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Strategy and Structure: Corporate Restructuring and the Scope and Characteristics of Sunk Costs

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  • G L Clark

    (Institute of Ethics and Public Policy, and Department of Geography and Environmental Science, Monash University, Wellington Road, Clayton, VIC 3168, Australia)

Abstract

Most studies of industrial restructuring and regional adjustment are focused upon the local consequences or causes of restructuring. Few studies are focused upon corporate strategy, an essential ingredient for a better understanding of the motive forces behind restructuring. This paper is an attempt to redress the balance, beginning with the relationship between structure (the inherited configuration of production) and strategy (the design and implementation of restructuring). As part of this analysis, three types of strategy are distinguished: structure-dependent, structure-limited, and structure-focused strategies. To appreciate better the connection between the choice of strategy and corporate form, a series of models of corporate control are developed that distinguish between ownership and management. These preliminary arguments are then used to analyse the scope of sunk costs—that portion of fixed costs which are non-recoverable. To illustrate the scope of the framework used, recent examples of restructuring from northeast Asia and North America are interpreted in the light of the analytical model.

Suggested Citation

  • G L Clark, 1994. "Strategy and Structure: Corporate Restructuring and the Scope and Characteristics of Sunk Costs," Environment and Planning A, , vol. 26(1), pages 9-32, January.
    • Handle: RePEc:sae:envira:v:26:y:1994:i:1:p:9-32
    DOI: 10.1068/a260009
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    References listed on IDEAS

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    Cited by:

    1. Lisa A. Hagerman & Tessa Hebb & Anna Steiger, 2008. "The role of community partners in urban investments," Public and Community Affairs Discussion Papers 2008-02, Federal Reserve Bank of Boston.
    2. Konstantinos Melachroinos & Nigel Spence, 1999. "Regional Economic Performance and Sunk Costs," Regional Studies, Taylor & Francis Journals, vol. 33(9), pages 843-855.
    3. H. D. Watts & J. D. Kirkham, 1999. "Plant Closures by Multi-locational Firms: A Comparative Perspective," Regional Studies, Taylor & Francis Journals, vol. 33(5), pages 413-424.
    4. J. Painter & M. Chisholm & S. C. Dow & N. A. Phelps & R. J. Buswell & I. H. McNicoll & C. M. Law & M. E. Cawley & B. Archer, 1996. "Book Reviews," Regional Studies, Taylor & Francis Journals, vol. 30(3), pages 311-316.

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