• Summary
  • Contents
  • Subject index

In this book, Lex Donaldson, one of the leading scholars in the field of organization theory, introduces a compelling theory of performance-driven organizational change, Organizational Portfolio Theory. In explaining why organizations change and also why they fail to change, the theory reconceptualizes the organization as a portfolio with a number of different causes of organizational performance varying over time. The author argues that without a performance crisis there is a good chance that necessary organizational changes will not be forthcoming, and that moreover, the adaptive change induced by the crisis creates the capacity for fresh organizational growth.

Divisional Risk
Divisional risk

In this chapter, we take further the analysis of the divisions that make up the corporation. Again, we are interested in their performances, their consequent propensity to make needed adaptive changes, and their resulting degree of organizational adaptation. Once more, we use the new perspective of the organization as a portfolio. We commence our discussion by developing the concepts of systematic risk and unsystematic risk as applied within an organization. Then we turn to a consideration of differences between divisions in their positions in their industries.

In previous chapters, we argued that a low-risk corporation tends eventually to become suboptimal in its performance. In this chapter, we argue that a low-risk division tends to becomes suboptimal in its performance. Thus once again, the ...

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