Retrenchment: Cause of turnaround or consequence of decline?
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TL;DR
It is found that little evidence exists to support the assertion that retrenchment is integral to turnaround, and several recommendations are offered for turnaround researchers.
Abstract
Abstract In a recent investigation of the turnaround attempts of 32 U.S. textile firms, Robbins and Pearce (1992) concluded that retrenchment is an integral component of successful recovery from decline. In this note we critique, replicate and provide an alternative explanation for their findings using data from the same sample of firms attempting turnarounds. Based on our analyses, we find that little evidence exists to support the assertion that retrenchment is integral to turnaround. We conclude by offering several recommendations for turnaround researchers.