Performance Measures for Corporate Decline and Turnaround

For a review of the major empirical studies conducted prior to 1987, see Hoffman, Richard C. , ‘Strategies for Corporate Turnarounds: What do we know about them?’, Journal of General Management, Vol. 14, No. 3, Spring 1989, pp. 46–66.

Most researchers describe organizational decline as a progressive deterioration, beginning with decreasing profit margins and culminating in imminent disaster. Cf. Hofer, Charles W., Corporate-Level Turnaround Strategies, Department of Management, University of Georgia Working Paper, 1985; Sloma, Richard S., The Turnaround Manager's Handbook, New York: The Free Press, 1985; Weitzel William , and Jonsson, Ellen , ‘Decline in Organizations: A Literature Integration and Extension’, Administrative Science Quarterly, Vol. 34, 1989, pp. 91–109.

See Schendel, Dan E. , and Patton G. Richard , ‘Corporate Stagnation and Turnaround’, Journal of Economics and Business, Vol. 28, 1975, pp. 236–41, and Schendel, Dan E., Patton, G. Richard and Riggs, James, ‘Corporate Turnaround Strategies: A Study of Profit, Decline and Recovery’, Journal of General Management, Vol. 3, No. 3, Spring 1976, pp. 3-11.

Originally cited in Hofer, Charles W. , ‘Turnaround Strategies’, Journal of Business Strategy, Vol. 1, No. 1, 1980, pp. 19–31.

Ramanujam Vasudevan , Environmental Context, Organizational Context, Strategy, and Corporate Turnaround: An Empirical Investigation, doctoral dissertation, University of Pittsburgh, 1984.

Heany, Donald F. , ‘Businesses in Profit Trouble’, Journal of Business Strategy, Vol. 5, No. 4, 1985, pp. 4–12.

Grinyer, Peter H. , Mayes, David G. , and McKiernan, Peter , Sharpbenders: The Secrets of Unleashing Corporate Potential, Oxford: Basil Blackwell, 1988.

Winn Joan , Asset Productivity Turnarounds: An Exploratory Study, doctoral dissertation, University of Georgia, 1989.

This is obviously the case in: O'Neill, Hugh M. , Turnaround Strategies in the Commercial Banking Industry, Ann Arbor, Michigan: UMI Research Press, 1981, and Schendel, et al., Note 3 above.

Specifically Bibeault , Donald B. , Corporate Turnaround: How Managers Turn Losers into Winners, New York: McGraw-Hill, 1982; Winn, Note 8 above, and Zimmerman, Frederick M., ‘Managing a Successful Turnaround’, Long Range Planning, Vol. 22, No. 3, 1989, pp. 105-24.

Pant, Laurie W. , The Determinants of Corporate Turnaround, doctoral dissertation, Boston University, 1986.

Hambrick, Donald C. , and Schecter, Steven M. , ‘Turnaround Strategies for Mature Industrial-product Business Units’, Academy of Management Journal, Vol. 26, 1983, pp. 231–48; Heany, Note 6 above; Ramanujam, Note 5 above; and Pant, Note 11 above.

Note 11 above.

Existing research has examined companies in each of these four groups, with few studies focusing on only one category.

Beaver, William H. , ‘Financial Ratios as Predictors of Failure’, Empirical Research in Accounting: Selected Studies, Supplement to Journal of Accounting Research, Vol. 4, 1966, pp. 71–111.

Altman, Edward I. , ‘Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy’, Journal of Finance, 1968.

Altaian, Edward I. , Haldeman, Robert G. , and Narayanan P. , ‘Zeta Analysis: A New Model to Identify Bankruptcy Risk of Corporations’, Journal of Banking and Finance, Vol. 1, 1977, pp. 29–54.

Blum Marc , ‘Failing Company Discriminant Analysis’, Journal of Accounting Research, Vol. 12, No. 1, 1974, pp. 1–25.

Wilcox, Jarrod W. , ‘A Gambler's Ruin Prediction of Business Failure Using Accounting Data’, Sloan Management Review, Vol. 12, No. 3, 1971, pp. 1–10.

Altman, Edward I. , and LaFleur, James K. , ‘Managing a Return to Financial Health,’ Journal of Business Strategy, Vol. 2, No. 1, 1981, pp. 31–7.

Slatter Stuart , Corporate Recovery: Successful Turnaround Strategies and their Implementation, Harmondsworth: Penguin Books, 1984.

O'Neill, Hugh M. , ‘Turnaround and Recovery: What Strategy do you Need?’ Long Range Planning, Vol. 19, No. 1, 1986, pp. 80–8; and Zimmerman, Note 10 above.

Bibeault , Note 10 above, pp. 66–9.

Ramanujam , Note 5 above.

Ibid, p. 66.

Zimmerman , Note 10 above.

See, e.g., Hambrick , and Schecter , Note 12 above; and Ramanujam, Note 5 above.

Sheth, Jagdish N. , Winning Back your Markets: The Inside Stories of the Companies that Did It, New York: John Wiley & Sons, 1986; and Grinyer, et al., Note 7 above.

Note 4 above.

Cf. Kibel H. Ronald , How to Turnaround a Financially Troubled Company, New York: McGraw-Hill, 1982; Taylor, Bernard, Turnaround, Recovery, and Growth: The Way through the Crisis’, Journal of General Management, Vol. 18, No. 2, 1992, pp. 5-13.

Hayes, Robert H. , and Abernathy, William J. , ‘Managing Our Way to Economic Decline’, Harvard Business Review, Vol. 58, No. 4, 1980, pp. 67–77; Hayes, Robert H. and Wheelwright, Steven C., Restoring Our Competitive Edge, New York: John Wiley & Sons, 1984; and Sink, D. Scott, Tuttle, Thomas C. and DeVries, Sandra J., ‘Productivity Measurement and Evaluation: What is Available?’ National Productivity Review, Vol. 3, No. 3, 1984, pp. 265-87.

See Note 8 above.

Crost J.G. , ‘Successful Turnarounds of Independent Businesses’, The Journal of Commercial Bank Lending, September, 1974, pp. 28–39.

Schendel and Patton, Note 3 above.

Cf. Schendel, et al., Note 3 above; or Ramanujam, Note 5 above.

See Sheth, Note 30 above.