| Sumario: | A study examined the proposal that organizational change may benefit the organization's performance and survival chances if it occurs in response to dramatic restructuring of environmental conditions and if it builds on established routines and competences. Using data from the Federal Home Loan Bank Board, the proposal was tested for the 1977-86 period on the California savings and loan (S&L) industry; an industry that has undergone economic, technological, and regulatory shifts that have forced S&Ls to adapt or fail. The results indicate that diversification away from a firm's base domain helps financial performance in most cases but that only 3 of 8 types of change improve survival chances. The 1 type of change that was found to seem harmful to S&Ls is acquiring direct investments in real estate. It was also found that the distinction between moving into related and unrelated lines matters for short-term financial performance but not for organizational failure.
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