Centralization of strategic decisions during the Great Recession

Bakonyi, Zoltán and Muraközy, Balázs (2016) Centralization of strategic decisions during the Great Recession. Műhelytanulmányok = Discussion Papers (MT-DP ). Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budapest. ISBN 978-615-5594-53-3

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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 po stponing innovations are indeed associated with centralization even when we control for ownership, group structure, financing, management, and strategy.

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