Two observable aspects of an enterprise are its tangible performance and persistence (longevity). Intuitively, persistence and high performance would correlate closely. Of course, a high performance enterprise with a very specific mission to achieve might be disbanded thereafter. But why do low performance enterprises persist? Identify some examples and explain their survival.

Question

What will be an ideal response?

Answer 1

Considerable inertia builds in typical large enterprises. They have accumulated reserves of resources
that allow them to continue operating despite declining vigour, growth, and even relevance (leading,
in the case of businesses, declining profits). Whether businesses or not-for-profit enterprises, the
emotional commitment of owners and managers makes it hard for them to acknowledge decline. The
prevalence of systematic ‘downsizing’ as a concept allows established enterprises to decline quite
gracefully rather than address fundamental issues. Governments have been known to commit
taxpayers’ money principally to sustain employment, especially in depressed regions, rather than
award contracts to more competitive (lower cost or higher quality) enterprises elsewhere. The UK
has been replete with industries whose incumbents have thereby declined and ultimately folded.
Interestingly, though charities are not exempt from this phenomenon, chapter 13 documents some
that have successfully reinvented themselves.