ORGANIZATIONAL SIZE AND CHANGE - DIVERSIFICATION IN THE SAVINGS AND LOAN INDUSTRY AFTER DEREGULATION

This paper examines the relationship between organizational size and c hange. If organizational size indicates political insulation and degre e of bureaucratization, then large organizations will change less than small organizations. If organizational size is related to the possess ion of slack resources, differentiated and decentralized structures, a nd market power, however, then large organizations will be more fluid than small organizations. I tested these hypotheses by modelling rates of change (expansion into new markets) in a population of savings and loan associations. For three of seven outcomes studied, I found a pos itive relationship between size and change and concluded that large or ganizations are more capable of taking advantage of the opportunities to enter new and promising markets than are small organizations, altho ugh the advantages of large size sometimes diminish over the range of size. In contrast, for four outcomes, I found an inverted-U-shaped rel ationship between size and change. These results indicate that both pr ocesses-market power and bureaucratization - operate simultaneously bu t that the market-power process dominates the bureaucratization proces s.