The Organizational Life Cycle: Review and Future Agenda

Abstract

<p><strong>Purpose:</strong> The review summarizes major research that contributed to the organizational life cycle theory, discusses major issues and contradictions of the theory and offers additional assumptions about the organizational life cycle. Based on that, it attempts to offer a future research agenda for the theory.</p><p><strong>Methodology/Approach:</strong> The paper uses narrative review; the list of included life cycle models stems from previous summaries of the theory and subsequent snowball search through reference lists of individual reviewed papers.</p><p><strong>Findings:</strong> The theory is rich with various life cycle models that nevertheless converge on some major characteristics. Organizational life cycle can be described with classical five stages: (i) founding, (ii) growth, (iii) maturity, (iv) decline, and (v) revival. However, the stages do not necessarily follow in such an order, and therefore the research establishes likely paths in their development. Also, it appears that growth rate (relative to a market) and change in formalism are major factors distinguishing in the theory individual stages.</p><p><strong>Research Limitation/implication:</strong> Organizational life cycle theory is often neglected based on simplifying presumptions like determinism of organizational development. On the other hand, there is a growing evidence that factors stemming from particular life cycle stages alter organizational behavior and therefore should be considered in behavioral research on an organizational level.</p><p><strong>Originality/Value of paper:</strong> The paper represents up to date review of major theoretical models from the perspective of the current state of the field. Since the theory flourished in 70’s and 80’s it is inevitably limited in some aspects. The new review may spark renewed interest in implications stemming from the theory and enrich analytical tools of management scholars.</p>

Organizational life cycle models: a design perspective

“…First, to provide a revised and up-to-date overview of the OLC models, we searched the ‘ISI Web of Knowledge’ database (time span: 2000–2020 and Social Sciences Citation Index) using the following keywords: ‘review life cycle of organization’ and ‘review organizational stages and growth’. This search produced six review articles: Phelps et al ( 2007 ), Levie and Lichtenstein ( 2010 ), Muhos et al ( 2010 ), Muhos ( 2015 ), Tam and Gray ( 2016 ) and Jirásek and Bílek ( 2018 ).…”

“…Therefore, building on the five primary elements of good theory (i.e., why, when, who, what and how) suggested by Whetten ( 1989 ), we (1) review five seminal OLC models—Lippitt and Schmidt ( 1967 ), Greiner ( 1972 ), Adizes ( 1979 ), Galbraith ( 1982 ) and Churchill and Lewis ( 1983 )—proposing an in-depth analysis of their organizational design characteristics, and we (2) discuss the relevance of the OLC perspective for describing the evolution of the firms in the actual business environment. By reviewing the seminal OLC models through Whetten’s five primary elements of good theory, we not only extend Levie and Lichtenstein’s ( 2010 ) analysis, which was limited to three theoretical elements (what, how and why), but we also add to previous reviews on OLC models (e.g., Phelps et al 2007 ; Muhos et al 2010 ; Muhos 2015 ; Tam and Gray 2016 ; Jirásek and Bílek 2018 ), which have neglected to analyze the organizational design characteristics inherently associated with each stage of the models (namely vertical and horizontal differentiation, coordination mechanisms, centralization and decentralization, standardization and mutual adjustment).…”

Characterizing Organizational Lifecycle through Strategic and Structural Flexibility: Insights from MSMEs in Mexico

“…The seminal idea of OLC theory equates the growth of the company with the life cycle of a person, plant, or animal (Adizes, 1979 ; Jirásek & Bílek, 2018 ; Mosca et al, 2021 ). OLC is the firm development process from birth to demise and consists of individual stages formed by distinguishable patterns of change (Jirásek & Bílek, 2018 ).…”

“…The seminal idea of OLC theory equates the growth of the company with the life cycle of a person, plant, or animal (Adizes, 1979 ; Jirásek & Bílek, 2018 ; Mosca et al, 2021 ). OLC is the firm development process from birth to demise and consists of individual stages formed by distinguishable patterns of change (Jirásek & Bílek, 2018 ). OLC theory was introduced in 1959 and has continued to be developed to the present day thanks to their holistic and comprehensive approach, which states that both the internal factors (strategic and managerial decisions) and external conditions (market and competitive pressures) trigger the company development (Mosca et al, 2021 ).…”

“…In this sense, more contextualized studies, especially in developing nations, are still needed (Carrillo, 2007 ) as the models from mainstream settings may not fit them (Angeles et al, 2019 ). In addition, calls have been put forward for more studies that analyze flexibility variants in MSMEs due to their particular formalization processes and structural characteristics (Jirásek & Bílek, 2018 ).…”