Does Doing Badly Encourage Management Innovation?
AbstractIn this paper we have undertaken an empirical analysis of the notion that firms introduce managerial innovations as a consequence of bad times, as in the "pit-stop" view of recessions. We first analyze a dynamic model of the firm and conclude that a competitive firm operating in a perfect capital market may well devote more of its employees' time to reorganization and other productivity improving activities during periods where the real output price or productivity is declining (e.g. recessions). We then investigate the hypothesis that a worsening of the firm's situation will lead to the introduction of productivity improving innovations of various kinds. Our individual company data tend to confirm this hypothesis with the single exception that firms tend to become more centralized when their real or financial position declines, despite the general view that it is decentralization which tends to improve the operation of a company in the long run. Copyright 2001 by Blackwell Publishing Ltd
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 99175.
Length: 34 pages
Date of creation: 1995
Date of revision:
COMPETITION; ENTREPRISES; PRODUCTIVITY;
Other versions of this item:
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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