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A longitudinal study of the corporate life cycle

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Kathleen Ceulemans

on 24 March 2014

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Transcript of A longitudinal study of the corporate life cycle

A longitudinal study of the corporate life cycle
A longitudinal study of the corporate life cycle
Danny Miller & Peter H. Friesen
Ecole des Hautes Etudes Commerciales & Faculty of Management, McGill University, Montreal, Quebec, Canada
830 cited on Google Scholars
Management Science, Vol.30, No.10, October 1984
A longitudinal study of the corporate life cycle
1. Unorthodox data:
Qualitative data via magazines and books

2. A reanalysis:
Reaction by other authors: statistical reassessment

3. The Sequence:
Do companies really go through each phase in an order?

Critical Assessment
Birth phase
Growth phase
Maturity phase
Revival phase
Decline phase
Summary of the publication
H1: over the initial four life cycle phases, the situation of the firm changes so as to increase the complexity of its administrative task.

H2: these situational challenges must be met by an increasingly sophisticated and complex organizational structure, information processing apparatus, and decision-making style.

H3: organizations alternate between innovative phases and conservative ones – between phases that renew or establish organizational competences (birth, growth and revival), and those that exploit them through efficiencies (maturity and decline).
Data used: based upon books, corporate annual reportes, articles from Fortune and other magazines

- Selected firms have already undergone several phases
- Younger firms might show different paths
- Only large and well-known companies
- Length of analyzed period differs

Potential data distortion
- Historian might inaccurately report the events
- The authors might inaccurately interpret the report
1. Unorthodox data
When looking at the organization life cycle theory, how do you think you could apply the different theories of contingency, resource dependency, institutional and so on?

Question 1
Birth phase
Drazin & Kazanjian (1990): A reanalysis of Miller and Friesen's life cycle data.

Extension of the model:
- Question the amount of phases: 5 – 4 – 3
- What to do with companies who do not evolve through phases?
- Use of a statistical technique to test the progression hypothesis (the sequence)

- Support of the progression hypothesis depends on the importance of firms which stay in the same phase (high: sequential, low: tendency rather than imperative)
- More support for 4-3 phases in the model
2. A reanalysis
Christensen & Poulfelt (2006): Managing Complexity and Change in SMEs: Frontiers in European Research. ISBN-13: 978-1845429089.

Shortcomings of the biologic model:
Edith Penrose (1952): ‘We have no reason what so ever for thinking that the growth pattern of a biological organism is willed by the organism itself. On the other hand, we have reason for thinking that growth of a venture is willed by those who make the decisions’ (Penrose, 1952, P.808).
Tornatzky et al. (1983, p.19) questions the stages by saying that these models are an intellectual tool to simplify the complexity of the processes, but which says very little about the underlying patterns of decisions and actions.
Melin (1992): ‘stage models fundamentally disregard individual differences ‘

Growth phase
Maturity phase
Revival phase
Decline phase
Findings / Conclusion
Organization’s situation becomes more complex during first 4 phases
Firm size grows
Influence owner & shareholders declines
More customer oriented
Heterogeneity & hostility increases
Analysis, multiplexity& integration rises

Alternation between innovative & conservative phases

3. The Sequence (1)
3. The Sequence (2)

1. Summary of the publication
5 phases

2. Critical assesment
Unorthodox data
A reanalysis
The Sequence

3. Discussion
Critical Assessment
Summary of the publication
What could be the possible relation between the formation of networking strategies and the corporate life cycle?
Question 2
Question 3
What is the effect of technical evolutions on the corporate life cycle?
The End
Thank you for your attention !

Drazin, R. and Kazanjian, R. K. (1990), A reanalysis of miller and friesen's life cycle data. Strat. Mgmt. J., 11: 319–325. doi: 10.1002/smj.4250110407

Christensen, Poul and Poulfelt, Flemming. 2006. Managing Complexity and Change in SMEs: Frontiers in European Research. s.l. : Edward Elgar Publishing Ltd, 2006. p. 288. ISBN-13: 978-1845429089.

Levie, Jonathan. 2008. From “Stages” of Business Growth to a Dynamic States Model of Entrepreneurial Growth and Change. University of Strathclyde. [Online] August 2008. https://www.strath.ac.uk/media/departments/huntercentre/research/workingpapers/media_146530_en.pdf.
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