Chapter 3: Post-Stagflation Management Strategies
THE ‘FOUR Ms’ STRATEGIES We have learned that, according to Joseph A. Schumpeter, innovative activity of the market transforms a state of stagnation into one of growth. But the economic process is very complex. It begins with the occurrence of new forms of market-effective technology, production and organization, which are created alongside already existing structures. However, after some time, intensified competition between the old and the new arises. As a critical stage of advancement is reached, competition leads to instability in national economies, with closures of old industries and increasing unemployment. Further, with the market mechanism on their side, the new enterprises and economic sectors gradually assume a position of superiority owing to their competitiveness (Salter 1969). Schumpeter used the now famous term ‘creative destruction’ to describe this process of old structures weakening and ultimately disappearing while new ones break through and reform the sphere of production (Schumpeter  1979). The systemic nature of the process gives rise to the notion of new ‘techno-economic paradigms’. In the wake of the 1970s stagflation crises, a new techno-economic paradigm ascended (Hayward and Menon 2003). The reform of the sphere of production builds on a completely new world with new standards of efficiency, new high growth of sectors, new location patterns, new models for management and organizational principles. The neo-Schumpeterian view is that the transition from one techno-economic paradigm to the next entails equally profound transformations of the institutional and social framework (Amin 1994). In this new paradigm, the ‘socio-institutional’ paradigm is clearly...
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