Undifferentiation does not mean a company is giving in to bankruptcy; it’s a step toward reducing the effect of perceived insolvency on existing and potential customers. Keeping a hold on that customer base reduces the chances that a financial crunch will turn into a crisis. Daring to be the same, not different, is the discipline that debt imposes on struggling companies.
Gyöngyi Lóránth, [email protected]
Gyöngyi Lóránth is a research fellow at the London Business School’s Centre for New and Emerging Markets (CNEM) and a research affiliate of the Centre for Economic Policy Research (CEPR).
Stefan Arping, [email protected]
Stefan Arping is an assistant professor of finance at the University of Amsterdam. He is coauthor, with Gyöngyi Lóránth, of a CEPR working paper titled “Corporate Leverage and Product Differentiation Strategy.”