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Article
Publication date: 9 August 2013

Fernando Ribeiro Serra, Manuel Portugal Ferreira and Martinho Isnard Ribeiro de Almeida

In this article, the authors aim to review the extant literature and analyze the theoretical influence in the academic research of organizational decline and related…

Abstract

Purpose

In this article, the authors aim to review the extant literature and analyze the theoretical influence in the academic research of organizational decline and related topics (turnaround and bankruptcy, for example). They examine the theoretical contribution and the most influential authors to better understand the intellectual structure that connects theories and authors that have researched organizational decline. This study makes it possible not only to understand the current state of the art of research on organizational decline but also to uncover and guide future studies on organizational decline, based on the conceptual gaps identified.

Design/methodology/approach

Empirically, the authors conduct a bibliometric study involving analyses of citations and co‐citations to uncover the connections between authors and theories used. The bibliometric study was performed in 18 top‐ranked management journals. Their sample of 104 articles was retrieved from ISI Web of Knowledge.

Findings

The authors identified four clusters of research areas, and conclude that evolutionary theories support a considerable number of works, including studies on the effects of inertia, isomorphism and adaptation. Sociological approaches have also been used, namely examining the adjustment of the internal structures and actions to enhance positioning. Other research on decline is based on works on learning and decision making as well as on decline and turnaround strategies.

Research limitations/implications

The main limitations concern the methods and the sample. Although the authors selected 18 top management journals, they do not encapsulate the entire stock of existing knowledge.

Originality/value

Well‐known and reputable corporations, not only the small entrepreneurial firms, also face organizational decline and failure. Although organizational decline is a reality, there is a notable scarcity of research on the topic. Organizational decline is more often studied in small companies and attributed to the liability of newness and a lack of several types of physical, technological, financial and social resources. Although the authors expected a priori to identify works using a resource‐based view, that was not the case, perhaps because since the 1990s strategy scholars' interest in studying organizational decline diminished. Notwithstanding, organizational ecologists continue to work on organizational decline as it is one of the central areas of their work.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 11 no. 2
Type: Research Article
ISSN: 1536-5433

Keywords

Article
Publication date: 8 February 2013

Klaus Heine and Heike Rindfleisch

The aim of this paper is to propose an integrative framework of organizational decline on the firm‐level.

2898

Abstract

Purpose

The aim of this paper is to propose an integrative framework of organizational decline on the firm‐level.

Design/methodology/approach

In recent years, there has been a growing number of contributions to the research field of organizational decline from diverse theoretical perspectives and different levels of analysis. In this paper, an integrative framework of organizational decline on the firm‐level is proposed that relies on a process perspective, combining insights from organizational ecology, path dependence and the resource‐based view.

Findings

Different theoretical perspectives are used to explore various aspects of the problem of organizational decline. A theoretical framework as a theoretical perspective is developed to guide research and to interconnect diverse theoretical findings. Based on the suggested framework, two archetypes are distinguished which lead an organization to insolvency: malabsorptive incompetence and maladapted competencies.

Originality/value

The proposed framework allows the capture of the dynamic process of organizational decline and the identification of the triggers driving organizational decline.

Details

Journal of Organizational Change Management, vol. 26 no. 1
Type: Research Article
ISSN: 0953-4814

Keywords

Article
Publication date: 1 January 2002

John C. Edwards, William McKinley and Gyewan Moon

Building on the enactment perspective and past work on the self‐fulfilling prophecy, this paper explores how organizational decline can be enacted through self‐fulfilling…

Abstract

Building on the enactment perspective and past work on the self‐fulfilling prophecy, this paper explores how organizational decline can be enacted through self‐fulfilling prophecies of decline. We present two self‐fulfilling prophecy‐based models of organizational decline, one in which decline is enacted unintentionally through the predictions of an organization's managers, and a second in which decline is enacted unintentionally through the predictions of external constituencies. We articulate propositions that capture the dynamics of each model and that are intended as a platform for future empirical research. We also discuss the implications of our theoretical framework for future theory development on the causes of organizational decline, and offer suggestions for managers who wish to avoid organizational decline.

