NEW YORK -- Fearful that corporate raiders might target their company as fat, lazy and ripe for a hostile takeover, executives at Tasty Baking Co. a few years back sought to trim costs and boost productivity by combing through every aspect of their operation -- the administrative staff, the production process, the marketing budget, even the trash.

An idea to burn garbage as a means of heating factories never panned out. But the effort did lead to a broader review of energy use that helped the Philadelphia maker of TastyKakes reduce its electric bill by 60 percent.

Looking back on the whole ordeal, Tasty Baking Vice President Elizabeth Gemmill said the corporate takeover craze of the 1980s mostly spewed speculative investments and stifling mountains of debt. But the trash episode, she admitted, does illustrate its valuable contribution to boardrooms across America: "Corporate raiders did make everyone re-examine everything."

Today the takeover artists have all but disappeared -- grounded by the collapse of the junk bond market, the souring of some highly visible deals and the proliferation of numerous anti-takeover laws and court decisions. Their exit has been widely hailed as a victory for managers who say they can now turn their attention to their companies' operations instead of maneuvering to save their own neck.

But some executives, economists and other business analysts worry that, without the raiders standing in the shadows, a key force has disappeared that had served to help keep U.S. business lean, energetic and resourceful.

How business responds to the new climate will determine whether the U.S. economy maintains, let alone sharpens, its competitive edge in this decade, several analysts say.

"You take away the sword of Damocles that had been hanging over their head {because of the takeover threat}, and some will say, great, now I can really pursue long-term goals, and others will say, great, now I can go to the beach," said Nell Minow, general counsel for Institutional Shareholder Services Inc., a Washington-based consulting firm.

"The restructuring movement worked a lot of the fat out of corporate America," agreed Ralph V. Whitworth, director of the Washington-based United Shareholders Association, a shareholder rights group founded by former raider T. Boone Pickens Jr. "The thing to watch in the 1990s is to see if the managers learned anything from the 1980s."

Raiders' Legacy

In some areas, they may well have internalized a lesson or two.

The legacy of the raiders has promoted a new attitude and ethos among business managers, said Joseph A. Grundfest, a professor at Stanford Law School and former commissioner at the Securities and Exchange Commission.

In particular, managers have learned that they cannot afford to squander their companies' cash on marginal operations where they cannot compete effectively, according to Grundfest and others.

The risk of a hostile takeover brought home the peril of neglecting to pare weak businesses. That's because a company whose earnings were lagging, owing to the drain from peripheral operations, saw its stock price sag and thus became a natural target for raiders who could purchase the company's stock for a cheaper price.

In this sense, one of the benefits of the 1980s was the recognition that many companies benefit by spinning off less-critical businesses and focusing maximum attention on the core operations that management knows best.

Carter Hawley Hale Stores Inc., the Los Angeles retailer, shed its glamour specialty stores -- including Neiman Marcus and Bergdorf Goodman -- in 1987 to avert an unfriendly takeover, its second in less than three years. It was left with five department stores, including Thalheimers in Richmond. Carter Hawley Chairman Philip M. Hawley, a man resolutely soured on the takeover frenzy, nonetheless conceded he is better positioned to compete in the 1990s as a result of having pared down his operation. "There's no question we're doing things differently as a result" of the attempted takeover, he said.

From a historical perspective, the 1980s thus helped to undo some of the excesses of an earlier decade -- the 1960s -- when the rage in financial circles was putting together huge conglomerates combining widely varying kinds of businesses.

"The 1960s' conglomerate boom may have contributed to the slowdown in U.S. productivity growth that began at or slightly after that time," Frank Lichtenberg, a research associate at the private National Bureau of Economic Research Inc., wrote in a recent study.

But if the raiders tore asunder what the last two decades brought together, what can we expect from the coming decade?

Many business experts believe a new era dawns with outside pressures of a different sort to keep business in check. Among the new "enforcers" of efficiency will be a dramatically more competitive marketplace.

"General economic pressures are going to be the disciplinary factor in keeping management lean," predicted Hawley, echoing a sentiment shared by many.

