Date of Award

Spring 2011

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Legal Studies & Business Ethics

First Advisor

Diana C. Robertson

Abstract

Organizational failure is an incomplete process because routines and norms persist through employee careers. Qualitative interviews with former employees from four newspapers and two investment banks, all of which are bankrupt or disbanded, demonstrate ongoing utilization of routines and ongoing compliance to norms despite severed connections to the failed firm. Routines are most likely to persist when they relate to low-volatility processes that do not require maintenance to ensure ongoing accessibility. Characteristics that make norms transferable are also identified. Adherence to aesthetic and pragmatic norms depends on how well they fit into new occupational contexts: uptake varies in proportion to the similarity between the failed firm and the new occupational setting of a failure survivor. Justice-oriented norms are not context-dependent; they persist regardless of post-failure employment outcomes. In fact, justice-oriented norms are found to drive the selection of new occupations as journalists seek normative consistency in their careers and some investment bankers change careers to reclaim a sense of purpose lost in banking. These observations hold whether survivors find employment in incumbent firms, entrepreneurial projects, or as freelancers. As survivors adapt work practices, their efforts constitute a form of inter-organizational innovation that generates organizational heterogeneity within unstable industries. Post-failure continuity provides an important and largely undocumented mechanism for the preservation of organizational attributes and the diversification of organizational form amidst crisis, an adaptive process that reconsiders the normative environment of a business and selectively discards assumptions about how firms ought to be. Survivors of failure often face a dilemma in deciding whether to attempt to re-create an occupational setting similar to the firm that failed or to go a different direction. This work takes up this dilemma, asking what insight business ethics research can provide for those who might wonder about the purpose of their firms. A theory of property is used to articulate a normative argument: firms should fail when they are unable to cover their debts and externalities, and firms should survive when they generate surplus value. The dissertation contributes to organizational theories of evolution, to the study of career trajectories, and to a life-cycle approach to business ethics.