Homeostasis belongs to group of basic concepts in biological sciences, and is also used by alternative theories of the modern enterprise.

Homeostasis means the ability of automatic self-regulation of certain processes. Such self-regulation (e.g.. maintaining body heat or the pulse rate in mammals within certain limits), first observed by biology, has been moved to general systems theory and the science of organization and management.

Company and its environment

Homeostatic balance between a company and its surroundings is the main condition for surviving. That is to say, that survival is more important than profit maximization in the short term.

This theory implies that the company, like any biological organism, seeks to achieve a state of dynamic balance (i.e. homeostasis). This state company achieve by implementing internal standards and processes. These standards may be new, or can be adapted from proven standards in the operation of the other companies because it reduces the risk of failure. Companies seeking homeostasis demonstrate less flexibility in the operation and are less prone to take risks.

Maintaining a particular balance state inside the company, however, is not the primary goal of its activities. Overarching long term goal of the company is (like in the case of biological organisms) survival. In order to survive, the organism has to evolve with the changing environment. Continuous externally enforced change process however, is accompanied by internal constant tendency to maintain homeostasis at every stage of the development.