The paradox of cost minimization and the survival of organizations

Zvi Winer, Yitzhak Samuel

Research output: Contribution to journalArticlepeer-review


Organizations that operate in a dynamic environment must take steps to adapt to their changing circumstances; otherwise, they may collapse entirely. Yet, managers may postpone necessary change to minimize costs, while ignoring the risk that this myopic approach entails to the survival of their organizations. This paper proposes a model that considers failure as a stage-wise process of decline, in which the organization’s portfolio of products and the technological processes that it uses to produce them become increasingly misaligned with market conditions. Eventually, if management fails to adapt to the market in time, the gap between the organization and its environment expands to a point of no return, after which organizational collapse is inevitable. The model enables us to run computerized simulations to predict the lifespan of organizations.

Original languageEnglish
Pages (from-to)401-421
Number of pages21
JournalComputational and Mathematical Organization Theory
Issue number3
StatePublished - 1 Sep 2018

Bibliographical note

Publisher Copyright:
© 2017, Springer Science+Business Media, LLC, part of Springer Nature.


  • Change
  • Myopic management
  • Simulation
  • Survival

ASJC Scopus subject areas

  • General Decision Sciences
  • General Computer Science
  • Modeling and Simulation
  • Computational Mathematics
  • Applied Mathematics


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