The “how” and “why” of firm longevity: A comparative study of corporate objectives

Abstract

We see organizations all around us. They touch our lives every single moment of every single day of our existence on this planet. From the daybreak alarm of an Orpat table?clock to the evening cuppa of Tata Tea to the night’s brushing session with HUL’s Close?up, organizations have entrenched themselves in our lives. But have we ever paused to question what underlies these names that flash past the bottom of our television screens in the NDTV Profit Ticker? What is it that these organizations were created for? What is it that these organizations exist for? What is their identity? What are their objectives? It is our fascination with these very questions that prompted us to take this up as a contemporary concern study. As individuals, we are often intrigued by the questions pertaining to our objectives in life. In ways more than one, organizations are like individuals. They are born, pass through several phases in their lives and sooner or later, meet with their end. But organizations significantly differ from human beings in terms of their survival rates and the variability in their life spans. The gamut ranges from organizations going bust within months of inception to those that have successfully survived for centuries at stretch. Questioning this variability forms the underlying theme of our study. Through our analysis, we have tried to decipher what goes into making an organization long lasting. Our study hinges on the stated corporate visions of companies and the variables we purport to identify are correlated with the performance and survival patterns of companies under study, but we cannot claim a definitive causal relationship. Lack of possibility of conducting a placebo?controlled trial on a control group in the real world scenario limits our ability to come up with a causal model. But as the statistics professor George E.P. Box once wrote – “All models are wrong; some models are useful”1 , the suggested framework is helpful in understanding, at least in part, how and why some companies last longer than others.