The Organizational Lifecycle Effects of Age and Size Abstract

TheOrganizational Lifecycle: Effects of Age and Size


The organizational lifecycle often captures the movement of a companyover a period as it makes various changes in its growth. Inparticular, the size and age are instrumental factors that determinehow the management will handle certain issues. This essay willevaluate how the two factors help the firm in looking at variouscircumstances in order to survive and get a competitive advantage.For instance, the younger organizations will adopt the simplestructures since they want to use their fewer resources efficiently.On the other hand, the centralization of the decision-making processtends to be more common as the company begins but, over the years,the management will allocate the powers to the various departments.Besides that, the smaller firms will erase division of labor, and thefew employees might undertake multiple responsibilities at a time.The same case will apply to the formalization process since themature companies will have a set of rules and procedures that willgovern the organization while a younger one will lack such aspects.The growth of the firm will also lead to the creation of variousdepartments that helps in handling specific functions too. Often, thesize and age also end up acting as a moderator in the learning aswell as the innovation procedures in the company. Lastly, thecentralization of authority is determined by the size of anorganization since an older one will delegate the powers to eachdepartment instead.

The Organizational Lifecycle: Effects of Age and Size

The organizational lifecycle often begins when a company is small insize but, it will strive to increase in size as the year goes by.More importantly, the lifecycle relies on various factors that revealhow the company works in developing itself and create its competitiveedge in the industry. The size and age are some of the crucialaspects that determine how the organization lifecycle occurs. Forinstance, the companies often begin as small ones and later expandphysically as they gain more employees, resources, and capital too.In this case, the size and the age have also influenced other factorsthat are implemented to reveal the specific phase of the company inthe organizational lifecycle. In particular, the two factorsdetermine the structure uses since a younger firm will use a simpleone that will evolve to a complex design as the years passes by.Apart from that, the decision-making process also relies on the sizeand age of a company since they are facilitated by the number of theemployees. As the time passes by, the firm often creates ways tosurvive and defeat the other competitors and having a chance tocontrol the industry too. The approach also helps them in masteringthe way to handle problems since time exposes the management tomultiple challenges that they are able to solve. In the process, theincrease in the size will make them change their priorities fromsurvival to stability. The gain of momentum is the crucial conceptthat facilitates the movement from the infancy to maturity over aperiod. All in all, the two factors help in guiding the firm as itmoves from one to another stage in its development. Morespecifically, this paper proves that size and age influence thevarious functions such as structure, the division of labor,formalization as well as the centralization of decision-makingprocess that depend on the particular organizational lifecycles.

The organizational lifecycle tends to influence the operations of afirm and ensure that it functions depending on its capability. Inmost cases, the size and the age of a firm also determine how theorganizational lifecycle runs. For instance, a company at the infancystage will not portray features similar to the one that has reachedthe maturity phase. In this case, the size and age is a critical partof the lifecycle since it determines the structure of theorganization and the decision-making process too. More importantly,the size and age will also influence some specific aspects of thefirm and make sure that they match with the capability of theparticular organization too (Hui et al., 2013). In fact, the earlystages of the lifecycle help a company in experimenting on thespecific decisions and certain plans that might work. All in all, theplans and the choices that the company makes should prioritize theaccuracy and the need to find a market niche. A smaller organizationwill not make some complex operations because of the few funds andthe human resource. Some of the firms might believe it is still riskyto invest a huge amount of money in the operations since they want toassess the market first. As the company grows, it will keep makingsome risky ventures since they have understood how the industry worksand the appropriate way to have an impact too (Hui et al., 2013). Theadvanced stages of the lifecycle will have other challenges that willalso call for some immediate and extensive planning that will helpthe company succeed in the end. Hence, it is evident that a youngerfirm will have fewer activities to undertake as opposed to a largerand an older company that wants to have a competitive advantage overthe other ones in the industry.

A smaller firm will most likely have a simple structure while thedecision will be highly centralized too. It will be strange to find asmaller company starting with a larger structure that has othermultiple departments. In most cases, the fewer funds will make thefirms to focus on simple structures. It is hard to find a smallercompany that will create some complex structures that will be waybeyond its capability instead. For instance, the same scenario alsoshows the number of resources at its disposal. A smaller organizationwill have fewer resources, and that will force the management to makesome rational decisions that also apply to its ability. However, alarger firm will have more resources, and it might create somecomplex structures that will also align with the number of decisionsand the goals that they make (Dibrell et al. 2011). Hence, the sizeof a firm is an important part of the management since it will alsodetermine the lifecycle phase that it has reached. More importantly,a firm will begin a smaller company, and it will expand as it goesway up the hierarchy. As the years passes by, the organization willalso have an advanced age that will identify the way that itoperates. It will be risky for a small firm to create a complexstructure since it will undermine its values and the need to be abetter company. Instead, the organization should simply take one stepat a time and understand how the industry works before investing alot of cash in the market.

