Capacity utilisation and corporate restructuring: a comparative study of the US, UK and other EU countries
* Imperial College Business School
Address for correspondence: C. Driver, Imperial College Business School, 53 Princes Gate, Exhibition Road, London SW7 2PG, UK; email c.driver{at}ic.ac.uk
This paper compares and contrasts capacity utilisation in the manufacturing sectors of the US, UK and other EU countries over three decades. It argues that corporate governance and the pressures of globalisation have led to a tighter capacity stance in the UK but not generally in the US or Europe. The paper further explores the nature of the UK experience, in particular, the rival theories that efficiency in capital use has increased versus the view that firms have simply tightened their capacity stance in line with higher hurdle rates of return. The evidence of the paper supports the view that UK firms adopted a ‘submissive’ response to the pressures of globalisation by shutting capacity and retreating from new investment.
Key Words: Capacity • Utilisation • Capital • Structural breaks • Corporate control
JEL classifications: E22 L16 L60 P52
Manuscript received January 28, 2002; final version received March 25, 2003.
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