Details

The International Journal of Organizational Analysis, vol. 10 no. 1
Type: Research Article
ISSN: 1055-3185

Book part
Publication date: 26 August 2014

Brian Uzzi

Analysis of organizational decline has become central to the study of economy and society. Further advances in this area may fail however, because two major literatures on…

Abstract

Analysis of organizational decline has become central to the study of economy and society. Further advances in this area may fail however, because two major literatures on the topic remain disintegrated and because both lack a sophisticated account of how social structure and interdependencies among organizations affect decline. This paper develops a perspective which tries to overcome these problems. The perspective explains decline through an understanding of how social ties and resource dependencies among firms affect market structure and the resulting behavior of firms within it. Evidence is furnished that supports the assumptions of the perspective and provides a basis for specifying propositions about the effect of network structure on organizational survival. I conclude by discussing the perspective’s implications for organizational theory and economic sociology.

Details

Collaboration and Competition in Business Ecosystems
Type: Book
ISBN: 978-1-78190-826-6

Keywords

Article
Publication date: 15 February 2016

Mahua Guha

There is a preponderance of evidence in the established literature that declining firms have lower levels of organizational slack when compared with surviving firms. To…

Abstract

Purpose

There is a preponderance of evidence in the established literature that declining firms have lower levels of organizational slack when compared with surviving firms. To further advance the current literature, the purpose of this paper is to examine whether or not organizational slack in its various forms differ in declining firms and in surviving firms. Additionally, this study examines whether there is a change in the extent of slack in the declining firms in the years immediately preceding bankruptcy filing.

Design/methodology/approach

t-tests and panel regressions with random effects are performed.

Findings

Available slack, potential slack and total slack of bankrupts significantly differ from that of survivors in each year. However, recoverable slack levels do not differ in bankrupts and survivors. Available slack of bankrupts reduces significantly over the last five years before bankruptcy. Recoverable slack, potential slack and total slack conditions do not drastically deteriorate for the bankrupts over the last few years prior to bankruptcy.

Research limitations/implications

Not confirming to prior evidences, the results of this study suggest that not every type of organizational slack is in a worse condition within a declining firm than in a surviving firm.

Practical implications

Among all the slack types, what differentiates bankrupts from survivors is the amount of available slack. Decreasing available slack within declining firms should forewarn managers of further likely deteriorations.

Originality/value

The results of this study questions the prevailing wisdom that financial resource levels, especially the levels of organizational slack is in a significantly lower level in declining firms than in surviving firms.

Details

Journal of Strategy and Management, vol. 9 no. 1
Type: Research Article
ISSN: 1755-425X

Keywords

Article
Publication date: 16 February 2015

Sunitha Panicker and Mathew J. Manimala

The purpose of this paper is to report on a research study aimed at comparing the causes of organisational decline and turnaround strategies involved in cases of…

1203

Abstract

Purpose

The purpose of this paper is to report on a research study aimed at comparing the causes of organisational decline and turnaround strategies involved in cases of successful and unsuccessful turnarounds, with a view to identifying the differences, if any, between the two groups, which in turn is expected to provide useful information to academics, practitioners and policy makers.

Design/methodology/approach

Since turnaround is a business phenomenon of general interest, their stories are often published in business periodicals, which are a rich source of data on them. In order to tap this data source, the present paper employed a method of content analysis for the proposed investigation on the cause of organisational decline and turnaround strategies used. In order to quantify the data, a three-point scale was developed, where the presence of a cause/strategy is rated as “3”, its ambivalence as “2” and its absence as “1”, whose validity was assessed through the inter-rater agreement indices. The data thus generated are amenable to statistical analyses, using which the more commonly prevalent causes of organisational decline and the strategies commonly employed for turnaround by the successful and unsuccessful companies are identified.

