Imagine a ship at sea, at risk of sinking in a tempest. Is it better to empower the crew to do whatever it takes to save the ship, or should every decision be made by the captain and top officers? Similarly, what should the optimal form of firm organisation be during a severe downturn? The need to make tough decisions – including layoffs – may favour firms that concentrate power at the top. However, the turbulence and fast-shifting conditions magnify the value of the information held by local managers.
