Transformation of troubled organizations : the Bulgarian State Railways case

Many managers ask them self “Why our transformational efforts fail? Why? We did everything in a full harmony with the best business practice learnt in business schools and collected during our experience.” However, the fact is that the transformation of troubled companies as the Bulgarian State Railways is a very demanding process hindered by many internal and external factors. Theories of organizational adaptation as well as Organizational Ecology discuss the challenges from the right perspective: They consider organizational inertia and process of spontaneous institutionalisation major obstacles any reorganization necessitated by environmental drifts has to deal with. The power of the factors undermining the reorganisations is so strong that in most cases the management will probably fail. The research looks at the major factors that affect the fitness of the corporation and describes the attempts of the managers to recover the going concern status of the enterprise. The study investigates the Hypotheses that the adaptive capacity and the speed of reorganisation of the troubled BSRG decline with: (1) the length of service of the inertial management, (2) the strength of the limits imposed on the company performance by the institutionalised collective labour agreements, (3) the strength of its organisational opacity and asperity, and (4) the intensity of the conflicting institutional demands presented by the internal and the external audience. The real problem is that the transformation of BSRG from a company on the verge of bankruptcy to a financially sustainable company took long eight years and the cost of the reorganization turned to be enormously high. However, while confirming to certain extent the validity of the Theory of population Ecology, the dissertation simultaneously presents managerial approaches that increase the likelihood of organisational survival by improving the adaptive capacity of the enterprise.