Analysts foresee a quantum leap in commercial and industrial rivalries in the 1990s as new competitive pressures come in from all points of the globe.

Gail D. Fosler, chief economist of the Conference Board, a business-sponsored research organization, said there will be more pressure from foreign companies trying to capture market share from Americans and in their appetite for strategic acquisitions of U.S. firms.

"Many companies feel they are satisfied with what they've achieved in the 1980s. I think they're going to find that they're going to have to rethink that competitiveness on an ongoing basis," Fosler said.

"Takeovers may not have been as great a threat as the sheer pressure, today, from companies from different countries to purchase different technologies, markets, manufacturing capacity and the like," she said.

In the more immediate future, the risk of a recession also will play a powerful role in forcing managers to focus on cost-cutting and innovative ways to maintain sales and profits.

"The concern today is not so much over takeovers, as over the possible recession that could be coming at us, with the oil prices and everything. Management is thinking, how can you operate in a recession?" said a senior executive of a large, Pennsylvania-based manufacturer, who asked to remain unidentified.

Rise of the Institutions

Perhaps more than anything else, institutional investors are rising as a potent force of pressure on management.

In 1955, institutional investors made up 23 percent of the total value of stocks traded in the United States. Their share rose to 38.5 percent in 1981 and stands at about 50 percent today, according to Carolyn Kay Brancato, chief economist for the Columbia Law School's Institutional Investor Project, a group that is undertaking a five-year study of the growing role of institutional investors in corporate governance.

With that presence has come the gradual realization that they can do much to boost the return on their investment by wielding their clout to improve management's performance.

Some argue that the institutional investors may well have the raiders to thank for helping to highlight the gap between the people who own the companies -- stockholders -- and the people who run them -- management.

For decades, many stockholders bought shares the way they put money in the bank. Once they placed the money in an institution, they left management to decide what to do with it. No more. With corporate raiders sounding the horn, stockholders returned to the essential principle of capitalism, namely that the people whose money is at stake have the best incentive to run a company in the most efficient, profitable manner.

"Stockholders haven't carried out their responsibilities," said Pickens, who asked to be identified as a Dallas oilman rather than a corporate raider. "There isn't any legislation that makes management accountable to shareholders. Shareholders have to do it."

With power has come knowledge, some of it acquired through the realities of the marketplace. In years past, for example, large institutional investors such as pension funds ran their operations according to what is called the "Wall Street Walk" -- they sold stock as soon as its price fell.

But as the market share of institutional investors has grown, many have come to understand the futility of their buy-and-sell mentality: Institutional investors are now so big and dominant that they cannot "walk" without significantly depressing the stock they are selling. The result is that many are staying put and taking an active role in reviewing how management does its job.

"The institutions are much more sophisticated now, and they're putting on a lot of pressure that was coming before from the raiders," Whitworth said.

Marcus Bennett, chief financial officer of Martin Marietta Corp. in Bethesda, said the defense and aerospace company in the last 10 years has "significantly reoriented" its attention to institutional investors, who own 60 percent of the company's stock.

"They're able to understand good performance from shoddy performance," he said. "I think you'll see a lot more sticking to the knitting and back to basics."

Are the Critics Up to It?

But not everyone is convinced institutional investors are up to the job of keeping management on its toes. Harvard Business School Professor Jay Lorsch, for example, is skeptical that institutional investors, as a group, are any better able to eye the long-term over short-term profits than raiders. "If they own all that stock and say they're in it for the long term, then who's doing all the short-term trading?" he said. But he's hopeful.

"Gradually, I think, the institutional investors will get their act together," said Lorsch.

In the ideal scenario, the new spurs for efficiency will promote effective management, while minimizing the disadvantages of the wild-and-woolly environment of the merger craze.

"I think it could be healthier for everyone because it's not the gun-to-the-head method," said Greg Jarrell, a former chief economist of the Securities and Exchange Commission who is now a finance professor at the University of Rochester's Simon Business School.

While the demise of heavily financed takeovers eliminates the "pressure-cooker environment" that once prevailed, said Jarrell, the combination of new competitive factors is sufficient to keep executives from thinking "they can go play golf every day at four."