Dynamics of Organizational Routines in Declining Firms when Compared to their Matched Survivors: In the US Chemical and Allied Products Industry (SIC 2800)

How does organizational decline affect organizational search routines? Do search routines change differently in declining firms than in surviving firms? This dissertation compares the propositions of threat rigidity theory and behavioral theory of the firm to examine if declining firms exhibit rigidity or adaptive behavior in terms of their search routines. It measures search routines by research and development expenditure and by patent counts. It examines the role of the following contingencies: time to bankruptcy, organizational slack and the interaction of organizational slack with time. Results indicate that declining firms in the US chemical and allied products industry exhibit rigidity in their organizational search routines. Interestingly, the time to bankruptcy did not matter. This dissertation shows that declining firms did not change their year to year search routines in the five years preceding bankruptcy. The results also indicate that both declining firms and their matched surviving counterparts increase search in the presence of available slack and potential slack. Both declining firms and surviving firms use available slack and potential slack during the early years of the decline to enhance search. Overall, there are two interesting contributions of this dissertation. First, it questions the dominant wisdom in the literature that organizational decline is associated with continued and accelerated deterioration within firms. Surprisingly, the search routines did not continue deteriorating during the last five years before bankruptcy. Second, organizational search routines are dynamic routines that are supposed to change. However, in this dissertation, these dynamic routines exhibit no change in the five years before bankruptcy. This stimulates further research thought on under what conditions do dynamic routines change and under what conditions do dynamic routines remain stable.Doctor of Philosoph