Free to Fail

Free to Fail

Creative Destruction Revisited

Hugh van der Mandele and Arjen C. van Witteloostuijn

This challenging book tackles one of the most fundamental questions in economics: Why are commercial organizations more efficient than organizations in the public domain?

Chapter 11: Necrosis and apoptosis

Hugh van der Mandele and Arjen C. van Witteloostuijn

Subjects: business and management, organisation studies, strategic management, economics and finance, industrial organisation


The ultimate outcome is that the organization ceases to exist. No outside help is forthcoming, and internal measures are not successful. The organization fails in a radical way by dissolving. This chapter deals with this ultimate type of organizational failure, which we refer to as organizational dissolution. The next question is: what does this dissolution look like? In principle, there are two different organizational collapse processes, associated with two different faces of organizational dissolution. Nature offers excellent models with which we can illustrate these processes. The following citation describes these models: There are many ways to die, but from cell biological point of view only two forms exist: physiological and pathological death. Pathological or accidental cell death occurs as a catastrophic accident . . . when these are exposed to a severe physical, chemical or osmotic injury, including hypoxia and complement attack. During this accidental or pathological cell death, which is called necrosis, the cell membrane loses its selective permeability and ion-pumping capacity as result of direct membrane damage. This leads almost instantaneously to swelling of the cell and its organelles, including the mitochondria, and the leaking of the cellular contents into the extracellular space. (Wolbers et al., 2004, p. 198; emphasis added) The parallel with economics, and particularly with organizational dissolution, is demonstrated in Table 11.1.

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