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   Source : Handbook of Strategy and Management   

Life Cycle Theory

Van de Ven and Poole (1995) observe that many management scholars have adopted the metaphor of organic growth as a heuristic device to explain changes in an organizational entity from its initiation to its termination. Witness, for example, often-used references to the life cycle of organizations, products, and ventures, as well as stages in the development of individual careers, groups, and organizations: startup births, adolescent growth, maturity, and decline or death.

Life cycle theory assumes that change is immanent; that is, the developing entity has within it an underlying form, logic, program, or code that regulates the process of change and moves the entity from a given point of departure toward a subsequent end that is already prefigured in the present state. What lies latent, rudimentary, or homogeneous in the embryo or primitive state becomes progressively more realized, mature, and differentiated. External environmental events and processes can influence how the immanent form expresses itself, but they are always mediated by the immanent logic, rules, or programs that govern development.

The typical progression of events in a life cycle model is a unitary sequence (it follows a single sequence of stages or phases), which is cumulative (characteristics acquired in earlier stages are retained in later stages) and conjunctive (the stages are related such that they derive from a common underlying process). This is because the trajectory to the final end-state is prefigured and requires a specific historical sequence of events. Each of these events contributes a certain piece to the final product, and they must occur in a certain order, because each piece sets the stage for the next. Each stage of development can be seen as a necessary precursor of succeeding stages.

Life cycle theories of organizations often explain development in terms of institutional rules or programs that require developmental activities to progress in a prescribed sequence. For example, a US legislative bill enacting state educational reform cannot be passed until it has been drafted and gone through the necessary House and Senate committees. Other life cycle theories rely on logical or natural properties of organizations. For example, Rogers' (1983) theory posits five stages of innovation - need recognition, research on the problem, development of an idea into useful form, commercialization, and diffusion and adoption. The order among these stages is necessitated both by logic and by the natural order of Western business practices.