Paper Title
When an Organization Declines Despite Addressing Routine and Resource Inertia: Case Study from Japan

Abstract
The purpose of this research is to clarify why an organization declines even after it allocates new resources and promotes the transfer of authority on operations in the event of a threat. Research has revealed that when an organization faces a threat, resource rigidity decreases and routine rigidity increases. Therefore, if an organization allocates new resources and proceeds with transfer of authority to the job site, can it completely avoid decline? To clarify this question, this research conducts a case study of Japanese textile company Kanebo. After the recession of 1958, Kanebo started to diversify into new businesses, that is, it promoted new resource allocation. Kanebo’s managers felt that the future potential of natural fibers, which was its main business until then, was limited and started diversifying into synthetic fibers, cosmetics, foods, and chemicals. In these new businesses, the structures of production and distribution were completely different from those for natural fibers, so each new operation was explored in great detail. At the same time, a divisional structure was introduced, and decentralization of operations was promoted. However, Kanebo started to decline, and eventually collapsed. In other words, the case of Kanebo is the most likely case, with its failure contradicting existing theory. By studying the most likely case, this research will discover new mechanisms and factors overlooked in the existing theory. Index Terms - Organizational decline, routine rigidity, resource rigidity, Japanese firm