A Longitudinal Study of the Corporate Life Cycle

Abstract

A review of recent literature on the corporate life cycle disclosed five common stages: birth, growth, maturity, revival, and decline. Theorists predicted that each stage would manifest integral complementarities among variables of environment ("situation"), strategy, structure and decision making methods; that organizational growth and increasing environmental complexity would cause each stage to exhibit certain significant differences from all other stages along these four classes of variables; and that organizations tend to move in a linear progression through the five stages, proceeding sequentially from birth to decline. These contentions were tested by this study. A sample of 161 periods of history from 36 firms were classified into the five life cycle stages using a few attributes deemed central to each. Analyses of variance were performed on 54 variables of strategy, structure, environment and decision making style. The results seemed to support the prevalence of complementarities among variables within each stage and the predicted inter-stage differences. They did not, however, show that organizations went through the stages in the same sequence.organizational life cycle, corporate strategy, evolution of strategy, structure and environment

The decline of large Brazilian companies

“…Notwithstanding, in their majority, these will be consequences of decline and not ex ante factors that would predictably lead to decline. Other authors argue it is related to the retraction of the market and the inability of the company to react to mutations in demand (Miller and Friesen, 1984;Weitzel and Jonsson, 1989;Castrogiovanni, 1991).…”

Using social networks theory as a complementary perspective to the study of organizational change

“…These organizations are probably lee less likely to initiate change, and will be more isolated from other firms (Collins, 1988 Future research might even observe how organizational change may vary concerning the magnitude and scope (Gersick, 1991) of change, or to how fundamental an organizational change is and to what extent the activities, structures, and so forth, post-change differ from those previously established (Watzlawick, Weakland, & Fisch, 1974). Some scholars have distinguished between incremental and radical change to reflect that while incremental change is manifest in small and gradual adjustments, which consist essentially of variations on the same theme (Nadler, Shaw, & Walton, 1995), radical change entails a substantial departure, divergence, revolution (Weick & Quinn, 1999), quantum change (Miller & Friesen, 1984) or transformation (Porras & Silver, 1991). While the radical changes tend to involve the entire organization, often leading to the shattering of the established pattern of behaviors, the incremental changes are small in magnitude, narrow in scope, and do not change the structures of the firm (Gersick, 1991).…”

Internal Control, Life Cycle and Earnings Quality —An Empirical Analysis from Chinese Market

“…The severity of agent problem is different at different stages of firm life cycle, the effect of internal control is varying. Miller and Friesen (1984) state that in the introduction LCS, firm's owner is predominant, and organization structure is informal, the role of internal control at this time is not important [11]. In the growth LCS, sales grow rapidly, plenty of resources are accumulated, and organizational structure is much more formal, managers are predominant.…”