To retrench or invest? Turnaround strategies during a recessionary time

Mann, Manveer; Byun, Sang Eun

doi:10.1016/j.jbusres.2017.06.018

Cited by 18 publications

(10 citation statements)

References 36 publications

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“…This was an attempt to catalogue previous research in turnaround strategy and develop a tool that could help in decision making during the turnaround attempt. Thus, this work furthers the work of several researchers like Mann and Byun (2017) and Lohrke et al (2004). They had presented the interdependent nature of failure preconditions and turnaround strategy implementation.…”

Section: Development Of An Integrated Canvassupporting

confidence: 58%

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Development of an integrated canvas on turnaround strategy

Bhattacharyya

Malik

2019

IJOA

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Purpose The purpose of this study is to provide a comprehensive understanding regarding corporate turnaround. An integrated discussion regarding different corporate failure factors, conditions, symptoms followed by turnaround strategies and its results have been provided. Design/methodology/approach Authors have done a comprehensive systematic and integrated literature review study of research articles on corporate turnaround. The paper reviewed discussed different dimensions of turnaround management. The authors applied thematic reductionist categorisation with logical arguments to develop an integrated turnaround canvas (ICT). Findings An ICT has been developed. ICT is a holistic framework to comprehend turnaround strategy. Impact of precondition and turnaround levers on cash flow dynamics and the operational and strategic levers for successful turnaround performance of the firm has also been presented. Authors have also tabulated the entire spectrum of corporate turnaround. Research limitations/implications This conceptual work would help researchers interested in turnaround research to anchor their study at different points in ICT canvas. This could be at the decline precondition stage, corporate failure state, turnaround levers (strategic and operational) application phase and in terms of turnaround performance. Practical implications The ICT canvas would help managers to identify the set of corporate failure preconditions which might lead their firm to decline phase. The ICT canvas would also help managers based upon the identification of decline preconditions to select an appropriate turnaround interventions required to arrest the corporate failure. Finally, the ICT canvas would help in identifying the operational and strategic levers for successful turnaround implementation and thus achieving the desired corporate performance. Originality/value This is one of the first studies to provide an integrated perspective on corporate turnaround as the developed ICT canvas consisted of identification of decline preconditions, corporate failure, turnaround levers (strategic and operational ) and turnaround performance.

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Section: Development Of An Integrated Canvassupporting

confidence: 58%

“…The integrated canvas developed by the authors has incorporated failure preconditions and turnaround strategies from the selected turnaround literature. This work thus builds on to the conversation of O'Neill (1986aO'Neill ( , 1986b, Mann and Byun (2017), Lohrke et al (2004).…”

Section: Development Of An Integrated Canvasmentioning

confidence: 99%

Development of an integrated canvas on turnaround strategy

Bhattacharyya

Malik

2019

IJOA

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“…The processual context is more broadly linked to the stage theory of business failure, which originates from the idea that before failure, firms go through numerous observable stages (Weitzel & Jonsson, 1989; Amankwah-Amoah, 2016). Of these stages, the recent focus has mainly been set on firm turnaround (Trahms, Ndofor & Sirmon, 2013;James, 2016;Mann & Byun, 2017;Zorn et al, 2017). On the other hand, studies focusing on the stages of processes ending with bankruptcy are infrequent and Amankwah-Amoah (2016: 3392) has noted that Firm failure process (FFP) has been conceptualized in several studies (e.g.…”

Section: Introductionmentioning

confidence: 99%

Firm failure processes and components of failure risk: An analysis of European bankrupt firms

Lukason

Laitinen

2019

Journal of Business Research

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This paper aims to extract firm failure processes (FFPs) by using failure risk and rank the importance of failure risk contributors for different stages of FFPs. The dataset is composed of 1234 bankrupt firms from different European countries and three theoretically motivated FFPs are detected. For the dominant FFP found (73% of cases), failure risk becomes high very shortly before bankruptcy is declared. Annual and accumulated profitability are the most important failure risk contributors for these stages of all FFPs, where failure probability exceeds 50%. The obtained results provide important implications for bankruptcy prediction research and practice, especially in terms of identifying the most important financial predictors.

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“…Large state-owned companies have more organizational slack (Stan et al, 2013), and they need to focus more on the employees' psychology and emotions instead of taking asset retrenchment in a panic. For small companies, retrenchment strategy is necessary to secure or provide slack, and asset retrenchment and cost retrenchment can help deplete redundant resources to obtain cash flows (Mann and Byun, 2017). Third, this paper provides a basis for executive compensation restrictions and re-examines pay dispersion and economic inequality.…”

Section: Practical Implicationmentioning

confidence: 99%

“…The funds obtained from the sale of assets can alleviate the urgent need and make the organization focus on the core business. Moreover, in order to relieve the psychological pressure of executives in crisis, they can make more precise and rational judgments (Tangpong et al, 2015) for improving operational continuance and efficiency (Mann and Byun, 2017). Besides, the retrenchment strategies can significantly boost the confidence of external stakeholders and enhance the organizational ability to obtain external support from the capital market, government and customers, thus providing a reliable guarantee for organizational turnaround (Trahms et al, 2013).…”

Section: Retrenchment Strategiesmentioning

confidence: 99%

Compensation gap, retrenchment strategy and organizational turnaround: a configurational perspective

Tang

Hong

2020

JOCM

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PurposeThis 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.Design/methodology/approachDrawing 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.FindingsThis 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.Research limitations/implicationsFirst, 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.”Practical implicationsOrganizational 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.Originality/valueThis 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.

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To retrench or invest? Turnaround strategies during a recessionary time

Cited by 18 publications

References 36 publications

Development of an integrated canvas on turnaround strategy

Development of an integrated canvas on turnaround strategy

Firm failure processes and components of failure risk: An analysis of European bankrupt firms

Compensation gap, retrenchment strategy and organizational turnaround: a configurational perspective

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