Organizational Decline Research Review: Challenges and Issues for a Future Research Agenda

Abstract

Organizational decline is related to the deterioration of the resource base and performance of an organization for a sustained period of time. Although some studies have been conducted, it remains an understudied phenomenon, despite its importance. The study of organizational decline is faced with challenges to improving and increasing research. In this study, we analyze the scientific field of organizational decline in business and management journals with a high impact factor. We conducted a mixed-method study: a bibliometric study of a sample of 214 articles, and a qualitative study with 41 authors. We used an analysis of citations, co-citations and factor analysis. This enabled the identification of the most influential works and their conceptual approaches. The interviews with the authors were analyzed using content analysis, which complemented our understanding of the challenges and problems facing the theme. The results show that organizational decline can be organized into three different aspects: organizational decline itself; studies on turnaround; and mortality. Specific challenges to overcome are related to a better definition, cognitive issues and other issues on decision-making and specific methodological problems. In addition, it is necessary to evaluate whether theories that explain growth are also able to explain decline.

Firm Performance and the Strategic Components of Bankruptcy Reorganization Plans

“…In this sense, our study makes an explicit link between strategy and bankruptcy (Daily, 1994;Sheppard, 1994;Trahms et al, 2013). More specifically, the reorganization plan is important because it brings empirical evidence on two research gaps, namely: the turnaround strategies that goes beyond retrenchment (Schweizer & Nienhaus, 2017) and the strategic decision process and practice under organizational decline (Serra et al, 2017). The examination of reorganization plans, moreover, is in line with recent studies that use documentary, qualitative evidence in the context of corporate decline (Muñoz-Izquierdo, Segovia-Vargas, Camacho-Miñano, & Pascual-Ezama, 2019).…”

“…That is to say, the reorganization plan plays a role in the process of business recovery. Although the literature on turnaround is extensive, we consider that an analysis of the reorganization plans can bring new insights into the turnaround strategies used by companies (Schweizer & Nienhaus, 2017) and the decision process and practice in times of organizational decline (Serra et al, 2017). Our study is a step in this direction, showing how the strategic components of reorganization plans relate to firm performance.…”

“…L. Baker & Duhaime, 1997). Specifically, we bring insights into the turnaround strategies used by companies (Schweizer & Nienhaus, 2017) and the decision process and practice in times of organizational failure (Serra, Pinto, Guerrazzi, & Ferreira, 2017). Second, by mapping the strategic components of reorganization plans, we develop a holistic view of the strategic building process.…”

Dr. Reddy’s Laboratories Ltd: Searching Its Glorious Days

“…Serra et al (2017) studied the extant literature on the theory of organizational decline and turnaround and found that management researchers have used multiple theoretical lenses to study the said phenomenon. The study classified the academic literature into three broad categories, that is, organizational decline, turnaround and mortality.…”

Why is Academia Sometimes Detached from Firms’ Problems? The Unattractiveness of Research on Organizational Decline

“…To understand and analyze problem choice, we selected the literature on 'organizational decline' as a relevant research topic (see, for instance, Collins, 2009;Damodaran, 2011;Hamel, 2012;McMillan & Overall, 2017;Whetten, 1980). This goes somewhat against the grain of mainstream research on growth that is prevalent in business and management journals (Serra, Pinto, Guerrazzi, & Ferreira, 2017). Despite the pervasiveness of organizational decline in countries, the extant research has not succeeded in explaining firms' failures (Garicano & Rayo, 2016).…”