Most p rior literature has argued that turnaround firms’ first objective is to focus on retrenchment activities that avoid a further deterioration of the firm decline situation. Once firm s ha ve ensured its short - term survival, the turnaround activities shift their focus towards recovery. How ever, recent turnaround studies have questioned this sequential process of retrenchment and recovery and argued for a simultaneous approach . Motivated by these results, we analyze turnaround behavior of 35 service firms during 2002 and 2003 . Our results confirm the combination of retrenchment and recovery for service turnarounds. This study responds to prior claims for more turnaround research in service firms and contribute s to a more thorough understanding of how to manage the conflicting tensions betw een retrenchment and recovery.