Success and failure in turnaround attempts. An analysis of SMEs within the Finnish Restructuring of Enterprises Act

Nicholas Collett, Naresh Pandit, Jukka Saarikko

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41 Citations (Scopus)


This study focuses on the success and failure of small and medium sized enterprises (SMEs) attempting turnaround within Finland’s Restructuring of Enterprises Act. In doing so, it aims to shed light on (1) how successful and unsuccessful SME turnarounds differ; and, (2) the effectiveness of the Finnish regime in promoting SME recovery. A preliminary review of the turnaround literature revealed 23 decline and recovery variables. Data on these variables were collected via a questionnaire sent to the Administrators of failing SMEs that entered restructuring. Data from the sample of 228 returns were subjected to factor and logit analysis. The factor analysis finds four decline categories: poor management, high debt in adverse macroeconomy, an adverse microeconomic environment, and one-off causes of decline. It also finds three recovery action categories: management change and cash generation, market reorientation, and cost cutting and retrenchment. The logit analysis finds that one-off causes of decline, management change and cash generation, and cost cutting and retrenchment are more important in successful turnarounds and that poor management and an adverse microeconomic environment are more important in unsuccessful turnarounds.

The study also finds that the Finnish Restructuring of Enterprises Act has resulted in good rates of business survival. 54% of SMEs in our sample turnaround and survive.
Original languageEnglish
Pages (from-to)123-141
Number of pages19
JournalEntrepreneurship & Regional Development
Issue number1-2
Publication statusPublished - 2014


  • Turnaround
  • Restructuring
  • Finland
  • SMEs

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