Abstract
Purpose: It is widely accepted that stakeholders play a role in the turnaround of an organisation. However, the exact role is unclear. This study set out to investigate the roles of stakeholders in the success of business rescue through the lens of stakeholder theory. Design/methodology/approach: The study research design is qualitative following an exploratory approach. The choice of technique for the study was semi-structured interviews. Findings/results: The findings indicate that key stakeholders go beyond affected parties as described by Chapter 6 of the Companies Act. Creditors are considered the most influential stakeholders due to their ability to vote on the business rescue plan, followed by post-commencement funders and employees, to ensure business continuity. Customers were given the same level of importance by the business rescue practitioners as other affected parties. Due to the dynamic nature of business rescue, business rescue practitioners prioritise resourceful stakeholders when managing the process. A simplified framework illustrating roles of stakeholders during business rescue is presented. Practical implications: Stakeholder management should be recognised as a valuable exercise that must be allocated time and resources. Business rescue practitioners should recognise stakeholder influences at different stages of the business rescue process.
Highlights
The business rescue status quo report reflected a 9.4% success rate in business rescue (Pretorius, 2015)
The study’s primary research question is: what are the roles that different stakeholders play during a period of successful or unsuccessful business rescue in South African organisations? The study seeks to understand within the context of business rescue who the key stakeholders are, which stakeholders are influential and what factors contribute to their influence
The findings indicate that the first instinct of the participants was to describe stakeholders as affected parties; through further probing, reference was made to the broad view and parties were influenced by the outcome of the business rescue
Summary
The business rescue status quo report reflected a 9.4% success rate in business rescue (Pretorius, 2015). D’Aveni and MacMillan (1990) and Trahms, Ndofor and Sirmon (2013) recognise how crucial stakeholders are in the turnaround of a business It is, valuable to understand stakeholder influence in the success and failure of business rescue. Benedettini, Neely and Swink (2015) identify the business environment incorporating stakeholders as a factor that contributes to business failure These researchers (Benedettini et al, 2015; Priego et al, 2014; Tangpong et al, 2015) show that stakeholders play a prominent role in an organisation’s failure and turnaround processes. It is clear that literature recognises the importance and contribution of stakeholders It remains unclear precisely what roles different stakeholders play within turnarounds. The study’s primary research question is: what are the roles that different stakeholders play during a period of successful or unsuccessful business rescue in South African organisations? The study seeks to understand within the context of business rescue who the key stakeholders are, which stakeholders are influential and what factors contribute to their influence
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