Search results

The purpose of this paper is to report on a research study aimed at comparing the causes of organisational decline and turnaround strategies involved in cases of successful and unsuccessful turnarounds, with a view to identifying the differences, if any, between the two groups, which in turn is expected to provide useful information to academics, practitioners and policy makers.

Since turnaround is a business phenomenon of general interest, their stories are often published in business periodicals, which are a rich source of data on them. In order to tap this data source, the present paper employed a method of content analysis for the proposed investigation on the cause of organisational decline and turnaround strategies used. In order to quantify the data, a three-point scale was developed, where the presence of a cause/strategy is rated as “3”, its ambivalence as “2” and its absence as “1”, whose validity was assessed through the inter-rater agreement indices. The data thus generated are amenable to statistical analyses, using which the more commonly prevalent causes of organisational decline and the strategies commonly employed for turnaround by the successful and unsuccessful companies are identified.

The findings of the present study have generated a few useful insights. First, the primary causes for organisational decline are the internal weaknesses of the organisation; in fact the external changes can adversely affect the organisation only if it is internally weak. Second, organisational decline caused by multiple factors (which is usually the case) can be managed effectively by adopting a variety of strategies; hence a single-pronged strategy is often found to be ineffective. Third, the more successful turnarounds had a diverse portfolio of strategies including those of institution-building, often employed in a phased manner, consistent with the stage theories of turnaround.

The limitations of this research arise mainly from the generation of data from published sources and the consequent biases, which can be managed, to a large extent, by using multiple sources for the same case for reducing the publishers’ biases as well as by having multiple raters for identifying the researcher’s biases, if any.

The study has highlighted the need for addressing the internal causes of organisational decline on a priority-basis rather than blaming the external factors, besides pointing to the need for adopting a variety of strategies for dealing with the diversity of causes affecting the organisation’s health, particularly the need for institutionalising the changes. These findings can be of help especially to turnaround managers and policy-makers in dealing with organisational decline and thus contribute to the creation and enhancement of economic value.

Drawing on variables cited in the turnaround literature, this study aims to explore whether information contained within annual reports is useful in distinguishing between distressed companies that enact a turnaround and those that fail.

This study develops a discriminant model to identify distressed companies that have turnaround potential.

Analysis of the results reveals that successful turnarounds are associated with the severity of the distressed state, its determinants, with the extent of change in the distressed state since the previous year, and firm size.

This article is of use in identifying what information is useful in annual reports.

A neglected area of research in ODC is the turnaround of poorly performing firms such as those under bankruptcy protection. We researched 142 companies that attempted reorganization under bankruptcy protection between 1983 and 2003. Firms deployed one or more of four distinct strategies to turnaround: rationalizing existing resources, developing existing resources, generating new resources, and investing in future resources. Firms that generated new resources, and developed and rationalized existing resources, had the highest probability of emergence. Interestingly firms that sustained their turnaround post-emergence invested in future resources in addition to generating, developing, and rationalizing resources. Implications for ODC are discussed.

Examines the key elements that are involved in managing successful turnarounds. An analysis of the turnaround strategies of more than ten global companies revealed that these strategies incorporated similar sequential processes: identification of problem and need for change; replacement of incumbent CEO; major cost‐cutting attempts; refocusing on core businesses, and reinvesting for the future.

The paper aims to provide a longitudinal view of successful turnaround phases and of how management accounting practices played a significant role in improving performance in one company.

The company provided internal documents to cover the period of the study and permitted access to key individuals who were able to elaborate and clarify the motives which underpinned the numbers reported and the strategies employed.

The success of the corporate turnaround appeared to be attributable to an effective leadership style that was able to motivate and support the employees whilst making strategic changes to the organization's capital, financial well‐being and operations.

Recognition of the key factors in the turnaround process has implications for the implementation of corporate recovery strategies elsewhere.

This paper extends the current understanding of the retrenchment-–turnaround relationship in declined companies by introducing a compensation gap view. It argues that the effectiveness of the retrenchment strategy is contingent on reducing the executive-employee compensation gap in the turnaround process.

