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

Fernando Antônio Ribeiro Serra,Luiz Guerrazzi,Manuel Portugal Ferreira,Rosiele Pinto

doi:10.1590/1807-7692bar2017160110

Abstract

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.

Highlights

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
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
The longitudinal analysis by period afforded us a view of the evolution concerning decline. Considering this evolution over the years, the study of decline has been conducted in three different aspects: organizational decline itself; studies on turnaround; and mortality

Summary

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. 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)

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