Organizational aging and performance 2.0 : broadening the view

Abstract

This dissertation investigates the relationship between organizational age and performance. Age (usually defined as the time since founding) is broadly recognized as a factor affecting organizational performance and has become a standard variable to include in statistical models of performance. The existing theoretical and empirical work on the topic, however, has fallen short in explaining why age is sometimes positively and other times negatively related to performance in the results of empirical work, even when using the same performance indicator. It is this puzzle of the dual role of age as both a performance-enhancing and hindering factor that motivated this study. The dissertation consists of an introductory chapter and four essays. The introductory chapter presents relevant literature on the age–performance relationship and the two concepts separately. Moreover, it points out the key shortcomings of the existing work that the four essays then aim to address. These shortcomings relate to the incomplete understanding of the factors that underlie the observable age–performance patterns (because it is not age as such, but the processes it represents, such as learning or routine formation, that causes the performance effects) and the tendency to approach age as a solely universal and deterministic force. Regarding views of organizational performance, the last shortcoming is the shortage of studies investigating the development of individual performance dimensions separately but simultaneously. The four essays of the dissertation contribute to filling the gaps in the insufficiently understood areas mentioned above. Three of the essays also provide insights specific to their individual topics, including growth–profitability dynamics, performance consequences of member turnover, and the relationship between survival and success. The most significant contribution of the work as a whole, however, arises from updating the universal deterministic view of aging to one taking a semideterministic approach. The results from the essays support the idea that while there are universal deterministic tendencies related to organizational development with age, such forces are also modified by context-specific factors and potentially also organizational actions. This updated view not only serves a deeper understanding of the age–performance relationship but also makes age a highly potential concept for explaining within-industry or within-population differences in organizational performance.