Findings

The findings of the present study have generated a few useful insights. First, the primary causes for organisational decline are the internal weaknesses of the organisation; in fact the external changes can adversely affect the organisation only if it is internally weak. Second, organisational decline caused by multiple factors (which is usually the case) can be managed effectively by adopting a variety of strategies; hence a single-pronged strategy is often found to be ineffective. Third, the more successful turnarounds had a diverse portfolio of strategies including those of institution-building, often employed in a phased manner, consistent with the stage theories of turnaround.

Research limitations/implications

The limitations of this research arise mainly from the generation of data from published sources and the consequent biases, which can be managed, to a large extent, by using multiple sources for the same case for reducing the publishers’ biases as well as by having multiple raters for identifying the researcher’s biases, if any.

Originality/value

The study has highlighted the need for addressing the internal causes of organisational decline on a priority-basis rather than blaming the external factors, besides pointing to the need for adopting a variety of strategies for dealing with the diversity of causes affecting the organisation’s health, particularly the need for institutionalising the changes. These findings can be of help especially to turnaround managers and policy-makers in dealing with organisational decline and thus contribute to the creation and enhancement of economic value.

Details

Journal of Strategy and Management, vol. 8 no. 1
Type: Research Article
ISSN: 1755-425X

Keywords

Article
Publication date: 13 May 2019

Orlando Antonio Llanos-Contreras and Muayyad Jabri

The purpose of this paper is to determine how family and business priorities influence organisational decline and turnaround in a family business.

Abstract

Purpose

The purpose of this paper is to determine how family and business priorities influence organisational decline and turnaround in a family business.

Design/methodology/approach

Following critical realism as philosophical orientation, this research is based on an exploratory single case study.

Findings

This research identified specific socioemotional wealth priorities driving this organisation decline and turnaround. The study also determined how the family and business dynamic leads to decisions that first trigger the organisational decline and then explain the successful implementation of turnaround strategies.

Research limitation/implications

Findings of this research provide limited and contingent theoretical generalisation. Accordingly, replication and further quantitative research is required for a better understanding of this phenomenon.

Practical implications

Managers can benefit from this paper by noting which behaviour could lead to organisational decline and which factors could lead to a turnaround. Similarly, managers can learn about the importance of the alignment of socioemotional wealth priorities as a critical response factor to determine whether to follow exit strategies or turnaround (succession) actions.

Originality value

The study contributes to the organisational decline literature and family business literature. It advances the understanding of how family businesses should balance family and business priorities to avoid organisational decline and identify strategies successfully implemented for turning around.

Objetivo

El objetivo de este artículo es determinar cómo las prioridades familiares y del negocio influyen sobre la declinación y recuperación organizacional en una empresa familiar.

Diseño/Metodología/Enfoque

Se usa investigación cualitativa basada en caso único de estudio y realismo crítico como orientación filosófica.

Hallazgos

Esta investigación identifica prioridades socioemocionales específicas que explican la declinación y recuperación organizacional de una empresa familiar. Se determina como la dinámica familiar y empresarial lleva a tomar decisiones que primero desencadenan declinación organizacional y luego explican la implementación exitosa de estrategias para la recuperación organizacional de la empresa en cuestión.

Limitaciones

Los resultados dan soporte a una generalización teórica y contingente. En consecuencia, se requiere replicación y más investigación cuantitativa para una mejor comprensión de este fenómeno.

Implicaciones prácticas

los gerentes pueden beneficiarse de este artículo al identificar qué comportamiento podría conducir a la declinación de la organización y qué factores podrían conducir a su recuperación. Del mismo modo, los gerentes pueden aprender sobre como alinear prioridades socioemocionales y hacer de esto un factor crítico en la definición sobre implementar estrategias para continuar (sucesión) o dejar el negocio.

