Organizational Life Cycle Theory Research Articles

CEO Type and Firm Performance: Evidence from Nasdaq Baltic

Despite the well-established characteristics of shareholder-CEOs and professional-CEOs, previous research has yielded inconclusive findings on the actual impact of the separation of shareholding and management on firm financial performance. This study aimed to address this gap by going off the beaten path of research centered on the U.S.-listed firms and investigating 55 firms listed on the Nasdaq Baltic market in the post-Soviet countries of Estonia, Latvia, and Lithuania from 2017 to 2021. While professional-CEO-led firms displayed higher Tobin’s Q (M = 1.37) compared to shareholder-CEO-led firms (M = 1.17), and shareholder-CEO-led firms had a higher average ROE (M = 7.76%) compared to professional-CEO-led firms (M = -1.74%), independent samples t-test analysis revealed that these differences in either stock market performance (p = .250 > .05) or shareholder return (p = .193 > .05) were statistically insignificant. These findings challenge organizational life cycle theory and agency theory predictions, aligning instead with stewardship theory and upper echelons theory, suggesting that CEO characteristics, motivation, and actions, while clearly distinct for shareholder-CEOs and professional-CEOs, are not the sole determinant of financial performance in mature firms. Accordingly, shareholder-CEOs, other stockholders, and boards of directors should draw support from these findings in their considerations regarding firm leadership.

Pathways to Prosperity: Navigating Post-Stagnation Growth and Revitalizing Business

This study examines the ways in which firms recover from stagnation or sales decline, with a focus on two key aspects: traditional high-growth companies and growth restarts within the framework of organizational life cycle theory. Analyzing a dataset of 1883 Russian firms from 2013 to 2021, this research employs logistic regression to identify factors that promote growth. These factors include the youth of the firm, investment intensity, and significant sales drops during periods of stagnation. The study introduces a new economic category, termed ‘restarting growth’, which signifies a firm’s sustained expansion following an extended period of stagnation. This category is crucial for identifying factors that increase the likelihood of a company transitioning to growth after prolonged stagnation or production downturn. The findings of this study reveal that firms that are younger, invest more intensively in fixed capital, and have experienced a larger sales drop during a period of stagnation are more likely to transition to growth. These results are juxtaposed with the growth factors characteristic of traditional high-growth companies, as well as with the theoretical approaches explaining growth restarts within the framework of organizational life cycle theory. Such distinctions are pivotal both for academic understanding and practical applications in discerning how companies rebound from crises. Moreover, the research identifies several highly significant factors—indicators that can assist investors in selecting promising firms for financing.

Organizational life cycles and management control systems design

This paper explores the literature relating Organizational Life Cycle theory with Management Control Systems design. During the birth stage, much emphasis is put on cultural controls. In the growth stage, cultural controls remain important, but the degree of formalization increases with cybernetic controls and administrative controls. During the maturity stage, the most bureaucratic phase is reached with many planning and administrative controls. The revival stage shows a renewed focus on cultural controls and a reduction of administrative controls. Not many findings are available that discuss the decline stage. It is argued that each stage represents important challenges for the CFO.

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

Today’s lifespan of companies tends to be low in the so-called micro-, small-, and medium-sized enterprises (MSMEs). Organizational life cycle (OLC) theory indicates that organizational aging is related, but not determined, by the firm chronological age or its size. Therefore, a firm’s aging should be analyzed by other factors such as flexibility. The literature considers flexibility as an essential capability, a source of competitive advantage, and an enabler of long-term growth for MSMEs. However, little attention in emerging economies has been paid to examine the nuances of this concept in relation to the OLC in this type of companies. Additionally, studies tend to analyze flexibility as a general term, ignoring that it is a polymorphic concept. That is why there is a need to research the different categories of flexibility. Drawing on a quantitative approach conducting a factor analysis, a two-step cluster, and decision tree analysis to interrogate data from 257 MSMEs in Mexico, this study provides evidence of different dimensions of strategic and structural flexibility that help to characterize and predict the growth, maturity, and declining stages of MSMEs. Our results show that mature firms present more strategic and structural flexible characteristics than those involved in growth or decline stages. The flexible factors that help classify and predict an MSME in the maturity stage include open communication, decentralized decision making, and formalization. We provide a model with these results to illuminate unaddressed issues regarding the broad term of flexibility and its relationship to OLC.

