BETWEEN A ROCK AND A HARD PLACE - ORGANIZATIONAL-CHANGE AND PERFORMANCE UNDER CONDITIONS OF FUNDAMENTAL ENVIRONMENTAL TRANSFORMATION

This paper examines the proposition that change is detrimental to organizational performance and survival chances. I propose that organizational change may benefit organizational performance and survival chances if it occurs in response to dramatic restructuring of environmental conditions and if it builds on established routines and competences. These propositions are tested on the savings and loan industry in California, which has experienced technological, economic, and regulatory shifts that have forced savings and loan associations to change or die. Findings indicate that most changes enhance financial performance, one is harmful to performance, and three diminish failure rates. These results support the model developed here and suggest that the question of whether change is hazardous should be replaced by the questions of under what conditions change may be hazardous or helpful and whether the direction of change affects its impact on performance and survival.