This may be true, but the cost of doing business in the US, especially manufacturing, has left executives with few options.
You may also want to consider the role of 401k's and fund managers in that mix. As an investor, chances are that you care about Black Rock Small Cap Growth's performance. The actions that the Jack-In-The-Box (one of the fund's investments) takes to maintain share price and quarterly dividends is not really much of concern to you. Fund managers know that and base their decisions on that fact.
If you, as a corporate manager for (as an example) Jack-In-The-Box, take an action that is best in the long term but might temporarily reduce returns for a quarter or two in order to achieve long-term growth, you will be called on the carpet like nothing you've ever seen because your shareholders (the majority of whom are institutional owners, such as Black Rock Small Cap Growth) won't tolerate a loss of returns for even a quarter.
That changes how corporate managers act and how they think. IMHO, not always for the positive.
-— If you, as a corporate manager for (as an example) Jack-In-The-Box, take an action that is best in the long term but might temporarily reduce returns for a quarter or two in order to achieve long-term growth, you will be called on the carpet like nothing you’ve ever seen because your shareholders (the majority of whom are institutional owners, such as Black Rock Small Cap Growth) won’t tolerate a loss of returns for even a quarter.-—
So true.
My wife works for a major supermarket chain that changes hands regularly. The most recent acquisition was by an investment group. They thought of a novel idea —cutting staff and budgets.
But it wasn’t a novel idea. The store where my wife works was already badly understaffed. Long lines, messy shelves, postponed maintenance, etc.
Who knows how many loyal customers they’ve lost? But the manager keeps cutting and getting bonuses. The employees? Not so much.
If I was king I’d use profit-sharing as an incentive, like Costco and TJ’s. At TJ’s the employees are so attentive they’re like a bunch of Hare Krishnas. And the business is flourishing.