Centralization of strategic decisions during the Great Recession: An empirical analysis of European manufacturing firms

Zoltan Bakonyi () and Balazs Murakozy
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Zoltan Bakonyi: Institute of Economics - Centre for Economic and Regional Studies, Hungarian Academy of Sciences PhD student - Corvinus University of Budapest

No 1617, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: This study analyzes which types of firm-level shocks were associated with the centralization of strategic decision-making during the recession of 2008-09. We use a unique survey dataset of more than 14000 manufacturing firms from seven European countries which includes direct information on whether the firms centralized or decentralized their strategic decision-making process. Motivated by theoretical approaches claiming that organizations under considerable stress are more likely to centralize, we use multinomial logit models to test whether firms facing a larger fall in turnover, employment, investment or having to postpone their innovations were more likely to change their decision-making process. We find evidence that employment change and postponing innovations are indeed associated with centralization even when we control for ownership, group structure, financing, management, and strategy.

Keywords: centralization; Europe; recessions (search for similar items in EconPapers)
JEL-codes: D22 D23 M21 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2016-06
New Economics Papers: this item is included in nep-cdm and nep-eur
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