Organizational Decline and Adaptation: Theoretical Controversies

Abstract

In 1980, David Whetten published a seminal paper that urged organization scientists to revise their underlying assumptions of continuous organizational growth, and develop an agenda of research and teaching on organizational decline (Whetten 1980a). Since then, the organization science literature on decline has mushroomed. Some of this work has attempted to define the construct of organizational decline, using such definitions as maladaptation to the environment (Greenhalgh 1983), a downturn in organization size or performance (McKinley 1987), reductions in force (Ford 1980a), decrease in an organization's resource base (Cameron, Kim and Whetten 1987), and failure to anticipate and neutralize external threat (Weitzel and Jonsson 1989). Cameron, Sutton and Whetten (1988), Weitzel and Jonsson (1989), and Whetten (1980b, 1987) attempted to review and integrate the diverse literature on decline. Harrigan (1980), Sutton (1990), Sutton and D'Aunno (1989) and Zammuto and Cameron (1985) have developed theoretical models of decline in organizations, and still other research has reported on large-scale empirical studies of decline and its consequences (Cameron, Whetten and Kim 1987; D'Aveni 1989; Hambrick and D'Aveni 1988). Research on resource scarcity and its effects on organizations and their members is also closely related to organization decline (see discussion on Necessity: The Mother of Rigidity or Invention? later in this introduction). Brockner (1988), Brockner, Davy and Carter (1985), Brockner, Grover, Reed and DeWitt (1992), Brockner, Grover, Reed, DeWitt and O'Malley (1987), Cornfield (1983), Feldman and Leana (1989), Perry (1986) and Worrell, Davidson and Sharma (1991) have studied the many effects of layoffs, and the social and psychological processes that characterize organizational death have been investigated by Harris and Sutton (1986), and Sutton (1983, 1987). Since organizational death is not inevitable, and practitioners and scholars are both interested in how organizations can avoid it, a large literature on organizational turnaround has also developed (Bibeault 1982; Castrogiovanni, Baliga and Kidwell 1992; Grinyer, Mayes and McKiernan 1988; Hambrick and Schecter 1983; Hofer 1980; Hoffman 1989; Robbins and Pearce 1992; Schendel, Patton and Riggs 1976; Slatter 1984; Stopford and Baden-Fuller 1990). A common theme that threads through much of the related research on decline summarized above is how, and whether, organizations adapt to conditions of organizational decline. The literature relevant to the theme of organizational decline and adaptation has now matured to the point that several important theoretical controversies are becoming apparent. One controversy concerns a particular type of adaptation to organizational decline: organizational downsizing (Cameron, Freeman and Mishra 1991; Tomasko 1987). A second controversy involves the issue of whether organizational decline is usually an inhibitor or stimulus for adaptation. These two controversies form the framework for this focused issue, and for the introduction to the six papers that make up the issue.