Conformity, replication of design and business niches

Conformity affects the choice and design of organizations; conformists replicate successful strategies, play along with the rules of the game and display inert behavior. Conformity leads to the dominance of one mode. The combined impact of conformity and inertia, and the existence of employment costs, switching costs and network externalities, may exclude equally or superior efficient modes from replacing the incumbent mode (the first mover). Unable to overcome these barriers to entry, efficient maverick organizations are forced into niches. This is illustrated with respect to niches formed by labor-managed firms and ethnic businesses.