Edited by Pietro Mazzola and Franz W. Kellermanns
Chapter 21: Perceptions, Processes and Performance During Organizational Decline
Michael R. Braun and Scott F. Latham INTRODUCTION This chapter focuses on the strategy process during situations of organizational decline, or when firms experience a substantial, absolute decrease in their resource base that occurs over time (Cameron et al., 1987). While research on organizational decline has long been part of the strategic management literature, interest in the topic remains variable for several reasons. Traditionally, researchers tend to shy away from this relatively gloomy subject matter, opting instead to turn their attention to what makes firms grow and succeed (Cameron et al., 1988). During times of economic prosperity, decline scholars are often deemed pessimists or even veritable Cassandras for drawing attention to firm malfunctions, whereas in times of hardship the topic of decline takes a backseat to the power of positive thinking. Furthermore, as early researchers discovered, real challenges exist in gaining access to data on organizational decline since managers, more often than not, avoid engaging in discussions on the subject. Indeed, as a popular saying so aptly notes, success has many fathers but failure is an orphan. Mirroring the strategic management literature in general, strategy process research contextualized to organizational decline remains relatively sparse. While scholars maintain a low yet steady output of studies investigating causes and consequences of organizational decline, the manner in which the strategic process unfolds within declining organizations remains, to a large degree, underexplored. More specifically, we observe a research void in how managers come to formulate and implement strategies to stem deterioration in firm performance....
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