Drawing from a two-stage turnaround model and insights from the literature on executive-employee compensation gap, we develop and test a theoretical model that explains how five attributes, which refer to executive-employee compensation gap, asset retrenchment, cost retrenchment, ownership and size, affect the outcome of the organizational turnaround. This paper uses the fuzzy-set qualitative comparative analysis (fsQCA) method and based on the samples of 112 listed companies that experience the decline between 2005 and 2013.

This paper concludes two valid causal paths and finds that small companies with small executive-employee compensation gap have a higher likelihood of successful turnaround when they implement cost or asset retrenchment actions. As for large state-owned companies, they should reduce the costs and maintain a small executive-employee compensation gap. An excessive compensation gap can be problematic, which could impair the organizational ability to cope with adversity and decline.

First, this paper taps the vital role of employees in the turnaround process besides the mainstream “organizational decline-layoffs” logic, which hints a new human resource management strategy when organizations are facing decline. Second, this paper reveals the theoretical linkage between pay dispersion, internal stakeholder and organizational resilience. Third, as a methodological contribution, we introduce fsQCA, overcoming the shortcomings of turnaround strategy research with case and regression analysis and breaking through the paradigm of “specific factor-turnaround.”

Organizational turnaround is a systematic process that constitutes multiple factors together. When organizations take the asset retrenchment to stop bleeding, reducing the executive-employee compensation gap will help enhance employee's cognition of organizational values and strategic goals, eliminate feelings of exploitation in retrenchment implementation and thus effectively promote turnaround. This paper also provides a basis for executive compensation restrictions and re-examines pay dispersion and economic inequality.

This study sheds some light on the importance of the executive-employee compensation gap in retrenchment strategy and contributes to both organizational turnaround and pay dispersion theories. Also, it reveals the theoretical linkage between internal stakeholders, organizational resilience and long-term orientation.

The process of business decline can be identified through various warning signals that are concomitant with the decline process. These warning signals are noticed in both the internal and external business environments. The successful turnaround of a failing or declining business requires that management analyze the causes of decline and then implement a strategy for reversal of the decline. This article addresses the signals of decline, internal and external business environments and the strategies for reversal of decline.

This paper aims to investigate the role of resource orchestration in turnaround attempts following the organizational decline in the context of an emerging economy.

Multicase study of three Brazilian textile firms, following their trajectory from 1997 to 2009. We did a “historical reconstruction using the methodology” proposed by Mintzberg and McHugh (1985) to guide our data collection and analysis procedures. The methodology is geared towards the study of the evolution of organizations over a past period, wherein the researcher reconstructs the events after they have occurred, having developed them from documentary analysis and oral history.

The results indicate that resource orchestration is a critical capability for ensuring the coordinated implementation of operational and strategic actions in a turnaround. Moreover, in a context involving severe environmental jolts, the conservation of organizational slack appears to influence the effectiveness of resource orchestration and explains the different outcomes the firms in this study achieved in their turnaround attempts.

This paper may be useful to practitioners involved in turnarounds, helping them evaluate the consequences of decisions involving the acquisition, reconfiguration, bundling and divestment of firm resources.

Besides contributing to the advancement of theory-informed research on decline and turnaround, this paper may be useful to practitioners involved in turnarounds, when they consider the consequences of decisions involving firm resources.

This paper helps advance theory-informed research on decline and turnaround in developing economies, helping address a gap in the extant literature, primarily focused on firms in developed countries.

Investigar, en el contexto de una economía emergente, el papel de la orquestación de recursos en los intentos de recuperación después del declive organizacional`.

Estudio multicaso de tres empresas textiles brasileñas siguiendo su trayectoria desde 1997 hasta 2009. Hicimos una “reconstrucción histórica utilizando la metodología” propuesta por Mintzberg y McHugh (1985) para guiar nuestra recopilación de datos y procedimientos de análisis. La metodología está orientada hacia el estudio de la evolución de organizaciones en un período pasado, en el que el investigador reconstruye los eventos después de que han ocurrido, habiéndolos desarrollado a partir del análisis documental y la historia oral.

Nuestros resultados indican que la orquestación de recursos es una capacidad crítica para garantizar la implementación coordinada de acciones operativas y estratégicas en un processo de recuperación. Adicionalmente, en un contexto que implica impactos ambientales significativos, mantener la holgura organizacional parece influir sobre la eficacia de la orquestación de recursos y explica la diferencia de los resultados que las empresas encuestadas alcanzaron en sus tentativas de recuperación.

