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Centralization of strategic decisions during the Great Recession

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  • Zoltán Bakonyi
  • Balázs Muraközy

Abstract

We use a survey dataset of more than 14,000 manufacturing firms from seven European countries in order to examine changes in the degree of centralization that followed the Great Recession in 2009. We document three findings. First, we find that a larger fall in sales is associated with a tendency to centralize. The finding is consistent with a theoretical prediction that organizations facing substantial demand shocks are more likely to centralize. Second, we show that the change in the level of centralization during the crisis was accompanied by other decisions characteristic of short‐term optimization. Third, we show that increased centralization has led to slower postcrisis growth even when controlling for the size of the shock and other decisions taken during the crisis.

Suggested Citation

  • Zoltán Bakonyi & Balázs Muraközy, 2019. "Centralization of strategic decisions during the Great Recession," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(4), pages 394-413, June.
    • Handle: RePEc:wly:mgtdec:v:40:y:2019:i:4:p:394-413
    DOI: 10.1002/mde.3010
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    Cited by:

    1. Eirik Sjåholm Knudsen & Lasse B. Lien & Bram Timmermans & Robert Wuebker, 2022. "The more things change, the more they stay the same: Demand‐side responses to economic shocks," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1240-1255, July.
    2. Edwin R. Flores‐Hernández & Carlos R. García‐Alonso & César Hervás‐Martínez, 2022. "Strategic management practices in Central American micro family enterprises: The case of the commercial sector in El Salvador," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3454-3465, December.

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