Appropriately Managing Knowledge in Romanian Entrepreneurial Businesses: Finding Balance in Restructuring Companies

Abstract

In light of the global economy transformation and the several crises affecting the world, streamlining and reorganization of companies' activities is a priority. We posit that concentration of knowledge and its use in companies for short term gains can lead to misguided economic behavior, crisis and insolvencies coupled with low probability of successful restructuring. In turn the success of restructuring is dependent on cohesive knowledge management while dispersed knowledge management can, at most, prolong the economic life of a company and not save it from demise. We analyze the impact and lack of impact that knowledge and its guided/misguided management can have on Romanian companies, ex ante and ex post insolvency procedures. We chose both an exploratory and explanatory case study approach of Romanian companies affected by economic crisis that underwent various insolvency stages, tracing the use of knowledge and its different practical deployment to the decision-making processes and their outcomes. We review the causes that lead to the economic crisis and subsequent insolvency contexts. We compare the use of knowledge by the companies’ leadership against similar cases in other jurisdictions and we identify patterns of successful and unsuccessful application of knowledge management. Next, we investigate the effects of dispersed knowledge management in the early insolvency stages, focusing on the reorganization phase identifying gaps and discussing potential solutions. The results suggest, as they apply to the researched case studies, that both concentrated and dispersed knowledge management within distressed companies do not lead to positive outcomes and a balanced approach to knowledge management is more prone to provide effective and viable restructuring. The article explores several knowledge management theories and various academic research as they relate to the decision-making process for Romanian companies in distress and expands the academic universe as it relates to knowledge treatment in economic crisis. The results of our research and the potential solutions discussed can be further developed into a best practice guidance or a practical model to be used both by academics and practitioners as well.