Grey relational analysis between firm's current situation and its possible causes: A bankruptcy syndrome approach

Abstract

Purpose

By making an analogy with the human body, the purpose of this paper is to underline the relations between a firm's failure causes and its current situation, in terms of the syndrome that can be identified at its level.

Design/methodology/approach

For this reason, some elements taken from medicine, such as symptoms, causes and syndromes are presented and characterized from the point of view of the firm.

Findings

It is shown that knowing the type of syndrome and the relation between it and the causes that determined its occurrence, a firm's situation can be improved and its life can be lengthened. The study was conducted on 19 firms and the results are conclusive.

Practical implications

By knowing the main causes that determine a certain type of bankruptcy syndrome, the firm's management can properly intervene to establish a new order and a new equilibrium, which can “save” the firm from an imminent collapse, bringing it to a normality situation and even leading it, in future, to increased performance.

Originality/value

The paper succeeds in shaping the relation between a firm's situation, its symptoms, the bankruptcy syndrome and the causes that led to a certain situation. Using one of the newest developed theories – the grey systems theory – and one of the newest concept used in firms' diagnosis – the bankruptcy syndrome – the paper extends the characteristics of this term and uses it in determining the causes that generate anomalies at firm level.

Citation

Delcea, C., Scarlat, E. and Mărăcine, V. (2012), "Grey relational analysis between firm's current situation and its possible causes: A bankruptcy syndrome approach", Grey Systems: Theory and Application, Vol. 2 No. 2, pp. 229-239. https://doi.org/10.1108/20439371211260199