Originalidad/Valor

El estudio contribuye a la literatura sobre declinación organizacional y también a la literatura sobre Empresas Familiares. Avanza en la comprensión de cómo las empresas familiares deben equilibrar las prioridades familiares y del negocio para evitar el declive de la organización y da luces sobre estrategias implementadas con éxito en la recuperación organizacional de una empresa familiar.

Article
Publication date: 27 August 2019

Sharon Gotteiner, Marta Mas-Machuca and Frederic Marimon

Most mature organizations face a major decline in performance at some time during their existence. For more than three decades, it has been suggested that the management…

Abstract

Purpose

Most mature organizations face a major decline in performance at some time during their existence. For more than three decades, it has been suggested that the management practices that could cure a troubled company could have also kept it well. Inspired by this concept, this paper is proposing a preventive approach to early implementation of turnaround strategies as an alternative for otherwise traumatic rescue efforts, further along the downward spiral.

Design/methodology/approach

Corporate turnaround strategies and associated risks are integrated with a risk-based approach, along with a proactive decision-making process. The link between turnaround research, resource-based view, the sources of organizational decline, and the governance of organizational-decline-related risks – is explained.

Findings

The integrated model streamlines a preventive organizational process for considering the suitability of commonly used turnaround practices – for the non-crisis business routine of a mature company. By considering and adjusting the risks associated with such practices, it addresses risk aversion at the early stages of decline and determines the optimal sequence and timing of retrenchment and recovery activities. As such, it encourages mature companies to take actions for reducing their exposure to organizational decline. Accordingly, the model is named the “Anti-Aging” framework.

Research limitations/implications

Empirical testing of the suitability of turnaround strategies for non-crisis situations is proposed as a direction for future research.

Practical implications

The Anti-Aging framework opens an opportunity for the senior management of a mature organization to respond earlier to organizational decline and avoid the trauma associated with otherwise more challenging conditions, for the benefit of all stakeholders.

Originality/value

The Anti-Aging framework proposes an innovative way of bridging the gap between the benefits of early implementation of turnaround strategies, and major obstacles faced by willing, traditional management teams of mature organizations.

Details

Management Research Review, vol. 42 no. 11
Type: Research Article
ISSN: 2040-8269

Keywords

Article
Publication date: 19 September 2019

José Eduardo Teixeira, Fernando Serra, Rosiele Pinto and Luana Salles

This paper aims to investigate the role of resource orchestration in turnaround attempts following the organizational decline in the context of an emerging economy.

Abstract

Purpose

This paper aims to investigate the role of resource orchestration in turnaround attempts following the organizational decline in the context of an emerging economy.

Design/methodology/approach

Multicase study of three Brazilian textile firms, following their trajectory from 1997 to 2009. We did a “historical reconstruction using the methodology” proposed by Mintzberg and McHugh (1985) to guide our data collection and analysis procedures. The methodology is geared towards the study of the evolution of organizations over a past period, wherein the researcher reconstructs the events after they have occurred, having developed them from documentary analysis and oral history.

Findings

The results indicate that resource orchestration is a critical capability for ensuring the coordinated implementation of operational and strategic actions in a turnaround. Moreover, in a context involving severe environmental jolts, the conservation of organizational slack appears to influence the effectiveness of resource orchestration and explains the different outcomes the firms in this study achieved in their turnaround attempts.

Research limitations/implications

This paper may be useful to practitioners involved in turnarounds, helping them evaluate the consequences of decisions involving the acquisition, reconfiguration, bundling and divestment of firm resources.

Practical implications

Besides contributing to the advancement of theory-informed research on decline and turnaround, this paper may be useful to practitioners involved in turnarounds, when they consider the consequences of decisions involving firm resources.

Originality/value

This paper helps advance theory-informed research on decline and turnaround in developing economies, helping address a gap in the extant literature, primarily focused on firms in developed countries.

Objetivo

Investigar, en el contexto de una economía emergente, el papel de la orquestación de recursos en los intentos de recuperación después del declive organizacional`.

