Control cycle responses to decline

Abstract

An analytical model of control cycles taking place in declining economic organizations is proposed. The main conjecture is that in the face of decline management tends to move from looser to tighter modes of control. Four modes of control are described: coercive control, direct control, ideological control and ecological control. On the basis of existing studies, the differences in reactions of management in various organiations (market-related and budget-related) are discussed. The change of perspective, with unions as the main actor, leads to the presentation of a counter-control cycle.

The analysis suggests that tightening of internal control is a defensive reaction of management, who perceives it as a most obvious strategy in coping with decline. It is suggested that an opposite strategy, i.e. of loosening control in the face of decline, may produce more flexibility and therefore constitute a more functional reaction to decline.