Title: Stakeholder dynamics moderation for distressed firms entering turnaround and business rescue: who and what counts?

Authors: Marius Pretorius

Addresses: Department of Business Management, University of Pretoria, UP, 0002, Pretoria, South Africa

Abstract: Stakeholder salience, conflict and prioritisation are important for directing decision-making. Entering a turnaround situation or business rescue (following distress) affects who and what may be important to decision-makers. During such distress, the stakeholders' composition changes which may alter power, legitimacy and urgency relations for other stakeholders. The consequences thereof are unclear, especially as the associated uncertainty of the outcome increases. Going concerns support stakeholder theory as balanced situations but salience and prioritisation may be adversely affected by the moderating context when the decision-makers change on entering turnaround situations or filing for business rescue following distress. Hence, making sense of how the stakeholder dynamics change during distress is vitally important to stakeholders as this may moderate decision-making of the various parties and even underwrite conflict. Such decisions may affect the success of attempted reorganisation interventions. By presenting comparative narratives for each stakeholder, this study explores, using analytic auto ethnography as method, the changing stakeholder views following distress and concluding with a stakeholder salience framework.

Keywords: turnaround; business rescue; zone of insolvency; ZoI; reasonable prospect; distress concern; going concern.

DOI: 10.1504/IJMDM.2018.093499

International Journal of Management and Decision Making, 2018 Vol.17 No.3, pp.299 - 321

Received: 02 Aug 2017
Accepted: 28 Feb 2018
Published online: 26 Jul 2018 *

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