. Namely, the social schematisation is sensitive to hotel star ratings and not branding structures. The retail structure does not experience any schematisation selection pressure. 5-star hotels prefer to setup within proximity to the Grand Mosque, with 4-Star hotels demonstrating an elevated mortality hazard within the population, but experience increasing founding rates with distance increases. In terms of density-dependence, the hotel population is undergoing legitimation, but have interesting sub-population dynamics. Branded hotels face elevated mortality hazards as pilgrims have choice, but the competition within the unbranded hotel category improves their life chances. Perhaps, the most interesting finding within our research context is the interrelationship of founding events between hotel and retail populations. We observed once a hotel is founded, within 1-year we see a retail founding leading to another hotel being founded within 2 years. Lastly, our research observed generalists fair better in comparison to the specialists identity.