Founder CEOs and corporate environmental violations: Evidence from S&P 1500 firms

AbstractThe Chief Executive Officer (CEO), as the principal leader of the firm, plays an essential role in the prevention of corporate misconduct. While all CEOs have a responsibility to reduce incidents of corporate misconduct, not all are equally effective in doing so. In this study, we propose that given their central role in the inception of the firm, their psychological attachment, and stewardship mentality, founder CEO‐led firms exhibit less likelihood and frequency of environmental violations, which are major types of corporate misconduct. Additionally, we explore the possibility that founder CEOs' ability to reduce environmental violations may decline over time as the firm gets older and larger, using insights from organizational life cycle theory. Our analyses of data from major environmental violation incidents among S&P 1500 firms between 2009 and 2018 provide some support for our arguments. Specifically, we found that founder CEO leadership is indeed associated with a reduced likelihood and frequency of environmental violations. Furthermore, we observed that the normally negative relationship between founder CEO leadership and the occurrence of environmental violations turns positive as the firm gets older, consistent with organizational life cycle theory predictions. Implications for research and practice are discussed.

Does Liability of Newness Matter for Digital Startup on Early Stage of Organizational Life Cycle?

This study aims to test and analyzes the relationship between organizational life cycle characteristics and survivability of a digital startup in the early stage. In establishing new startup and managing early stage, founders have been facing two-fold pages. On one side, the opportunities exploration and exploitation require freedom to acts. On the other side, newly organization faces liability of newness traps that consider organizational formalization and organizational capability. The relationship among aspects is formulated as two-paths mediating roles on the impact of liability of newness and startup survivability. Questionnaires were distributed to 415 respondents in Greater Jakarta City, Indonesia. The study considered Jakarta represented Indonesian digital startup ecosystem. This newly established and still developing startup ecosystem that characterizes the early stages of OLC is considered relevant to the study. The data was analyzed quantitatively using SEM method. The result shows the linkage between the two-paths of mediating role. Since the opportunities are central of mindset for survivability, external legitimacy becomes antecedents of external opportunities as well as reliability and accountability required from organizational formalization and capability. Founders need to understand and translate the impact of liability of newness to establish an appropriate and better organization formalization and organization capability for startup survivability. This study contributes to enrich the early stage of organizational life cycle theory as well as to enhance startup founders’ managerial practices.

ANALYSIS OF OTORITAS JASA KEUANGAN POSITION IN THE ORGANIZATIONAL LIFE CYCLE

This study aims to determine the conditions and problems, as well as alternative strategies that can be providedat the Head Office of the Financial Services Authority (OJK) using the Organizational Life Cycle theory. Thepopulation of this research is the Head of OJK Employees in Jakarta as many as 72 employees. The samplingtechnique used saturated sampling method which obtained 72 respondents. The data analysis technique useddescriptive analysis assisted by Adizes Tools. The results of this study indicate that the Head Office of theFinancial Services Authority (OJK) is in a prime position. This position shows that there is a balance betweenflexibility and control, structured and systematic functions and tasks, significant leadership, quality employees,visionary innovation, and stable liquidity. However, there are several problems, namely the lack of employees,the length of the bureaucracy, inefficient structures, and differences in perceptions between OJK and the public.This problem can be overcome with alternative strategies, namely, improving communication, expertise andknowledge, utilizing technology, eliminating deficiencies in every business process, and scheduling employeeshifts to provide education to the community. The contribution of this research is expected to be able to becomea frame work on organizational life cycle knowledge, especially in the government sector, and be able to provideinformation and considerations to form alternative strategies in overcoming problems experienced in theorganizational life cycle. This research can be used as a new insight into the condition of the company from aninternal perspective.

Innovative Strategies For Social-Economic Development Financial Strategies In The Development Country

This research paper summarizes the arguments and counterarguments within the scientific discussion on the Small and medium scale enterprises constitute the backbone of any nations economic development and had remained a major contributor in poverty alleviation, employment generation, and industrialization. The purpose of this phenomenological study was to explore the lived experiences of small and medium scale enterprise owners in the development country, regarding the raising of finances from lending institutions to ensure their business growth and sustenance. A phenomenological qualitative approach for this study as it empowers the researcher to investigate the lived experiences of participants to gain a deep understanding of the small number of participants who had raised funding from financing institutions and how to improve their experiences thereby reducing the challenges while seeking for financing. The relevance of this scientific problem discussion from the organizational life cycle theory and working capital management theory to emphasize the concept of study environment, financing institutions, knowledge, and experience of small business owners. Key findings emerged that within the business environment, there are lack of government policies to support small businesses, and financing institutions are not favorably disposed to support small and medium scale business. The wide-ranging factors discussed in this article also brought to fore additional financing strategies adopted by small businesses as alternatives to banks funding, the effect adequate funding will have their operations and the improvement required by government, financing institutions and owners of small businesses to support the growth and development of small businesses. The results of the research study may contribute to positive social change by creating awareness amongst small and medium scale business owners on the best financial strategies to fund their operations to remain profitable and sustained. The research study highlighted the need for both the government and financing institutions to support small businesses to function effectively to remain relevant, continue to generate more employment, improve the living standard of the owners of small business, and ultimately impact development country at large. Finally, this study added to the existing literature on small and medium scale enterprises financing strategies, their challenges, and their means to ameliorate the difficulties experienced by their owners when seeking for funding from lending institutions.

