Resetting the Clock: The Dynamics of Organizational Change and Failure

Theorists disagree sharply about the likelihood and consequences of organzational change. This paper suggests that when viewed dynamically, change can be both adaptive and disruptive. Similarily, the same forces that make organizations inert also make them more malleable when viewed over time. These ideads are supported by dynamic models of organizational failure and change estimated on a population of 1,011 Finnish newspaper organizations over 193 years. Organizational changes are found to have two consequences. The first consequence is an immediate increase in the hazard of organizational failure, and the second is an immediate increase in the likelihood of additional changes of the same type. However timing is important. In both cases the immediate effect declines over time. Finally, the effects of change also depend on timing within the organization’s life cycle.