Blog #10 Enterprises Trashed the Economy
Henry Mintzberg, a professor of Management Studies at McGill University, shared his unique opinion on the cause of the recession in the newest edition of the Economist. To sum up his perspective simply, poorly run companies caused the recession. He goes on to state that no amount of economic intervention can end the recession; rather, change must come from the source, when corporate America cleans up its act.
Mintzberg places substantial blame on CEOs whom he believes run companies recklessly. Essentially, the CEOs get bonuses based on an increase of share prices. He goes on to explain that their are two ways that this may be done. One way, the ethical way, would be to raise share prices by conducting better research, improving products, and offering better service. The other way, which Mintzberg accuses the CEOs of, is raising stock prices through depreciating the brand, cutting investments in research, and confusing customers by deceptive pricing. This, he argues, raises prices long enough for CEOs to collect their bonus and leave.
There is more that Mintzberg has to say on the reasons why enterprises trashed the economy which can be found in the article link below.
http://www.economist.com/blogs/freeexchange/2010/12/management
