Navigating the Growth Paradox in an Incumbent Business Context : Managerial Implications from a Degrowth Perspective

Abstract: Our study investigates how the organizational growth paradox is perceived and managed by incumbent firms from a degrowth perspective. There is a growing critique against the growth paradigm, an increasing support for its abandonment. Scholars are calling for a paradigm shift towards a post-growth economy. The degrowth movement has paid more attention to macroeconomics but it has been insufficiently researched on a micro level. It is viewed as being too abstract and does not provide concrete frameworks that can be applied in a business context. We address this gap by applying two theoretical frameworks, organizational paradox and degrowth theory. Then the degrowth notion is defined on a macro- and a micro-level, including relevant degrowth frameworks such as the Doughnut Economic and the Circular Economy model. Lastly, we define organizational paradoxes and possible managerial responses to them. The degrowth agenda has a variety of perspectives that range from radical to more moderate. We adopt a moderate perspective, influenced by Buch-Hansen and Nesterova (2023) and consequently, we anticipate gradual changes as incumbents adapt to a post- growth economy. We collect empirical data by conducting a case study and performing semi-structured interviews on a cooperative in Sweden’s primary food industry. In addition, we interviewed the CEO of a family-owned company operating in the same industry. Moreover, we analyze the resulting organizational paradoxes, and explore management responses. Two new paradoxes have been discovered. First, the governance paradox shows that a cooperative structure by itself, as advocated by degrowth theory, does not prevent but potentially creates paradoxical tensions. Second, the core business paradox describes a dissent between the business or product and public perception. A justification response approach in this case can endanger the business’ existence. We conclude that profitability in financial terms is key to being able to transition towards degrowth. Moreover, the governance structure of a cooperative can create paradoxical tensions which, when not managed properly, can cause other paradoxes to surface. We highlight the challenges of implementing degrowth thinking at a micro-level, as incumbents are influenced by external factors and face tensions. To achieve widespread diffusion, collaboration and shared values throughout the value chain is essential. When operating in an everchanging dynamic environment, the core business can develop into a source of paradoxical tension. We recommend the paradoxical response approach, described in the Dynamic Equilibrium model (Smith & Lewis, 2011) for managing tensions, but note the risks involved. Shifting priorities without sufficient communication and motivation can harm commitment, trust, transparency, collaboration, and employee alignment. To successfully apply consistent inconsistency, strong management skills to foster employee commitment to changing priorities are required.