Explaining by mechanisms: A study of organizational decline and turnaround processes

Abstract

This dissertation argues that when examining organizational processes we can make the fundamental issues related to processuality and how things work more intelligible and understandable by means of examining causal mechanisms driving the processes. In order to defend this argument, the study seeks to explain how organizational decline and turnaround processes work in practice. To accomplish this goal, however, requires us to address essential issues regarding explanation by causal mechanisms in social sciences.

First, this study seeks to define the exact nature of causal mechanisms and, building on the premises of scientific causal realism, present a sound ontological and epistemological foundation for explanation by causal mechanisms. Another essential precondition this study aims to fulfill is the construction of a methodology that enables the examination and theorization of causal mechanisms. As an essential part of the suggested methodology a theoretical framework is formulated. The framework consists of two main parts entities and activities. The first part focuses on identifying stakeholders as entities of mechanisms as well as on developing a model of stakeholders ability to influence organizational survival. The second part describes a preliminary structure and general concepts for examining organizational decline and turnarounds as processes unfolding in time.

In addition of the methodological and theoretical basis, to identify and confirm mechanisms also requires intensive empirical work that intelligibly demonstrates the existence of mechanisms producing the outcomes of interest. Thus, I correspondingly apply the methodology and build the theorization of causal mechanisms on a comparative historical analysis of three organizational decline and turnaround processes from the Finnish pulp and paper industry: Kymi Corporation (1904 1913), Walkiakoski Paper Mill (1920 1934), and United Paper Mills (1963 1979).

Building on the previous theoretical knowledge and the findings of the detailed case analyses and their comparisons, an explanatory scheme of how organizational decline and turnaround processes work is presented. The scheme includes the mechanism for decline and the four other mechanisms (i.e., for general awareness, for explicit action, for retrenchment results, and for recovery results) that cumulatively and interdependently work against that mechanism and finally produce the successful turnaround. The scheme captures most of the previously confusing issues related to a decline and turnaround process. Altogether, the main argument of the thesis is proved to be warranted and the methodology developed is shown to be a systematic and productive way to do so. Regarding our epistemic and ontic assumptions as researchers, the conclusions provide strong support for the proposed realistic approach.

Keywords: Mechanisms, causal explanation, processes, methodology, realism, philosophy, management, organizations, turnaround, decline, stakeholders, history, pulp and paper industry