Economics
Decoupling and re-coupling during financial crises is typified by the decoupling hypothesis that, in 2007, held that Latin American and Asian economies, especially emerging ones, had broadened and deepened to the point that they no longer depended on the United States economy for growth, leaving them insulated from a slowdown there, even a fully fledged
recession
In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various ...
.
Faith in the concept had generated strong outperformance for stocks outside the United States. However, over the course of 2008, as fears of recession mounted in the United States, worldwide stock markets declined heavily. Contrary to the decoupling hypothesis, the losses were greater outside the United States, with the worst experienced in
emerging markets
An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or wer ...
and developed economies like
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...
and
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...
. Exports make up especially large portions of economic activity in those places, but that fact was not supposed to matter anymore in a decoupled world because domestic activity was thought to be so robust.
On the other hand, after the slump the emerging countries experienced a strong recovery, much stronger than that in advanced economies.
The phenomenon of decoupling and re-coupling has been explained by observing that global demand for factors such as capital and raw material declines when one part of the world economy suffers a crisis, which benefits the remaining healthy parts of the world economy through lower interest rates and lower commodity prices. However, once the crisis reaches the stage where global lenders suffer significant losses, they will cut back on their loan supply and interest rates for everybody will rise.
Organization theory
In
organizational theory
Organizational theory refers to the set of interrelated concepts that involve the sociological study of the structures and operations of formal social organizations. Organizational theory also attempts to explain how interrelated units of organiz ...
, ''decoupling'' refers to the creation and maintenance of gaps between formal, symbolic policies and actual organizational practices on the ground.
[Meyer, John W., and Brian Rowan. 1977. "Institutionalized Organizations: Formal Structure as Myth and Ceremony," ''American Journal of Sociology'', 83: 340-63.] In contrast, ''recoupling'' is a process by which previously decoupled policies and practices become coupled, leading to substantive, rather than symbolic, compliance.
[Tilcsik, András. “From Ritual to Reality: Demography, Ideology, and Decoupling in a Post- Communist Government Agency,” ''Academy of Management Journal'', 53:6 (December 2010): 1474-1498.](_blank)
/ref> Thus, recoupling is a process of organizational ritual becoming reality, of pretense becoming practice.
p. 1475.
References
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Great Recession
Organizational theory