A company that has reached its maturity phase will most likely haveless centralization of decisions. In particular, a smaller firm willhave few issues to deal with, and that means that one person mighthelp in making the decisions required. In this case, an employee in ayounger company might be forced to make multiple decisions that areway beyond his or her abilities. Instead, the particularcircumstances will call for immediate decisions, and the only personavailable will be responsible for the choices. One employee in asmaller firm might make decisions related to the marketing,distribution and the purchase of the raw materials as well (Demps etal., 2012). In fact, one can make all those decisions efficientlysince they are dealing with a few issues and the organization isstill in the infancy phase. However, as a firm grows, it will bedifficult for only one manager to make the decisions that will guideits operations. A company in the maturity phase will have somecomplex operations that need multiple people to participate in thedecision-making. For instance, the complex activities will lead tothe organization having multiple divisions that deal with differentissues such as the supply, production, marketing and human resource(Demps et al., 2012). On the other hand, it will be much difficultfor a single person to deal with all the decisions that will guidethe operations of the government. It will lead to thedecentralization of the decision-making process to ensure that thedepartments analyze an issue critically before reaching the answers.In summary, the entire scenario shows how the size and the age of afirm are critical in determining its particular lifecycle phase. Moreyears and a larger size mean that the firm will be able to allocateits decision-making responsibilities among the multiple differentdepartments.

The division of the labor is also a critical part in determining thesize and the age of a company too. In particular, a firm that is inthe infancy phase will have less division of labor since theemployees will be expected to have general skills. In this case, amanager might have the capability to act as an accountant and themarketer. In fact, the early stages of an organization’s life cycledo not entail a wide range of complex activities. Hence, it might beacceptable if one employee possesses the general skills to commitvarious activities at a time. However, it is more important that alarger firm has a higher specialization of duties to facilitate thecoordination of the operations (Roca-Puig et al., 2011). In thiscase, a huge company that has reached the maturity stage should havedifferentiated its roles and responsibilities depending on the numberof departments they have. In most cases, if an organization placesroles in the wrong, it is more likely that the management willexperience frequent conflicts since the miscommunication will eveninterfere with the decision-making process (Daft, 2015). Hence, thehuge size of a company will result in more complex roles and the needfor higher division of labor. The approach will facilitate thecoordination of the activities and increase the chances of theorganization achieving its goals much easier than expected.Unfortunately, if an employee tries to generalize certain skills on afirm that has reached its advanced stages, the management will haveto experience some severe consequences. For instance, theorganization might report some huge losses since they will end upmaking huge mistakes that will cost the firm some money too. Insummary, it is clear that the size and the age of a specific companywill influence the division of labor as well as the specialization ofthe skills too.

The size and the age of a firm also influence the formality and theparticular lifecycle phase as well. More importantly, the size of anorganization determines the number of people in an organization andthe role that they will play. For instance, a small company will havea one or two rules since it will have insufficient activities andfewer employees too. Hence, some of the few rules might includearriving at the workplace early enough and prioritizing accuracy andthe customer satisfaction. With such rules, a small firm can run itsoperations and achieve huge milestones. However, as an organizationgrows and it becomes bigger, it will be more difficult to run itsoperations with less formality. For instance, it might be tough anddemanding to control a group of employees in a large company, and itwill need the administration to create a list of rules that willgovern the entire organization (Coad et al., 2013). In most cases,the maturity phase of the lifecycle comes with more complexactivities and departments too. In this case, the management willneed to create a number of manuals that will guide and govern theemployees. Most of the employees might be reluctant to arrive in theworkplace on time or even respect certain work ethics. Hence, therules and procedures will enforce certain guidelines and reveal theconsequences that the people will experience if they fail to respectthem. The approach will be an appropriate way of restoring order inthe organization since it might seem cumbersome to control the hugenumber of employees without a set or written rules (Coad et al.,2013). In fact, it also aligns with the assumption that the size andthe age of a company will influence its specific phase in thelifecycle.

The size and the age of a company are also crucial in deciding theamount of the internal systems that control the decisions and anyother choice that the management makes. From the start point, theorganization will have a few people working, and it will be involvedin fewer activities. Hence, it is less likely that the firm will havea number of internal systems that dictate how it undertakes itsactivities. However, the same case will not apply to an older andlarger organization in its maturity phase of the lifecycle. Morespecifically, the larger companies tend to have a lot of operationsgoing on, and it will be stressful to let the activities go onwithout a plan or the internal systems that will control them. Forinstance, the larger organizations have to initiate control systemssuch as the budgets and the performance reports that reveal howoperations should be done (Kotha et al., 2011). The budget remains tobe one of the important parts of the firm since it reveals the amountof money that will be placed on various activities that themanagement is undertaking. It specifies the time that the managementwill take in implementing a certain plan or even the total amountneeded to do that. The performance reports remain as the key aspectsthat motivate the employees to execute their activities as expected.Besides that, the older and the larger firms also require theextensive planning of the roles that the personnel will undertake andthe financial goals as well (Daft, 2015). In this case, theperformance goals remain one of the important aspects of thedevelopment of an organization since they guide the entire humanresource in understanding what they should achieve. It also provesthat a larger and older firm is more complex and need extensiveplanning in order to succeed and reduce the losses too.

