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Situational and organizational determinants of turnaround

John D. Francis (Hagan School of Business, Iona College, New Rochelle, New York, USA)
Ashay B. Desai (College of Business Administration, The University of Wisconsin Oshkosh, Oshkosh, Wisconsin, USA)

Management Decision

ISSN: 0025-1747

Article publication date: 1 October 2005

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Abstract

Purpose

To test the ability of situational variables, manageable pre‐decline resources, and specific firm responses to decline to classify performance outcomes (turnaround vs non‐turnaround) in declining firms.

Design/methodology/approach

Using a longitudinal methodology and a multi‐firm sample, the paper studies the relative role of situational factors concerning the environment and a firm's decline, along with various internal resources and strategies that can enable a firm to recover from decline.

Findings

The results indicate that contextual factors such as the urgency and severity of decline, firm productivity and the availability of slack resources, and firm retrenchment can determine the ability of sample firms to turnaround. Overall, factors under the control of managers contribute more to successful turnarounds than situational characteristics.

Research limitations/implications

This study does not identify the exact cause of firm decline. The authors believe this is beyond the scope of this multi‐firm study.

Originality/value

This study contributes to the existing research by theoretically explicating and empirically testing the influences of multiple situational and organizational factors on turnaround outcomes. While several studies have investigated conceptually unique sets of actions applied by managers attempting to turn around declining firms, this paper integrate these actions as they can often impact each other and the eventual turnaround. The authors believe their research design affords a more holistic view to the turnaround process. In order to direct executives efforts, the findings are summarized into some practical applications.

Keywords

Citation

Francis, J.D. and Desai, A.B. (2005), "Situational and organizational determinants of turnaround", Management Decision, Vol. 43 No. 9, pp. 1203-1224. https://doi.org/10.1108/00251740510626272

Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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