The contingencies of corporate failure: the case of Lucas industries

ABSTRACT Most accounts of corporate failure offer explanation in terms of fundamental changes in the environment or strategic inertia. The case of Lucas Industries is different: a firm that was actively restructuring itself but still lost its 100-year-old identity in 1996 as a result of a merger. The firm actively pursued the merger but found that the smaller merger partner in fact became dominant. Comparative analysis with other firms, together with interrogation of the results of three studies of the firm over the period 1978–95, points to a threefold explanation: (1) some weaknesses in the restructuring strategy which were brought into focus by (2) an economic downturn and belief at the time in the rationalization of the industry into fewer firms and amplified by (3) some specific contingencies in parts of the firm. The analytical lesson is that failure can be more historically contingent than extant accounts recognize. The practical one is to urge more independent scrutiny of the decisions of company boards.