When Business Closes Down: Social Responsibilities and Management Actions

by Archie Carroll



There is no single reason why so many business and plant shutdowns have occurred over the past decade, although the recession of the early 1980s has been a recent catalyst. Some companies are simply in declining industries, others have outdated facilities or outmoded technology and see the shutdown as their only alternative. A number of companies seek nonunion regions of the country while others seek access to new markets. Automation, rising energy costs, inadequate capital investment, availability of transportation, foreign competition, depressed demand for products, costly regulation, labor-management conflict, poor long-term planning and changes in corporation strategy are other reasons often cited. Throughout the country companies are closing or selling operations as a reflection of the fundamental redeployment of corporate assets that is taking place. Plant shutdown and relocation problems are not unique to the U.S. In at least three other countries, Great Britain, West Germany and Sweden, advance notice and other concessions must be given prior to shutdowns. In Great Britain, companies are required to give severance pay, advance notice, time off to seek alternative employment and must consult with the union and consider their proposed alternatives to dismissal.

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

Learn more
Follow Us