THE GREAT RECESSION INSIDE THE BELTWAY: EVIDENCE FROM INTERVIEWS WITH BUSINESS LEADERS

Year 2018, Volume: 5 Issue: 2, 121 - 129, 13.07.2018

Rebecca H. Padot

https://doi.org/10.17261/Pressacademia.2018.831

Abstract

Purpose- The goal of this study was to understand how the economic climate during the United States Great Recession affected businesses in the heart of the recession.

Methodology - Fifteen interviews with CEOs, Presidents, and Founders from the Capital Region were conducted in order to determine how businesses were affected during this time period. These leaders represented companies which ranged in size from new start-ups to established small businesses to hundred-million dollar plus companies.

Findings- The data suggests that economic repercussions from the Great Recession was not distributed evenly among businesses in this region. A pattern emerged that showed that two general types of companies felt the repercussions differently. Companies selling predominantly to the private sector navigated the financial crisis by being focused on cost-reduction of either their own operating costs or of their products and services delivered to their clients. Whereas, companies selling predominantly to the federal government were largely insulated from the Great Recession.

Conclusion- The findings suggest practical implications for business growth include cost-reduction of operations, price reductions on their products and services, and expansion into the federal public sector. Rather than looking at economic downturns as a negative for the small business, small businesses can creatively outmaneuver these downturns with the aforementioned methods.

Keywords

Great recession, US economy, strategy, business growth, CEOs

References

• Aliber, R. & Charles P. Kindleberger. (2015). Manias, Panis, and Crashes: A History of Financial Crisis, 7th ed., New York, New York: Palgrave Macmillan.
• Bloom, N. (Spring 2014). Fluctuations in Uncertainty, Journal of Economic Perspectives, Vol 28, No 2, doi: 10.1257/jep.28.2.153.
• Boettke, Peter. (2018). Presidential Address: Economics and Public Administration, Southern Economic Journal, Vol 84, No. 4, doi: 10.1002/soej.12265.
• Conlan, T. & Posner, Paul. (2017). Economic Crisis and Policy Response: The Context, Design, and Politics of the Recovery Act. In Conlan, T. J., Posner, P. L., & Regan, P. M., Governing Under Stress: The Implementation of Obama’s Economic Stimulus Program (pp. 19 – 44). Washington, D.C.: Georgetown University Press.
• Conlan, T. Posner, Paul & Regan, P. (2017). Managing the Great Recession: A Stress Test for Modern Governance. In Conlan, T. J., Posner, P. L., & Regan, P. M., Governing Under Stress: The Implementation of Obama’s Economic Stimulus Program (pp. 1 – 18). Washington, D.C.: Georgetown University Press.
• Cynamon, B.Z., Fazzari, S. M., & Setterfield, M. (2014). Understanding the Great Recession. In Cynamon, B.Z., Fazzari, S. M., & Setterfield, M. (Eds.), After the Great Recession: The Struggle for Economic Recovery and Growth (pp. 1- 30). New York, New York: Cambridge University Press.
• Geithner, T. F. (2014). Stress Test: Reflections on the Financial Crisis, New York, New York: Crown Publishers.
• Geithner, T. F. (August 2, 2010). Welcome to the Recovery, Op-Ed, The New York Times, https://www.nytimes.com/2010/08/03/opinion/03geithner.html.
• Leaders Portfolio. (2007 – 2009). Retrieved from Leaders Portfolio website: www.leadersportfolio.com/audio
• Mian, A. & Amir Sufi. (2014). House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It from Happening Again, Chicago, IL: University of Chicago Press.
• Mishkin, F. S. (2011). Over the Cliff: From the Subprime to the Global Financial Crisis, Journal of Economic Perspectives, Volume 25, No. 1, doi: 10.1257/jep.25.1.49.
• The National Bureau of Economic Research. (September 20, 2010). Business Cycle Dating Committee, Press Release, Retrieved from http://www.nber.org/cycles/sept2010.pdf and http://www.nber.org/cycles/sept2010.html
• Paulson, Jr., H. (2010). On the Brink: Inside the Race to Stop the Collapse of the Global Financial System, New York, New York: Hachette Book Group.
• Poole, W., (January 2009). The Credit Crunch of 2007-2008: Lessons Private and Public, Business Economics, Volume 44, Issue 1, doi: 10.1057/be.2008.1
• Reaser, L., (2011). The “New Economic Reality”: How New and How Real? Business Economics, Volume 46, Issue 17, doi: 10.1057/be.2010.37.
• Reinhart, C. M. & Rogoff, K. S., (2009). This Time is Different: Eight Centuries of Financial Folly, Princeton, NJ: Princeton University Press.
• Rosevear, J., (March 23, 2013). Why ‘Government Motors’ Still Owes You, The Motley Fool, http://www.fool.com/investing/general/2013/03/23/why-government-motors-still-owes-you.aspx
• Sheffi, Yossi., (2015). The Power of Resilience, Cambridge, MA: MIT Press.
• Sorkin, A. R., (2009). Too Big To Fail, New York, New York: Penguin.
• Stigliz, J., (2012). The Price of Inequality: How Today’s Divided Society Endangers Our Future, New York, New York: W.W. Norton & Company.
• Tamminen, S., (2017). Regional effects or none? Firms’ profitability during the Great Recession in Finland, Papers in Regional Science, Volume 96, Number 1, doi: 10.1111/pirs.12222.
• The National Bureau of Economic Research. Business Cycle Dating Committee, Press Release September 20, 2010. http://www.nber.org/cycles/sept2010.pdf and http://www.nber.org/cycles/sept2010.html
• Yin, R. Case Study Research: Design and Methods, 2nd Ed. Applied Social Research Methods Series, Vol. 5. Thousand Oaks, CA: SAGE Publications, 1994.