Organizational decline and turbulence: Their relationships with environmental conditions, organizational culture, decision-making, strategy, and effectiveness in institutions of higher education.

Abstract

This study addresses two major questions: (1) Do organizational decline and turbulence in key resources relate to organizational culture, decision making, strategic orientations, domain selections, and effectiveness? and (2) Do organizational decision making processes and strategy moderate the relationships between organizational decline and turbulence and organizational effectiveness? Organizational decline (defined as an objective and absolute loss in resources critical to organizational functioning over a certain period of time) and turbulence (defined as fluctuation in the flow of critical resources over a certain period) were viewed as two distinctive, fundamental sources of uncertainty experienced by organizations. This study examined five areas of organizational phenomena: three environmental conditions (competitiveness, resourcelessness, and unpredictability), four types of culture (clan, adhocracy, hierarchy, and market), two aspects of strategy (strategic orientation and domain selection), three types of decision making processes, and nine aspects of effectiveness. Data collected from 331 institutions of higher education was used. Results indicated that organizational decline and turbulence were related to environmental hostility. Two types of culture--adhocracy and hierarchy--were found to be related to both decline and turbulence. On the other h and , few decision making, strategy, and effectiveness dimension variables were directly related to decline and turbulence regardless of the types of measures used. However, significant interaction effects existed between decision making processes/strategy and decline/turbulence on most of the effectiveness dimensions. This suggests that decline or turbulence in key resources has a significant impact on organizational effectiveness, depending on how managers make decisions, and what types of strategic orientation and domain selection the organization adopted.