Organizational Life Cycle is a fundamental concept that defines specific characteristics of any organization at various points in their evolution which suggests that organizations are born, grow older and eventually die. In 1950 Kenneth Boulding first suggested the concept of organizational life cycles. Since that time, discussion of the organizational life cycle have taken place within many disciplines, including management, public administration, education, sociology, psychology and marketing. (Gh. Ionescu, 2007).
Organizational characteristics continue to change over life-cycle stages to counter the chaos of continual environmental adjustment. Thus, organizational regulatory systems might demand to change across the life cycle to fit the changes needed in the competitive environment. Therefore, it is a challenge to management accountant to supply relevant, accurate and timely information adaptable to varying management needs across life cycle stages (Auzair, 2010).Different literature suggest different stages of organizational life- cycle.
Downs has conceptualize the model of organizational life cycle as the motivation for growth in which he has focused on the life cycles of government bureaus. He suggests that three main stages of growth and development are experienced by these organizations (Cameron, 1983). The starting stage is struggle for autonomy, which occurs before official emergence or just after. It is the attempt to obtain legitimacy and required resources from environment to attain a “survival threshold.” The second one is rapid growth which includes speedy expansion and emphasises on innovation and originality. And the final is, deceleration, which focus on expansion and initiation on formal system of rules and procedures and emphasize on anticipation and coordination. In the same way Greiner expresses the model as Problems Leading to Evolution and revolution where organizational life cycle moves from stages emphasizing creativity and entrepreneurship to formalization and then adaptability and flexibility (Cameron, 1983).
Though there are different models of development of organizational life cycle (Cameron, 1983) has suggested an integration of all nine models that they reviewed as one summary model. Although these nine models are based on different organizational phenomena (e.g., structure, individual mentalities, functional problems), it is noteworthy that all nine suggest progress through similar life cycle stages.
Each model contains an entrepreneurial stage (early innovation, niche formation, creativity), a collectivity stage (high cohesion, commitment), a formalization and control stage (stability and institution-alization), and a structure elaboration and adaptation stage (domain expansion and decentralization).Organizational characteristics during life cycle The following table represents some characteristics of organizations at each of three life – cycle stages. For example, as an organization when moves from inception to maturity, it tends to transfer from a lacking formal structure, to formal centralization, to formal decentralization. During these three different phases, its top managers are at first generalists, then specialists and planners. Decision making method shift from individual judgement to professional management through bargaining. The communication system begin with informal and finally became very formal.