Organisational Identity Dissonance in Organisational Decline and Turnaround

This paper presents a model integrating organisational identity dissonance, organisational decline and organizational turnaround. It specifies three sources of organisational identity dissonance – decline, which is further sub-divided into severity, pace and period; change in organisational identity attributes due to internal or external causes of organisational decline; and identity attributes as cause of decline. Three types of turnaround strategies are possible based on the congruency of turnaround actions with organisational identity - identity congruent, identity conflicting and identity transforming turnaround strategies. The turnaround strategies are contingent on the level and antecedents of dissonance. When decline is caused by identity characteristics, identity conflicting turnaround strategy leading to identity change leads to performance improvement, otherwise it aggravates the dissonance and decline increasing the risk of failure. Identity congruent turnaround strategy is appropriate for decline caused by external events. Identity transforming turnaround strategy is most appropriate when the decline is caused by the combination of internal organisational identity attributes as well as external events. It is also a strategic choice independent of the turnaround context. The paper concludes with the implications for theory and practice and gives directions for future research.