A Panel Study of Environmental and Organizational Decline

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How organizations respond to declining resources and opportunities is crucial to understanding the way organizations develop over time. This study examines the interplay between organizational structures, organizational decline, and the strategic response to that decline. It focuses on the types of constraints within the organization itself that precluded certain strategic responses to environmental decline and thus contribute to organizational inertia. Dr. Galaskiewicz addresses specifically the actions of nonprofit organizations located in the Twin Cities of Minneapolis-St. Paul. Nonprofit organizations have faced severe cutbacks in federal support. The goal of this study is to understand why some non-profit organization, in the face of these cutbacks, pursued retrenchment strategies, while other pursued new funding sources, increased prices for current goods and services, or else engaged in public relations campaigns. The hypothesis is that the choice of strategy depends upon the organization's product line, the power structure within the organization, the organization's culture, the availability of slack resources, and the specificity of assets. The study draws on existing surveys of 201 nonprofit organizations, representatives of which were interviewed in 1981 and 1984. It involves a new round of interviews, in order to create a panel survey of these organizations that will permit the analysis of changes over time. A second focus of the study involves the determinants of the level of corporate giving. By interviewing representatives of publicly held business corporations headquartered in the Minneapolis-St. Paul metro area the study will shed light on why, under environmental conditions of tight resources, corporate philanthropy has in fact increased since 1980. Corporations in the Twin Cities are a good case in point since their levels of corporate philanthropy are among the highest in the nation. The hypothesis is that contributions will be greater if an ethic of social responsibility has become part of the corporate culture, and that this should be independent of a firm's market position, executives' ties to local elites, and profitability. This research examines some important and timely problems involving the linkages, in the form of philanthropy, that develop between corporations and nonprofit groups in urban communities. But it uses the specific instances of philanthropy and nonprofit groups to examine broader issues involving organizations more generally. Accordingly, it should produce valuable insights on the processes of organizational decline and rentrenchment.