Besides that, the firm’s age also acts as the moderator in therelationship between the organization’s performance, learning, andinnovation too. In the lifecycle of a firm, the performance,innovation and learning processes tend to be inevitable. However,they are undertaken based on certain limits to avoid losses or someother irrational decisions. For instance, a smaller company that isstill in the infancy stage will make careful and rational decisionsknowing that it does not need a lot of activities going on (Daft,2015). In fact, they will undertake the innovation and learningactivities based on the few available resources to ensure that theyare on the right path. In some cases, the starting firms will focuson the administrative innovation to ensure that they survive in theindustry and they are able to make some rational decisions too. Onthe other hand, the learning process will reveal how the organizationmakes some important moves that will help them understand theindustry and identify any loophole that they might use to get amarket niche (Behaghel et al., 2014). However, the larger companiestend to consider some intense learning, performance, and innovationthat will nurture a competitive advantage. The maturity phase of thelifecycle is characterized by intense competition since most of theorganizations understand the industry clearly. As a result, a largerfirm will combine the administrative and the technical innovationsince it wants to have a breakthrough and defeat any other competingcompanies. In this case, the companies will also focus on themanagement commitment, experimentation as well as the knowledgeintegration in undertaking the organizational learning. The learningprocess, as well as the performance, remains to be the importantparts that guide the organization towards the goals it has. The sizeand the age of the specific firm remain as the moderators of theentire activities too.

The size and the age of an organization play a role in thecentralization of authority in ensuring that it is managedeffectively. In most cases, a firm cannot run without a properauthority that governs every operation. Without a proper authority,it is clear that an organization will have problems with itsprocedures and it might report a huge amount of losses as a result.However, the centralization of the authority also relies on the sizeand the age of the firm. For instance, a small firm that is stillgrowing will often have a centralized authority where the CEOcoordinates most of the operations and the decisions that themanagement makes (Dibrell et al., 2011). In this case, the CEO willbe able to look at the marketing, production, employee performance aswell as the financial operations too. Clearly, the CEO will be closerto the employees, and they might interact on a daily basis as theymake critical decisions to guide the firm towards getting moreprofits. On the other hand, a large and an older firm tend to havedecentralized authority since it is hard for one person to govern theentire organization. Instead, the CEO is supposed to delegate theduties to the various departments that are in charge of the differentoperations that the organization offers. It will be more efficient ifthe departmental managers make the critical decisions since they arefamiliar with the specific procedures and how they will affect thefirm in the long-run (Kotha et al., 2011). More importantly, oneperson governing the entire organization often results in mistakesand losses since he or she might lack the specific knowledge of howcertain things in the different departments work. It also revealsthat the size and age of a company is a crucial aspect thatdetermines the specific phase in the lifecycle.

The combination of all those factors also proves that the size andthe age are still significant in determining the particular phase ofthe organizational lifecycle. In this case, a firm expands as theyears go by, and the growth also arises from multiple issues in theindustry. For instance, the infancy phase will often have a simplestructure and an organization that does not have multiple activitiesgoing on. However, as the company develops, it gains momentum and hasstarted identifying any loopholes that it might exploit to itsadvantage. In the process, the group gains various ways of survivaland it also avoids any losses that might arise later. Evidently, theage and the size of a firm dictate the type and extent of decisionsit makes. As a company grows, it is more likely that it will have themastery to make individual decisions (Kotha et al., 2011). Moreover,the organization will gain enough experience on how they will proceedin different situations. Hence, they will avoid certain decisions orthe circumstances that will undermine their chances of succeeding inthe end. A company that is in the mature stage will most certainlyfocus on stability and not survival that is common in the infancystage. The management will also seek other ways to expandintellectually and to increase the technical innovation to make surethat they have a competitive advantage too.

In conclusion, the size and age of a company identify how it willsurvive in the different organizational lifecycle’s phases. Moreimportantly, the key aspect controlling the firms includes the amountof funds and other resources at its disposal at a particular stage.For instance, a smaller company will start with a simple structurethat can be able to undertake the production, supplies and the salestoo. However, more years in the industry will increase its size thatwill make its structure more complex instead. The high centralizationof the decision-making process tends to be more common as the firmbegins but, later, the management will allocate the responsibilitiesto the various created departments in the organization. The variousactivities prove that size and age remain as the two critical aspectsof the development of an organization. Besides that, the division oflabor tends to be lower in a younger firm and one person canundertake multiple responsibilities while an older firm will have todivide the roles to different qualified employees to facilitate theefficiency. On the other hand, the formalization is also criticalyet, it differs depending on the specific phase of the organizationin the lifecycle as well. For instance, a younger firm will not needa set of complex rules but, an older and larger organization willneed procedures and manuals that reveal how certain things are doneand the consequences that arise if one violates them.


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