Resource orchestration in a context of organizational decline

Abstract

Purpose This paper aims to investigate the role of resource orchestration in turnaround attempts following the organizational decline in the context of an emerging economy. Design/methodology/approach Multicase study of three Brazilian textile firms, following their trajectory from 1997 to 2009. We did a “historical reconstruction using the methodology” proposed by Mintzberg and McHugh (1985) to guide our data collection and analysis procedures. The methodology is geared towards the study of the evolution of organizations over a past period, wherein the researcher reconstructs the events after they have occurred, having developed them from documentary analysis and oral history. Findings The results indicate that resource orchestration is a critical capability for ensuring the coordinated implementation of operational and strategic actions in a turnaround. Moreover, in a context involving severe environmental jolts, the conservation of organizational slack appears to influence the effectiveness of resource orchestration and explains the different outcomes the firms in this study achieved in their turnaround attempts. Research limitations/implications This paper may be useful to practitioners involved in turnarounds, helping them evaluate the consequences of decisions involving the acquisition, reconfiguration, bundling and divestment of firm resources. Practical implications Besides contributing to the advancement of theory-informed research on decline and turnaround, this paper may be useful to practitioners involved in turnarounds, when they consider the consequences of decisions involving firm resources. Originality/value This paper helps advance theory-informed research on decline and turnaround in developing economies, helping address a gap in the extant literature, primarily focused on firms in developed countries.

Leadership in times of organizational decline: a literature review of antecedents, consequences and moderators

“…A poor assessment of the decline’s severity results in the engineering of ineffective revival strategies and a failed turnaround. Teixeira et al (2019) show that leaders in analyzed companies took a long time to notice the signs of distress, only reacting to it when the accounts were already posting losses. This delayed managerial reaction worsened the adverse effects of decline on their firm’s resource base and made the attempted turnaround more arduous and highly uncertain.…”

“…Many authors examine the relationship between organizational slack and likelihood of decline across industrial and national settings (Ribeiro Serra et al , 2013). In a study of three textile firms operating in Brazil, Teixeira et al (2019) conclude that the effectiveness of resource orchestration efforts and the achieved outcomes of turnaround attempts are influenced by the conservation of organizational slack. When comparing declining and surviving business entities, Guha (2016) find that the amount of available slack is significantly lower in bankrupts than in survivors, suggesting that it can act as a critical warning signal for managers in distressed organizations.…”

“…Adverse commodity prices, fluctuations in foreign exchange rates and changes in interest rates may increase input prices and decrease output prices, resulting in a net financial loss (Teixeira et al , 2019). Moreover, an industry that entered in its phase of decline enhances competition for customers and resources, pushing the weakest companies to exit the industry (Carmeli and Sheaffer, 2009).…”

The effect of resource slack on organizational decline of large Brazilian companies: the moderating effect of the industry’s dynamic

“…Often, there is a noticeable lag in managerial awareness and timely response. By the time some managers discern signs of decline, their firms might be wrestling with substantial losses, intensifying the negative impacts on resources and complicating the recovery process (Teixeira et al, 2019). Davis et al (2009) elucidate that empirical research on environmental dynamism encompasses diverse dimensions.…”

Turnaround and human resource strategies during the COVID-19 crisis

“…Indeed, decline cannot be directly associated with company death, while the other concepts (i.e., business failures, mortality, or bankruptcy) refer to a company’s exit, death, or mortality ( Mellahi & Wilkinson, 2004 ). Organizational decline thus refers to the deterioration of the company resources and performance over a particular period of time ( Cameron et al, 1987 ; D’aveni, 1989 ; Francis & Desai, 2005 ; Ribeiro Serra et al, 2017 ; Teixeira et al, 2019 ). Two main antecedents of decline have been distinguished, namely internal causes and external causes ( Weitzel & Jonsson, 1989 ).…”