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Asset Productivity Turnaround: the Growth/Efficiency Challenge

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  • Joan Winn

Abstract

Growth and productivity have been linked together as the path to increasing profitability. However, companies that embark on aggressive growth strategies often find their efficiency severely compromised. This research examined companies whose asset productivity declined severely during periods of aggressive growth. Contrary to conventional turnaround wisdom, asset pruning and debt reduction did not accompany asset productivity turnarounds; however, successful turnaround companies did decrease their long‐term debt ratios as they continued to expand. Companies that failed to turn around their asset productivity declines suffered subsequent declines in sales and income growth. Although the firms in this study did not publicly acknowledge the presence of decline, takeover attempts were more likely to occur during or immediately after the period of asset productivity decline.

Suggested Citation

  • Joan Winn, 1997. "Asset Productivity Turnaround: the Growth/Efficiency Challenge," Journal of Management Studies, Wiley Blackwell, vol. 34(4), pages 585-600, July.
    • Handle: RePEc:bla:jomstd:v:34:y:1997:i:4:p:585-600
    DOI: 10.1111/1467-6486.00064
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    Cited by:

    1. Lars Schweizer & Andreas Nienhaus, 2017. "Corporate distress and turnaround: integrating the literature and directing future research," Business Research, Springer;German Academic Association for Business Research, vol. 10(1), pages 3-47, June.
    2. Manuel Rico & Naresh R. Pandit & Francisco Puig, 2021. "SME insolvency, bankruptcy, and survival: an examination of retrenchment strategies," Small Business Economics, Springer, vol. 57(1), pages 111-126, June.
    3. Ze-To, Samuel Yau Man, 2016. "Asset liquidity and stock returns," Advances in accounting, Elsevier, vol. 35(C), pages 177-196.

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