ASSET PRODUCTIVITY TURNAROUND - THE GROWTH EFFICIENCY CHALLENGE/

Growth and productivity have been linked together as the path to incre asing profitability. However, companies that embark on aggressive grow th strategies often find their efficiency severely compromised. This r esearch examined companies whose asset productivity declined severely during periods of aggressive growth. Contrary to conventional turnarou nd wisdom, asset pruning and debt reduction did not accompany asset pr oductivity turnarounds; however, successful turnaround companies did d ecrease their long-term debt ratios as they continued to expand. Compa nies that failed to turn around their asset productivity declines suff ered subsequent declines in sales and income growth. Although the firm s in this study did not publicly acknowledge the presence of decline, takeover attempts were more likely to occur during or immediately afte r the period of asset productivity decline.