Metodologia

Estudio multicaso de tres empresas textiles brasileñas siguiendo su trayectoria desde 1997 hasta 2009. Hicimos una “reconstrucción histórica utilizando la metodología” propuesta por Mintzberg y McHugh (1985) para guiar nuestra recopilación de datos y procedimientos de análisis. La metodología está orientada hacia el estudio de la evolución de organizaciones en un período pasado, en el que el investigador reconstruye los eventos después de que han ocurrido, habiéndolos desarrollado a partir del análisis documental y la historia oral.

Resultados

Nuestros resultados indican que la orquestación de recursos es una capacidad crítica para garantizar la implementación coordinada de acciones operativas y estratégicas en un processo de recuperación. Adicionalmente, en un contexto que implica impactos ambientales significativos, mantener la holgura organizacional parece influir sobre la eficacia de la orquestación de recursos y explica la diferencia de los resultados que las empresas encuestadas alcanzaron en sus tentativas de recuperación.

Implicaciones prácticas

Este artículo puede ser útil para los profesionales implicados en procesos de recuperación, ayudándoles a evaluar las consecuencias de las decisiones que implican la adquisición, reconfiguración, agrupación y desecho de recursos de la empresa.

Originalidad/valor

Este estudio contribuye al avance de la investigación de base teórica sobre declive y recuperación en economías en desarrollo, ayudando a eliminar una laguna en la literatura existente, la cual se a centrado principalmente en empresas en países desarrollados.

Objetivo

Investigar o papel da orquestração de recursos nas tentativas de turnaround após o declínio organizacional, no contexto de uma economia emergente.

Design/metodologia

Estudo multicaso de três empresas têxteis brasileiras, seguindo sua trajetória de 1997 até 2009. Fizemos uma “reconstrução histórica usando o metodologia” proposta por Mintzberg e McHugh (1985) para guiar nossa coleta de dados e procedimentos de análise. A metodologia é voltada para o estudo da evolução de organizaçöes ao longo de um período passado, em que o pesquisador reconstrói os eventos após ocorreram, tendo-os desenvolvido a partir da análise documental e da história oral.

Resultados

Nossos resultados indicam que a orquestração de recursos é uma capacidade crítica para garantir a implementação coordenada de ações operacionais e estratégicas num turnaround. Adicionalmente, num contexto envolvendo choques ambientais significativos, a preservação da folga organizacional parece influenciar a eficácia da orquestração de recursos e explicar a diferença dos resultados que as empresas pesquisadas alcançaram nas suas tentativas de turnaround.

Implicações práticas

Este artigo pode ser útil para profissionais envolvidos em turnarounds, ajudando-os a avaliar as consequências de decisões envolvendo a aquisição, reconfiguração, agrupamento e descarte de recursos da empresa.

Originalidade/valor

Este estudo contribui para o avanço da pesquisa de base teórica sobre declínio e turnaround em economias em desenvolvimento, ajudando a eliminar uma lacuna na literatura existente, focada principalmente em empresas em países desenvolvidos.

Article
Publication date: 1 July 1997

Brian Uzzi

Analysis of organizational decline has become central to the study of economy and society. Further advances in this area may fail however, because two major literatures on…

398

Abstract

Analysis of organizational decline has become central to the study of economy and society. Further advances in this area may fail however, because two major literatures on the topic remain disintegrated and because both lack a sophisticated account of how social structure and interdependencies among organizations affect decline. This paper develops a perspective which tries to overcome these problems. The perspective explains decline through an understanding of how social ties and resource dependencies among firms affect market structure and the resulting behavior of firms within it. Evidence is furnished that supports the assumptions of the perspective and provides a basis for specifying propositions about the effect of network structure on organizational survival. I conclude by discussing the perspective's implications for organizational theory and economic sociology.

Details

International Journal of Sociology and Social Policy, vol. 17 no. 7/8
Type: Research Article
ISSN: 0144-333X

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