Strategic Moves and Organizational Survival in Turbulent Environments: The Case of Spanish Banks (1983-1997)

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Strategic Moves and Organizational Survival in Turbulent Environments: The Case of Spanish Banks (1983-1997)

Author Info

Vicente Lorente, José D. () (Departamento de Administración y Economía de la Empresa, Facultad de Economía y Empresa, Universidad de Salamanca)
Zúñiga Vicente, José Ángel () (Departamento de Administración y Economía de la Empresa, Facultad de Economía y Empresa, Universidad de Salamanca)

Abstract

The main purpose of this paper is to examine the effect of 'strategic moves' (or strategic change) on the likelihood of organizational survival in a population of firms which has undergone radical transformations in its environment. To this end, we propose and test two competitive hypotheses which are the result of two other theoretical perspectives about the consequences of strategic change: the adaptation view (classic strategic management and dynamic capabilities) and the ecological approach. While from the former, in general, it is assumed that strategic change has a positive effect on the likelihood of organizational survival, from the ecological approach, it is frequently argued that attempts at reorganization in general and strategic change in particular tend to be associated with an increase in the likelihood of organizational extinction. The sample used to test the two proposed hypotheses is the Spanish bank population over the period 1983-97. The results confirm the positive and significant effect of strategic moves (or strategic change) on the likelihood of organizational survival, in line with the conclusions of the adaptive perspective and other empirical research carried out in different settings. This paper introduces two important methodological innovations: (a) the definition and measurement of 'strategic moves' (or strategic change) by using a new cluster algorithm, the MCLUST; and (b) the control of the non-observable heterogeneity using panel data models for 'probit' regression.

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Paper provided by Interuniversitary Doctorate Program "New Trends on Business Administration", Universities of Valladolid, Burgos and Salamanca (Spain). Programa de Doctorado Interuniversitario "Nuevas Tendencias en Dirección de Empresas", Universidades de Valladolid, Burgos y Salamanca (España). in its series Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". Working Papers "New Trends on Business Administration". with number 2005-05.

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Date of creation: Jun 2005
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Publication status: Published in The Journal of Management Studies, vol. 43, no. 3, 2006, pages 485-519.
Handle: RePEc:ntd:wpaper:2005-05

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