An Exploration of the Relationship Between Loss of Legitimacy and the Sudden Death of Organizations

Organizational death is probably the least studied of any growth or decline process within organizations. Of the limited research that exists, little attention has focused on the impact that loss of legitimacy has as an antecedent to organizational death, particularly when an organization’s death is unanticipated and sudden, resulting from a major shift in previous organizational trends. Using an illustrative case study approach, this article develops propositions used to analyze the relationship between loss of legitimacy and the sudden death of three American organizations. Implications of this research for theory and practice, including relationships with the emerging field of organizational wisdom, limitations of the study, and directions for future research are also presented.