Turnarounds: A stage theory perspective

In strategic management, an impressive body of literature on turnaround has accumulated over the last three decades; however, the topic remains largely idiosyncratic and open-ended. Based mainly on the tenets of the life-cycle family of process theory, this paper presents a composite four-stage model that unfolds the dynamics of turnaround and provides a basis for the development of a theory on which to draw further. By categorizing the elements of turnaround as three critical requirements - incidents, events, and concepts - the model explains how the elements germane to each stage, when combined, facilitate the progression from a crippling deterioration in performance to an enduring success or to an eventual death. An analysis of the turnaround of Chrysler Corporation provides preliminary support for the model. The model's implications for theory, research, and practice are also given.