Resource efficiency in the innovative and conservative stages of a firm's evolution

Attempts to understand how firms view environmentally-friendly operations and conscious consumerism are easy to find in the resource efficiency literature. Although scholars consider various resource efficiency business models, opportunities to seize the benefits of the organizational life cycle theory remain under-researched. In the current study, we analyze resource efficiency actions undertaken by close to 1,200 firms in the innovative and conservative stages of a firm’s evolution from four European Union member states: Lithuania, Portugal, Slovenia, and Spain. Logistic regression results show that firms in the conservative stage are more likely to undertake resource efficiency actions related to the saving of water, energy, and materials than firms in the innovative stage which are expected to be implementing actions associated with the design of sustainable product. Surprisingly, our findings also suggest that firms in the conservative stage perform more resource efficiency actions than firms in the innovative one. Various actions are applied by firms in different stages among member states that share similar economic conditions. Moreover, support mechanisms are also considered in this study. The findings allow us to contribute by expanding how the resource efficiency field is conceived in the terms of firm-specific characteristics, their needs and limitations while providing insights and recommendations for researchers and policymakers to accelerate the transition to a sustainable society.

Circular economy configuration indicators in organizational life cycle theory

Abstract Circular economy is a rapidly evolving economic system designed to benefit society, business and environment. However, the current circular economy policies and resulting business models are more or less universal, meaning they largely neglect the organisational specifics. Therefore, research that seeks to enhance the circular economy mindset and, at the same time, the innovativeness of firms needs to include more analyses of firm-specific characteristics and issues with a view to more quickly making the modern sustainable reality. As a response, the current study contributes to a better understanding of the role of circular economy practices at different stages of the firms’ evolution. Using crisp-set qualitative comparative analysis we upgrade the organisational life cycle theory by developing 13 circular economy configuration indicators, 10 for the innovative (In1-In10) and 3 for the conservative (Co1-Co3) stage of the organisational life cycle. The various circular economy practices and (non–) financial mechanisms at work throughout the organisational life cycle reveal that a holistic approach to examining the field should be a priority.

Factors Affecting Organizational Life Cycle and Faculty Performance in Higher Educational Institutes in NCR

The practice of learning is considered to be important for an institution to survive or stay competitive when we are in the domain of business and management. Organizational life cycle (OLC) theory, during an institution’s growth from the beginning, to high growth leading to maturity, the institution’s characteristics starts to differ and the internal resources and capabilities of an organization develop over a while. Several scholars have already had discussions about faculty performance in such an institution. Though, few of them talked over the issue in an educational context. The purpose of this paper is to contribute to the limited number of researches on the relationship between organizational life cycle & faculty performance in a higher educational institute, by going through the impact of faculty participation in the performance of a private university in Delhi NCR. Organizational life cycle literature has discussed the dynamics, but there is very less knowledge about its relations with institution learning. This study’s findings indicated that faculty performance is positively partial by employee’s contribution in decision making and it significantly associates with academic results of the university. Additionally, employee participation is also positively linked with the academic grades of the university.

The Organizational Life Cycle: Review and Future Agenda

<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>

When firms mature: keeping the ho-hum at bay and embracing change

PurposeThis paper aims to offer a research-based assessment of why mature firms in mature industries may struggle to survive. The basic issues explored are major hurdles to the dynamic path that the contingency theory would predict.Design/methodology/approachBy examining dozens of studies through the lens of organizational and industry life cycle theory, the authors investigate how organizational maturity itself thwarts better choices.FindingsEnvironmental shifts in the marketplace, rigid policies, lengthy procedures and internally focused politics often hinder change.Research limitations/implicationsLimited to examining the work of others, this paper, nevertheless, offers an approach to using the life cycle theory for new insights.Practical implicationsThe results provide practitioners with a roadmap. The authors advise them to prepare early for the maturity stage, possibly bring in external talent, evaluate potential mergers or partnerships and consider building the R&D budget.Social implicationsFirm failure brings dislocation to a wide array of stakeholders. This paper emphasizes viable growth strategies, given the constraints firms face in maturity.Originality/valueThis paper deals with survival, integrating both environmental and organizational obstacles. This unique approach offers practitioners a synthesized view of the challenges they face in a mature stage and simultaneously suggests methods for change.

