ORGANIZATIONAL DECLINE AND INNOVATION: TURNAROUNDS AND DOWNWARD SPIRALS

TitleORGANIZATIONAL DECLINE AND INNOVATION: TURNAROUNDS AND DOWNWARD SPIRALS
Publication TypeJournal Article
Year of Publication2014
AuthorsMcKinley W., Latham S., Braun M.
JournalAcademy of Management Review
Volume39
Issue1
Pagination88-110
Date PublishedJan
Type of ArticleArticle
ISBN Number0363-7425
Accession NumberWOS:000330712100005
Keywordsattributions, causal, decision-making, firms attempting turnarounds, higher-education, managerial risk, performance downturns, product innovation, risk-return paradox, strategic reorientation, threat-rigidity
Abstract

We consider four scenarios that can unfold when organizations either innovate or respond rigidly to organizational decline. Two of the scenarios are downward spirals that threaten an organization with possible death, and two of the scenarios are turnarounds. These scenarios are important because they can determine the fate of an organization-survival or death. We explore the conditions under which each of these scenarios is likely to emerge, developing original theory and specifying propositions about those conditions. In developing this theoretical framework, we distinguish between flexible and inflexible innovations as factors in turnaround success or failure. Our model extends current theory on organizational decline to highlight the feedback effects of the consequences of decline and to explain the circumstances in which particular feedback effects are likely to occur.

DOI10.5465/amr.2011.0356