Este artículo puede ser útil para los profesionales implicados en procesos de recuperación, ayudándoles a evaluar las consecuencias de las decisiones que implican la adquisición, reconfiguración, agrupación y desecho de recursos de la empresa.

Este estudio contribuye al avance de la investigación de base teórica sobre declive y recuperación en economías en desarrollo, ayudando a eliminar una laguna en la literatura existente, la cual se a centrado principalmente en empresas en países desarrollados.

Investigar o papel da orquestração de recursos nas tentativas de turnaround após o declínio organizacional, no contexto de uma economia emergente.

Estudo multicaso de três empresas têxteis brasileiras, seguindo sua trajetória de 1997 até 2009. Fizemos uma “reconstrução histórica usando o metodologia” proposta por Mintzberg e McHugh (1985) para guiar nossa coleta de dados e procedimentos de análise. A metodologia é voltada para o estudo da evolução de organizaçöes ao longo de um período passado, em que o pesquisador reconstrói os eventos após ocorreram, tendo-os desenvolvido a partir da análise documental e da história oral.

Nossos resultados indicam que a orquestração de recursos é uma capacidade crítica para garantir a implementação coordenada de ações operacionais e estratégicas num turnaround. Adicionalmente, num contexto envolvendo choques ambientais significativos, a preservação da folga organizacional parece influenciar a eficácia da orquestração de recursos e explicar a diferença dos resultados que as empresas pesquisadas alcançaram nas suas tentativas de turnaround.

Este artigo pode ser útil para profissionais envolvidos em turnarounds, ajudando-os a avaliar as consequências de decisões envolvendo a aquisição, reconfiguração, agrupamento e descarte de recursos da empresa.

Este estudo contribui para o avanço da pesquisa de base teórica sobre declínio e turnaround em economias em desenvolvimento, ajudando a eliminar uma lacuna na literatura existente, focada principalmente em empresas em países desenvolvidos.

Organisational decline has far-reaching, negative emotional and financial consequences for staff and customers, generating academic and practitioner interest in turnaround change processes. Despite numerous studies to identify the stages during turnarounds, the findings have been inconclusive. The purpose of this paper is to address the gap by defining these stages, or episodes. The characteristics of leaders affect the outcome of organisational change towards turnarounds. This paper focusses, therefore, on the leadership requirements during specific episodes, from the initial crisis to the full recovery phases.

A total of 11 semi-structured interviews were conducted with executives from the public sector in South Africa who went through or were going through turnaround change processes and 3 with experts consulting to these organisations.

Contrary to current literature in organisational change, this study found that, in these turnaround situations, leadership in the form of either an individual CEO or director general was preferable to shared leadership or leadership distributed throughout the organisation. This study found four critical episodes that occurred during all the public service turnarounds explored, and established that key leadership requirements differ across these episodes. The study shows how these requirements relate to the current literature on transactional, transformational and authentic leadership.

The findings on the leadership requirements ultimately inform the selection and development of leaders tasked with high-risk turnaround change processes.

Four episodes with corresponding leadership requirements were established in the particular context of public sector turnaround change processes.

This research seeks to determine the success of turnaround strategies adopted by corporations in Thailand following post‐bankruptcy reorganization plans approved by the Thai Central Bankruptcy Court.

The study uses a sample of 101 companies whose reorganization plans have been confirmed by the Thai Central Bankruptcy Court in the period 1999‐2002, with performance measures to 2005.

The results indicate that over a three‐year reorganization period successful companies were found to be most likely to adopt cost and expense reduction, company size reduction and disposal of non‐core assets while operational strategies aimed at reconfiguring internal operations and systems were not likely to be associated with successful companies.

The data suggests, subject to limitations, the selection of restructuring methods may differ between those companies which successfully reform and those which do not. Companies pursuing successful turnaround strategies were found most likely to adopt cost and expense reduction, company size reduction and disposal of non‐core assets as significant operational strategy.

Prior research in Thailand has not investigated turnaround strategy of successful and unsuccessful companies. The result of the study has practical significance as it provides information of use to regulators, management, lenders, creditors, practitioners, and investors. The prevailing economic conditions worldwide suggest the need for replication and continual refinement of research in this area, not only in Thailand but elsewhere.