Incompetent business management

(Ref. 307)
Problem Components
Policy issue area: Economics
Policy issue: Management
Description: Decline of the industrial sector caused in part by mismanagement.
Symptoms: Business management that is characterized by short time horizons (lack of strategic thinking for their organizations); adversarial labor relations; lack of coordination with rest of society; underinvestment in R&D; poor management of cost and quality; inability to compete internationally; corporate and financial giantism and concentration.
Causes: Management education; tax system and legislation that provides wrong incentives.
Cost of problem: -
Solution Components
Resources: Educational and research institutions.
Goal: 1. Provide tax incentives to corporations to encourage forward looking, strategically thinking management practices
2. Create a framework of economic rules and incentives that discourage corporate/financial giantism and concentration (with its economic inefficiencies and alienation-producing bureaucracies), and encourage small- and medium-sized independent enterprises, and employee-owned businesses
3. Promote constructive labor-management cooperation and negotiations, including the equitable sharing of risks and rewards, worker productivity, quality of work, employee participation in decision-making, and more employee stake/ownership.
Program area: Economic development
Program-remedy: 1. Tax reform, with incentives that reward competent management
2. Labor legislation that encourages constructive labor-management cooperation.
Program-prevent: National economic planning program, which encourages the long-range, strategic view of economic development and international competition.
Cost of program: -
Beneficiaries: Business and industry; stockholders; workers.

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