Organizational Effects of Decline and Turbulence

Abstract

Financial support for this study was provided by the National Institute of Education and by the Graduate School of Business Administration and the Center for the Study of Higher and Postsecondary Education at the University of Michigan. This study clarifies the meaning and conceptual domain of organizational decline by delimiting it operationally from the related constructs of turbulence, stagnation, and environmental decline. We investigated organizational attributes commonly associated in the literature with organizational decline and turbulence. These attributes, including increased conflict, turnover, resistance to change, centralization, scapegoating of leaders, and so on, were investigated in 334 institutions of higher education, along with objective measures of their patterns of decline and turbulence over a six-year period. Results suggest that organizational attributes (e.g., centralization) associated with the actions of top managers are significantly affected by turbulence but not by decline. Organizational attributes (e.g., scapegoating) associated with the actions of organization members who are not top managers are significantly affected by decline but not by turbulence. One implication is that different sources of uncertainty may have differential effects on organizations and that loosely coupled structures may not, therefore, always be effective in buffering the technological core from decline-induced uncertainty.'