A resource-based analysis of organizational turnaround: The contingency role of organizational life stages

Drawing on the resource-based view of the firm (RBV), this study proposes two levels of resource action: shedding resources and adding resources as the main two turnaround approaches. Since firms differ in the way they manage their resources over stages of organizational development, this study further analyzes the link between the RBV and organizational life-cycle model to investigate the contingency role of life stages in the turnaround context. The study sample consists of 72 Taiwan firms had ever experienced a successful turnaround. The results indicate that cost-cutting and investment in training and R&D, which represent respectively a shedding and an adding resource action, enable firms to turn around their deteriorating performance. The results also show that R&D investment is more effective for early-stage firms, while cost-cutting is more useful to firms in the late-stage.