Changes in Labor Specialization in Successful Turnarounds
The Case of ASEAN Chinese Small and Medium Enterprises
Organizational decline and turnaround strategy contents have mainly focused on large multinational organizations in the Western context. Much of Western literature celebrates the notion that in the face of an external threat, an organization shifts its focus to internal efficiency concerns. Current strategic theory promotes the creation of heterogeneous assets and capabilities. The history of economic enterprise has also testified the benefits of specialization of labour in achieving cost efficiency. This paper investigates organization responses to decline with Chinese small and medium enterprises (SME) in the Association of South East Asian Nations (ASEAN), comprising of ten Southeast Asian states. Data were collected from senior management and internal change managers of 20 such organizations that have undergone turnarounds in the period 2011-2014. The objective is to investigate management perceptions of appropriateness of the turnaround strategy with increasing specialization and the division of labour during organizational recovery from decline. SME management is expected to increase specialization to ensure organization survival. Findings revealed that management has instead lowered specialization and boosted flexibility during the recovery process. Cultural values are found to have a major impact on Chinese SME decision-making in turnaround situations. The findings have also provided insights to the key guiding principles for overseas Chinese business practices. Cultural implications for management are discussed.