Factors affecting the utilization of specific Turnaround Strategies by SMEs, during an economic depression

Greece has been experiencing the consequences of a deep economic crisis for nine consecutive years since 2008. This has adversely affected the entire business sector of the country. Due to its unique business sector characteristics, meaning the fact that in Greece the greatest percentage of the companies are micro SMEs and SMEs, the conditions during the economic crisis years (2008-2016) have significantly worsened. The socioeconomic conditions in Greece since the beginning of the crisis, combined with the characteristics of the SMEs and the SMEs’ organizational level, are the sources behind the problems experienced by these SMEs. This present research studied the identification of a specific Turnaround Strategies Mix, as well as the factors affecting those strategies, and furthermore the impact of those strategies on the Greek SMES’ performance and viability. Despite the fact that many researchers have supported that organizational change and top-level management replacement should be followed by Retrenchment Strategies for declining SMEs’ survival, the present research investigates and identifies Turnaround Strategies, focusing on their ability to improve the SMEs’ viability and survival. This has been made effective since the researcher, based on previous researchers’ Turnaround models, conducted the present research’s model by altering the Investment Strategies, instead of the Retrenchment ones. The business environment complexity into which the sequence of these Turnaround Strategies (Turnaround Process) takes place, creates factors that affect this process. This research examines and identifies as critical factors, the impact of the SMEs’ owners or managers’ personal profile characteristics, the economic crisis effects and the firm’s debt extent-leverage that affect the Turnaround Strategies Mix adopted by the Greek SMEs in order to achieve their survival and improve their financial performance during deep economic recession circumstances. The scope of the research was to analyse the collected data from the conducted sample of 209 Ionian Islands Greek SMEs and the Turnaround Strategies they implemented as a result of the economic crisis and the deterioration of their profitability. The main Turnaround Strategies investigated were Organizational Change, Investment vs Retrenchment, Innovation Strategies and Market Strategies (including Export Orientation). The research conducted was based on the proposed model and studied the operating SMEs in the Ionian Island region in Greece while a new prototype Turnaround Strategies Measurement Instrument (TSMI) was introduced by the researcher to evaluate those Strategies. The results of the present research showed that the Turnaround Strategy Mix, which was used by the research’s proposed model, positively affect the performance, viability and survival of the SMEs during economically stressed conditions. Furthermore, this research’s findings showed the positive impact on the Greek micro SMEs and SMEs’ performance and viability from the use of a specific Turnaround Strategies Mix during economic crisis circumstances. Therefore these findings could be very important for the SMEs’ owners or managers, as well as researchers, government organizations, policy makers, and, business advisors. The present study contributes to knowledge (originality) at a theoretical level with the measurement instrument (TSMI) introduced, adding the relevant gap in the Turnaround literature, as well as on the empirical level by proposing a specific Turnaround Strategy Mix for the Greek SMEs, on the one hand, and by identifying those factors that affect the utilization of specific Turnaround Strategies by the Greek SMEs on the other hand.