What is Good for General Motors is Bad for America: The 2009 Bailout Through the Lens of Heskett's Design-Oriented Theory of Value

This research is an applied case study of the 2009 General Motors bailout using John Heskett's economics as a starting point for analysis. In 1993, Heskett (1937-2014) wrote in International Design that GM's myopic design vision at the corporate strategy level led to the company's stagnation and an inability to compete. Professor Heskett had not only captured GM's competitive position at the time-he had foretold its future decline. Shortly after that article was published, GM declared losses of $23 billion-the largest in US corporate history. In 2009, despite accumulated losses totaling $35 billion, GM was bailed out and nationalized by the US government in another unprecedented event. Through the lens of the GM bailout, this article examines Heskett's critique of mainstream economics and uses his research into institutional economics and the national system to help define the rent-seeking asset regime that led to the GM bailout. Key observations will benefit firm management, policy-makers, and those interested in political economics from an historical and institutional point of view.