Organizational failure: a critique of recent research and a proposed integrative framework

There is a long‐running debate in the business literature on the causes of organizational failure. On the one hand, classical industrial organization (IO) and organization ecology (OE) scholars have typically assumed a deterministic role of the environment and argued that managers are constrained by exogenous industrial and environmental constraints leaving them with little real strategic choice, and hence managers’ role should be ignored. On the other hand, the organization studies (OS) and organizational psychology (OP) literature takes a more voluntaristic perspective and argues that managers are the principal decision makers of the firm and, consequently, their actions and perceptions are the fundamental cause of organizational failure. This paper addresses the major deficiencies observed in the diverse body of literature covering this field, suggests an integrative framework and identifies the specific theoretical and methodological challenges ahead for researchers seeking to advance knowledge in the field of organizational failure.