What Can We Learn from the Organizational Life Cycle Theory? A Conceptualization for the Practice of Workplace Learning

<p>In the world of business and management, the practice of workplace learning is deemed important for firms to survive or stay competitive. However, firm characteristics such as business priorities, management styles, and limited internal resources and capabilities are always organizational factors that affect how firms may practice workplace learning. According to organizational life cycle (OLC) theory, during the firm’s growth from inception, to high-growth, to maturity, firm characteristics differ and the internal resources and capabilities of the firm develop. The literature has discussed the dynamics of organizational life cycle, but little is knownabout how it possibly relates to workplace learning. The paper synthesises the OLC literature and draws the characteristics of three common stages for firms (large or small) to conceptualize different patterns of workplace learning practices, promoting a new page of empirical research potential.</p>

Application of organizational life cycle theory for port reform initiatives in Taiwan

Global container port authorities worldwide are competing increasingly to improve the throughput of containers, and to enhance performance improvement, which has resulted in port reform since the 1980s to gain a competitive advantage. Because port reforms in various countries have unique motivations, incentives, and goals, no consensus has been reached regarding the relationship between port governance and related performance. Therefore, various port authorities may adopt diverse models according to their respective operating conditions and constraints. To avoid the indecisive argument of effectiveness when conducting port reform, it may be sound practice to conduct situational analysis by introducing organizational life cycle theory to present the negative factors of a “declining” organization that must urgently be reconstructed and introduced to new revitalization measures. The port reform case in Taiwan demonstrates that organizational life cycle analysis can be employed as an alternative approach to gaining a thorough understanding of the importance of this reform in relation to port personnel.

The Difficulties of Youth: America's Railroads and Organizational Life-Cycles 1875-1895

This paper examines managerial behaviour and firm success among America’s late nineteenth century railroads through the lens of organizational life-cycle theory. Whereas organizational life-cycle t...

Narrative as an organizing process: identity and story in a new nonprofit

PurposeThe purpose of this paper is to explore narratives in a new nonprofit arts center. It includes the macro‐, meso‐, and personal narratives that keep the center organized in the midst of the chaotic everyday activities. It advocates the explanatory force of narrative as an alternative to organizational life cycle theory for understanding organizational startups.Design/methodology/approachThis narrative ethnography involved participant observation, full participation, and narrative interviews over a three‐year period. Using grounded theory, narratives were examined to discover how they engendered and maintained order.FindingsThis paper contributes to the understanding narratives as a constitutional organizing and sensemaking process, including the narratives of “do it yourself,” and economic production, family and home, and personal narratives that constitute community, community boundaries, and identity, adding to our knowledge of organizing.Research limitations/implicationsThe research examined only one local nonprofit arts center, therefore the findings are specific to this site and the same types of narratives may not necessarily be found in other nonprofits.Originality/valueThis paper examines a nonprofit during start‐up. It validates support for the examination of organizations through narrative ethnography and narrative interviewing. It purports that narratives constitute social identity, rather than being the evidence of social identity.

Organizational lifecycle in a school of nursing.

This article is a historical case study of the organizational lifecycle of the DePauw University School of Nursing in Greencastle, Indiana. Few studies have examined schools of nursing over their entire lifecycles. The school was created in 1954, existed for 40 years, and closed in 1994. Organizational lifecycle theory posits that organizations undergo four stages: creation, transformation, decline, and closing or death. We used this theory to guide our study, which was based on data from interviews, archival documents, and institutional records. We found that factors associated with the creation of this organization had long-lasting effects, the external environment profoundly influenced the school, and that a shift in shared values and institutional linkages contributed to its closure. As society's need and demand for nurses increases, the continuance of schools of nursing and reasons for their demise merits the attention of faculty and administrators.

Re-Visioning Leadership in Community Colleges

The authors apply discourse analysis to the images of leadership found in the literature about community and junior colleges, in the context of organizational life cycle theory. They found: (1) the discourse of community college organizational development reinforces the ideology of a specific small group of male writers and (2) the effect of such writing systematically promotes an image of leaders as “commanders,” excluding those who do not fit that image. This favored image, they conclude, is inappropriate for community colleges at the renewal stage of organizational development.

An upper Echelons perspective on transformational leadership problems in high technology firms

The progression from an entrepreneurial to a professionally managed firm often produces the situation where the company outgrows the founder CEO. This “executive limit scenario” is theoretically developed by integrating organizational life cycle theory, and Hambrick and Mason's Upper Echelon's Model. Preliminary findings from interviews with twenty-five high technology firms' CEOs indicate that the executive limit results because the qualities of the initial entrepreneur are often not the same qualities which are optimal in later stages of the company's development.