Strategies for Business Turnaround and Recovery: A Review and Synthesis

Purpose: Against a backdrop of continued weak economic conditions and with many firms experiencing declining financial performance, this paper presents a synthesis of the business turnaround literature. It aims to identify which turnaround and recovery strategies have been effective historically, based on the evidence provided by previous empirical research. Design/methodology/approach: We review literature that includes 22 empirical studies, which investigated business turnarounds in previous recessionary environments. We review this literature in its entirety, rather than as individual contributions, to synthesise the lessons available for businesses operating in today’s challenging economic environment. Findings: Our review revealed convergence in the findings of the prior studies. Six effective turnaround strategies were consistently identified. Four of these relate to the content of the turnaround, namely cost efficiencies, asset retrenchment, a focus on the firm’s core activities and building for the future and two relate to accompanying change processes required for implementation: reinvigoration of firm leadership and culture change. Research limitations/implications: We highlight areas where knowledge on business turnarounds remains limited and suggest potentially fruitful directions for future research. Practical implications: We discuss the elements involved in each of the six effective turnaround strategies identified. We also provide a contemporary example to illustrate the application of these strategies in the current economic environment. Originality/value: The paper offers practitioners an evidence-based view on effective business turnaround and recovery strategies, in addition to providing researchers with an accessible review of the existing literature.