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Reinterpreting the great US department store bankruptcies of the 1980s A catalyst to strategic structural change

Reinterpreting the great US department store bankruptcies of the 1980s A catalyst to strategic... Purpose – The financial restructuring of the US department store industry is commonly interpreted as a time of corporate excess, value‐destruction and ultimately collapse. The purpose of this paper is to re‐analyse these events using qualitative methods to understand the background to the leveraged transactions and to review the implications that their failure had for the longer term strategy and structure of the US department store industry. Design/methodology/approach – The research is based on two extensive periods of fieldwork in the US when the author interviewed ( n =28) many of the protagonists of the 1980s restructuring period and those who inherited the management of the bankrupt businesses in the 1990s. By adopting a qualitative perspective, we are accessing social and human perspectives of these developments as well as their wider effects. Findings – The leveraged transactions were conceptually an appropriate attempt to centralise the structure of the industry but their execution was not possible under such extreme financial distress. However, bankruptcy protection provided the environmental conditions to realise the benefits of more efficient strategic and subsequent wide‐ranging structural change. Originality/value – This research differs from economistic readings of the period that analyse changes in market value of the constituent firms and the more reactionary journalistic accounts. The paper re‐casts the failed financial restructuring in a new light, underlining the regenerative effects of Chapter 11 Bankruptcy Protection in promoting firm revival, alongside visionary leadership. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Management History Emerald Publishing

Reinterpreting the great US department store bankruptcies of the 1980s A catalyst to strategic structural change

Journal of Management History , Volume 14 (4): 20 – Sep 26, 2008

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Publisher
Emerald Publishing
Copyright
Copyright © 2008 Emerald Group Publishing Limited. All rights reserved.
ISSN
1751-1348
DOI
10.1108/17511340810893135
Publisher site
See Article on Publisher Site

Abstract

Purpose – The financial restructuring of the US department store industry is commonly interpreted as a time of corporate excess, value‐destruction and ultimately collapse. The purpose of this paper is to re‐analyse these events using qualitative methods to understand the background to the leveraged transactions and to review the implications that their failure had for the longer term strategy and structure of the US department store industry. Design/methodology/approach – The research is based on two extensive periods of fieldwork in the US when the author interviewed ( n =28) many of the protagonists of the 1980s restructuring period and those who inherited the management of the bankrupt businesses in the 1990s. By adopting a qualitative perspective, we are accessing social and human perspectives of these developments as well as their wider effects. Findings – The leveraged transactions were conceptually an appropriate attempt to centralise the structure of the industry but their execution was not possible under such extreme financial distress. However, bankruptcy protection provided the environmental conditions to realise the benefits of more efficient strategic and subsequent wide‐ranging structural change. Originality/value – This research differs from economistic readings of the period that analyse changes in market value of the constituent firms and the more reactionary journalistic accounts. The paper re‐casts the failed financial restructuring in a new light, underlining the regenerative effects of Chapter 11 Bankruptcy Protection in promoting firm revival, alongside visionary leadership.

Journal

Journal of Management HistoryEmerald Publishing

Published: Sep 26, 2008

Keywords: Leveraged buy‐outs; Organizational restructuring; Department stores; Retailing; Qualitative research; United States of America

References