Organization performance has been the focus of scholars since long. From Fortune 500 list of companies in 1992, only 120 appear in the list of Fortune 500 for the year 2007. That is, over 76% of the Fortune 500 companies disappeared from the list in 15 years, Accenture study (2007).

In India, one of the most readily available organized data on performance of the business organizations is published by Economic Times, in terms of ranking of Top 500 companies in India. This is published every year so that the comparison from year to year is possible. For the purpose of this paper, 10 years’ data from the fiscal year 1995 to fiscal year 2005 was taken. These 10 years have been the years of liberalization and growth in Indian economy, marked with unprecedented and sweeping changes. This has thrown open opportunities in all sectors of economy.

Organizations have had wider choices to embrace new technology, launch new products, enter new markets and become global companies. These opportunities have been available to all companies in India. Some of them made full use of these opportunities and grew very rapidly. On the other hand, a large number of companies have not been able to cope with this new liberalized competitive environment. Economic Times ranking of 500 top companies in India shows that 309 out of top 500, i.e. 62% of the companies listed in the fiscal year 1995 are no longer in the Economic Times listing of top 500 companies for the fiscal year 2005.

Further, 101 out of total 500 companies i.e. 20% of the companies have declined in their ranking from fiscal year 1995 to fiscal year 2005. Only 90 companies, which are 18% of the Top 500 companies, have improved their ranking over the last 10 years. Both Fortune 500 and Economic Times 500 indicate a trend that large number of organizations are not able to sustain their success over a time period of 10 to 15 years.

Why does this happen? Does leadership play any role in influencing the company’s performance?

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Building HR Strategy, Managing Culture Design & Change Arvind Agrawal