The impact of emotional contagion on turnaround in declining organisations: a conceptual analysis

Purpose Drawing on the emotions as social information (EASI) theory, this study aims to explore leadership, emotional and organisational determinants to turnaround strategies in the context of declining organisations. This paper further conceptualises the moderating effects of locus of control, ethical practices and corporate governance on these emotional dynamics. Design/methodology/approach A multilevel conceptual model is developed to illustrate how leadership and emotional contagion influence employee resistance or alignment during turnaround efforts. This paper offers several testable propositions to guide future empirical research. Findings The proposed framework theorises the causal relationships among emotional contagion, charismatic leadership, ethical leadership practices and corporate governance mechanisms. It explains how emotional contagion can differ between in-group and out-group employees depending on relational quality and access to information, ultimately shaping organisational turnaround outcomes. Originality/value While extant literature on organisational decline has focused primarily on innovation, financial performance and external factors, the emotional dynamics of decline have received limited scholarly attention. This paper advances the first integrative account of how emotional contagion varies across relational subgroups in turnaround contexts, thereby extending theory at the intersection of leadership, emotion and ethics.