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Title: Retrenchment in Declining Organizations: Towards an Integrative Understanding

Authors: John D. Francis; Timothy L. Pett

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: We address the debate among researchers and revisit the issue of whether retrenchment is a consequence of performance downturns or an integral strategic response. We build a model of factors and test their relationship to retrenchment (either the reduction of assets and expenses) for a sample of manufacturing firms dealing with ROI downturns. The results indicate that retrenchment is not ubiquitous to all firms undergoing decline. Instead, this strategy is mainly employed depending on how severe or rapidly the decline occurred. Also, different forms of retrenchment are utilized depending on how productively the firm uses its human and capital resources.

Keywords: Retrenchment; declining organizations; performance downturns; strategic response; resource utilization.

DOI: 10.1504/JBM.2004.141123

Journal of Business and Management, 2004 Vol.10 No.1, pp.39 - 52

Published online: 05 Sep 2024 *