Understanding Bankruptcy: How Members of a Bankrupted Bank Construe Organizational Death

Bankruptcies are becoming more and more prevalent, partly as a consequence of business conditions created by the financial crisis characterizing the beginning of the 21st century. Nonetheless, knowledge on the phenomenon of bankruptcy from the point of view of the people who undergo it is scant. Knowledge on how members undergoing bankruptcy construe and make sense of their narrations of organizational death is important because when organizations die, members live on and in their afterlife their past forms and guides their present and future. In this inductive study, we focus on a small and local bank that went bankrupt as a consequence of the large and global crisis. Based on narrative interviews with 20 organizational members' the article offers a model that theorizes bankruptcy as a series of unfolding events that change a work world. Members narrate their immediate experience as a work world deconstruction and their subsequent response as a work world reconstruction. Inherent in every event is a loss and a transformation that members need to accept and go through in order to move forward. Members solve these challenges by comprehending the situation and justifying their response. The article matters for theorists researching the understudied but relevant issue of organizational death and practitioners struggling with the increasing but troubling problems of corporate bankruptcy. At the end of the article, avenues for further research are outlined.