Organizational life cycle for small business: An overview of birth stage / Dr Salwa Muda and Dr Asma’ Rashidah Idris

Life cycle stage is defined as a ‘unique configuration of variables related to the organisational context and structure’ (Hanks et al. 1993). Variety of organisational life cycle (OLC) models with different number of stages have been proposed by the researchers, ranges from three stages (Lippitt & Schmidt 1967), four stages (Kazanjian 1988; Quinn & Cameron 1983), five stages (Churchill & Lewis 1983; Galbraith 1982; Greiner 1972; Miller & Friesen 1984) to ten stages (Adizes 1979). Although the number of stages varies among the life cycle models, the models are typified by almost similar characteristics, strategies and challenges that the organisations face in each stage. Generally, the organisations evolve from birth (existence, entrepreneurial, conception and development), followed by survival (commercialisation, go-go), growth (delegation and coordination, success) and finally maturity (stability, collaboration).
The first stage of the life cycle is known as birth. Organisational researchers propose different names of the birth stage in their OLC models. Birth stage is known as creativity (Greiner 1972), courtship and infant (Adizes 1979), proof of prototype principle (Galbraith 1982), existence (Churchill & Lewis 1983), entrepreneurial (Quinn & Cameron 1983), birth (Miller & Friesen 1984) and conception and development (Kazanjian 1988).
Birth stage is crucial for the organisations considering the aim to be a viable enterprise with struggling efforts in developing new products or services that can attract potential customers. Obtaining customers’ acceptance of products and services becomes the main agenda. Besides, this stage witnesses the need to develop external support from other parties such as the government agencies. This situation is more challenging for small businesses due to the lack of access to financial resources and formal systems. SMEs depend on their own savings and funds from family and friends in the early stages of operations, thus only firms with sufficient and manageable financial and non-financial resources can sustain their businesses and move to the next stage in the business life cycle.