Corporate Turnaround: A Theoretical And Empirical Study On Chinese Small And Medium Sized Listing Companies

Small and medium sized enterprises (SMEs) occupy a unique place in Chinese economy. They comprise the largest number of total firms, and employ a large proportion of the workforce. They also develop a large number of new products and services because they can be quicker and closer to customers than larger firms. At the end of the 1990s and beginning of the 2000s, there has been a clear upswing of Chinese economy, with the launch of small companies listing on the stock market featured with high-growing contribution. However, nowadays some of the companies are suffering from stagnations or even net lost. The health development of the economy in small companies is critical. This study is an effort to improve the understanding of how they can survive declines.What are the reasons that result in the success of turnaround? As early as mid 1970s, a group of U.S. researchers analyzed companies that managed to perform a successful turnaround; the companies had significantly increased their performance from unacceptably low levels to normal. The ideas of turnaround practitioners are relatively homogeneous, - most of the authors recommend cost and asset reductions with a clear leadership focus. However, empirical turnaround studies did not achieve a similar common body of knowledge. Actually large numbers of empirical studies reported contradictory conclusions, whether the core of recovery of declining companies is strategic reorientation and operational improvement. As a matter of fact, turnaround actions inevitably comprise operational and strategic attempts that mutually influence the turnaround process. It is difficult and unnecessary to discuss the attempts separately.