TY - CHAP
T1 - Broken promises
T2 - The role of contract breaches in turnaround situations
AU - Semadeni, Matthew
PY - 2001
Y1 - 2001
N2 - This chapter explores the role of contract breaches in firm turnarounds. Drawing from the turnaround and contract literatures, this chapter proposes that implicit and explicit contract breaches provide substantial resources to firms in turnaround situations during their retrenchment phase. It is asserted that the turnover of top management, the threat of bankruptcy, and the severe time compression of the turnaround situation will facilitate contract breaches. These contract breaches will, however, cripple the firm's ability to accomplish the goals of the reorientation phase, particularly if they choose to pursue a "return to growth" strategy. To avoid these crippling effects, it is proposed that the management of the firm will utilize the uncertainty inherent to the turnaround situation to provide accounts of why the contract breaches were necessary. Through these accounts, management will lower the perceived losses of the violated parties and will maintain their commitment during the firm's reorientation phase.
AB - This chapter explores the role of contract breaches in firm turnarounds. Drawing from the turnaround and contract literatures, this chapter proposes that implicit and explicit contract breaches provide substantial resources to firms in turnaround situations during their retrenchment phase. It is asserted that the turnover of top management, the threat of bankruptcy, and the severe time compression of the turnaround situation will facilitate contract breaches. These contract breaches will, however, cripple the firm's ability to accomplish the goals of the reorientation phase, particularly if they choose to pursue a "return to growth" strategy. To avoid these crippling effects, it is proposed that the management of the firm will utilize the uncertainty inherent to the turnaround situation to provide accounts of why the contract breaches were necessary. Through these accounts, management will lower the perceived losses of the violated parties and will maintain their commitment during the firm's reorientation phase.
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U2 - 10.1016/s0897-3016(01)13004-1
DO - 10.1016/s0897-3016(01)13004-1
M3 - Chapter
AN - SCOPUS:35448978383
SN - 0762308273
SN - 9780762308279
T3 - Research in Organizational Change and Development
SP - 117
EP - 146
BT - Research in Organizational Change and Development
PB - JAI Press
ER -