Abstract
Growth and productivity have been linked together as the path to increasing profitability. However, companies that embark on aggressive growth strategies often find their efficiency severely compromised. This research examined companies whose asset productivity declined severely during periods of aggressive growth. Contrary to conventional turnaround wisdom, asset pruning and debt reduction did not accompany asset productivity turnarounds; however, successful turnaround companies did decrease their long‐term debt ratios as they continued to expand. Companies that failed to turn around their asset productivity declines suffered subsequent declines in sales and income growth. Although the firms in this study did not publicly acknowledge the presence of decline, takeover attempts were more likely to occur during or immediately after the period of asset productivity decline.
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