As people do, organizations face with crises in the process of growth and decline. If organizations manage the crises successfully, they will grow continuously. Yet; if they do ‘'not, they will disappear. According to the existing literature, 53 per...
As people do, organizations face with crises in the process of growth and decline. If organizations manage the crises successfully, they will grow continuously. Yet; if they do ‘'not, they will disappear. According to the existing literature, 53 percent of newly born corporations tend to die in two years, and even 50-year old business organizations and public organizations represent only 2 percent and 4 percent of a11 organizations that were born in the same years. Thus, studying death and decline of organizations as well as studying birth and growth is meaningful and interesting. In addition, understanding how organizations manage successfully their crises is very necessary and important.
However, there exist few systematic studies of organizational decline and death so far.
Further, there exist very few empirical studies of managing organizational crises. Therefore, this study, first, aims at designing a model of organizations’'crisis management based on existing literature on organizational decline, change, and death. Second, this study aims at investigating empirically antecedents, symptoms, managerial strategies, and outcomes of organizational crisis through an in -depth case study.
The empirical case study revealed the following phenomena about the management of organizational crisis: Because of change in both internal and external environments, H Corporation faced with organizational crisis. In earlier years, this corporation tended to try to overcome the crisis by pursuing a first -order change within the past managerial frame. In this stage, past successes were one of the major obstacles: managers tended to overcome the crisis by applying the style of management that was effective before con-fronting the crisis, although environments surrounding the corporation had been rapidly changed. Such trial, hence, resulted in the failure of overcoming the crisis.
In later years, the corporation changed the past frame of management itself and pursued a second -order change. This change included change in top executives, major higher-level managers, organizational strategies, and so on. With these changes, lower-level members of the corporation organized committee to overcome the crisis and to get back to normal operations. This resulted in the recovery and rebirth of the corporation.
This study designed a model of analyzing organizational crises. This model will provide a frame of reference for future studies of organizational crises. In addition, the research methodology in this study wilI let future researchers reconsider the way. of analyzing organizational crises, declines, and rebirth or death. The findings from this study, further, will offer various implications for practioners to manage effectively organizations that have already faced or will face with crises and declines.