Organizational portfolio theory: performance-driven organizational change

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Authors: L. Donaldson

Publication Year: 2000

Source: http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7287.2000.tb00035.x/abstract

Journal: Contemporary Economic Policy

Volume: 18

Issue: 4

Categories: Organizational Change, Crisis


Abstract

The article outlines some of the main ideas of a new organizational theory: organizational portfolio theory. The literature has empirically established that organizations tend not to make needed adaptive changes until they suffer a crisis of low organizational performance. Organizational portfolio theory takes this idea and constructs a theory of the conditions under which organizational performance becomes low enough for adaptive organizational change to occur. The focus is on the interaction between organizational misfit and the other causes of organizational performance. To model these interactions use is made of the concepts of risk and portfolio.