Acceso usuarios
The unexpected investment decisions of companies during recessions often frustrate commentators and policy makers who view the economy from the top down. Companies may act against immediate market signals during recessions because of uncertainties about strategy and the future direction of the economy. A mesolevel sociological model of how firms interpret and respond to economic conditions in uncertain times improves understanding of firms� variable responses to recessions, which cumulatively shape macroeconomic trajectories. Examining firm-level employment during four recessions from 1950 to 1970, the author generates results from dynamic panel models to show that firms set their employment levels against profits and market share and in alignment with peers and political affiliations. Firms manage uncertainty by imitating peers but also by endeavoring to construct their environment collectively through business associations. This article�s counterintuitive economic findings and the evidence of social and political influences reinforce the importance of careful investigation into how firms respond to recessions.
