Organizational decline research review: Challenges and issues for a future research agenda.
| Autor | Serra, Fernando Antonio Ribeiro |
| Cargo | Report |
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.
Key words: organizational decline; turnaround; mortality; bibliometric study; mixed method.
Introduction
When Whetten (1980) wrote his seminal article on organizational decline, he pointed out the need to study this theme and its importance, considering the study of decline and the path to increasing the longevity of companies. At that time, in the late 1970s and 1980s, American companies were facing strong competition from Japanese industries and these companies' performance was affected. Considering the importance given by authors in books for a professional audience (e.g., Collins, 2009; Damodaran, 2011; Hamel, 2012; Pfeffer & Sutton, 2006) and the impact of decline on mature and apparently successful companies (Torres, Serra, Ferreira, & Menezes, 2011), this theme merits further investigation. Given the evidence that even successful companies can go into decline, which is nothing new, we assume that the study of a variety of issues pertaining to organizational decline would attract the attention of researchers. These issues include understanding why companies go into decline, how this decline could have been avoided, the role of organizational inertia in the face of external transformations, losses in terms of performance, how the erosion of specific resources and the capacity of companies occurs, which decision making processes lead companies into decline, why company resources lose their value and many others.
We hope that decline can become a central theme in courses such as strategic management, but despite the efforts of some authors since the 1990s to conduct further studies on decline and related matters, we are still far from understanding and explaining why companies, even renowned and apparently successful ones, go into decline (Cameron, Kim, & Whetten, 1987; Serra, Ferreira, & Almeida, 2013).
The purpose of this work is to help to enable and improve future research of such an important phenomenon by identifying the challenges facing researchers and to propose specific studies to overcome these challenges. To explain the existing research on decline better and to present the challenges and issues to overcome to enable future research on the subject, we conducted a mixed method study, consisting of a bibliometric study (Study I) and a qualitative study (Study II). Bibliometric analyses are helpful by shedding light on different aspects (Boyack, Klavans, & Borner, 2005; Gorraiz & Gumpenberger, 2015).
The bibliometric research in Study I involved articles published in journals available on Thomson-Reuter's Web of Science (ISI) with a JCR impact factor higher than 2.0. From a sample of 214 articles that were collected, we examined citations, co-citations and emphasis on research over time. We used citation frequency, co-citation networks and factor analysis techniques to determine the sub-fields in organizational decline. In Study II, using the authors in the sample for Study I, we identified relevant authors who study decline and conducted research by e-mail, for which 41 of the authors provided responses. The analyses conducted in Study II were qualitative and we associated the statements of the researchers on the theme of organizational decline in relation to our findings in Study I in order to establish a future research agenda and orientation for overcoming the challenges of decline research.
Methods
Study I--bibliometric study
This study is based exclusively on articles on organizational decline published in top business journals until 2014. To collect the sample, we selected 20 journals with a JCR impact factor higher than 2.0 (Appendix A).
Having defined the journals and considering the time available in the database, we conducted a search using key words in the topic option for articles. The following words were used: decline (organizational decline and performance decline), decay (strategy decay, performance decay and organizational decay), bankruptcy, failure (business failure and organizational failure), turnaround, retrenchment, longevity, lifecycle and mortality. The software identified all the articles with these words either in the title, abstract or key words of the journals that were consulted.
Using the data collection procedure, 1580 articles were identified initially. These articles were filtered and the final sample was composed of 214 articles. The articles were filtered because a wide range of key words was used to obtain a diversity of articles not directly related to decline. Thus, all the titles and abstracts (and later the content) of the articles were evaluated to reduce the number and arrive at the final sample. The distribution of the sample in the selected journals is shown in Table 1.
Aiming to reduce the bibliographic references used in the sample and to obtain clusters with similar conceptual approaches on organizational decline, we used a multivariate statistical technique following Acedo, Barroso and Galan (2006). For bibliometric proceedings we ran Bibexcel software (www.umu.se/inforsk/Bibexcel), which allowed us to produce quantitative information about the research sample. By using this software, we created the citation frequency table (Table 2) and generated the co-citation matrix, necessary for creating the co-citation network (Figure 1). This analysis was complemented by factor analysis and multidimensional scaling (MDS) using SPSS. First, we analyzed the citations, which aided identification of the main researchers and works that contributed to the intellectual development of the theme and how they signal the themes and theories related to organizational decline. The citation analysis involved all the references of the 214 articles in the sample, and we analyzed the 54 most-cited articles (see Table 2).
We conducted the factor analysis with varimax rotation (see Acedo, Barroso, & Galan 2006; Lin & Cheng, 2010), as the results are easier to interpret (Fabrigar, Wegener, MacCallun, & Strahan, 1999). Articles with conceptual or thematic proximity have higher loadings on the same factor. Factor loading with values greater than 0.4 form the theme (Lin & Cheng, 2010; Shafique, 2013).
Study II: research with specialists
All of their articles were published in top journals in terms of the impact factor and their works corresponded to 27.4% of the articles in the sample.
This study is qualitative and based on the experience of selected researchers through their contributions to existing research. Self-report measures, such as direct questions to experts or questions on performance, have been increasingly accepted in organizational research (e.g., Daneels, 2016). Using the co-citation matrix of the previous study as a starting point, the MDS (Appendix B) was presented to the authors, briefly introducing the research. They were asked the following open questions: (a) What motivated you to study decline? (b) Do you continue to study decline? (c) Did you consider decline an interesting subject in this hectic environment? (d) What else would be interesting to study? The latter question in particular was intended to understand what other aspects would be interesting to continue studying organizational decline. With the feedback from these questions, even though they were partially open, we classified the responses and analyzed the content to understand the challenges and problems in a particularly difficult research theme that addresses the unpleasant past of organizations. The analytical framework is the one recommended by Gioia (Reay, 2014), in which first-order groups of information, extracted directly from the interviews, are clustered into second-order themes and added third-order dimensions to enable a better understanding of the emerging arguments (Gioia, Corley, & Hamilton, 2012).
To become familiar with the experience of the specialists in the study of decline, it is especially interesting to understand their ideas for future studies on the subject to complement previous studies that were focused mainly on content, while research on decline faces challenges and specific questions regarding the phenomenon.
Results
Study I: bibliometric study
Citation analysis
Table 1 shows the most cited works for the whole period under analysis. Considering only the 10 most-cited out of the 214 works, only Hambrick and D'Aveni (1988) and Bibeault (1982) are directly related to organizational decline. Hambrick and D'Aveni (1988) developed a longitudinal view of the bankruptcy of companies during the years prior to bankruptcy being declared from some characteristics such as lack of domain initiative, environmental...
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