Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Foreword
- Preface
- Part I Overview
- Part II Human outcomes
- Part III Organizational outcomes
- Part IV Post-downsizing implications
- 10 The stress outcomes of downsizing
- 11 Good downsizing
- 12 Post-downsizing implications and consequences
- 13 Exploring the etiology of positive stakeholder behavior in global downsizing
- Index
- References
11 - Good downsizing
Published online by Cambridge University Press: 05 July 2014
Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Foreword
- Preface
- Part I Overview
- Part II Human outcomes
- Part III Organizational outcomes
- Part IV Post-downsizing implications
- 10 The stress outcomes of downsizing
- 11 Good downsizing
- 12 Post-downsizing implications and consequences
- 13 Exploring the etiology of positive stakeholder behavior in global downsizing
- Index
- References
Summary
Downsizing, broadly conceptualized here as an intentional selective reduction in a firm’s physical and/or human capital (DeWitt, 1998), is most commonly equated with layoffs, one choice in a broad range of intentional workforce reduction alternatives (Cascio, 1993; Greenhalgh, Lawrence, and Sutton, 1988). Because of downsizing’s often detrimental effect on those let go (Leanna and Feldman, 1992; Newman, 1988; Uchitelle, 2006), it is difficult to promote the idea that downsizing might be considered great. But research suggests that downsizing can be good.
Insights into what makes downsizing good can be found in studies of the relationship between downsizing and a firm’s financial performance. First, downsizing does not happen without a reason. Erosion in corporate performance, either experienced or expected, precedes use of workforce reductions (Datta, Guthrie, Basuil, and Pandey, 2010; Wayhan and Werner, 2000). Second, poorly executed downsizing, including large employment cuts and across the board cuts, triggers negative market reactions (Nixon, Hitt, Lee, and Jeong, 2004; Worrell, Davidson, and Sharma, 1991). Thirdly, short-run financial improvements are evidenced when employment cuts are part of corporate refocusing (Nixon et al., 2004; Wayhan and Werner, 2000) or asset restructuring (Cascio, Young, and Morris, 1997). Additionally, where short-run financial erosion occurs, longer-run financial recuperation may follow (De Meuse, Bergmann, Vanderheiden, and Roraff, 2004). But, many of these studies focus on market reactions to very large, diversified, publicly traded company announcements. As it is hard to discern what a firm did other than at the most coarse of levels, questions remain regarding how “good downsizing” is obtained. What are investors reacting to? Is it the change in the relative weight of the business units within the portfolio or the change in the size of the corporate staff? Is it change in the way business units are positioned within their market? Or, perhaps more appropriately, is it the relative effectiveness of the change; how does the change being undertaken by a particular firm compare to the changes being undertaken across the firm’s competitive context? Answers to these questions, though important, are not this chapter’s focus.
Information
- Type
- Chapter
- Information
- DownsizingIs Less Still More?, pp. 326 - 355Publisher: Cambridge University PressPrint publication year: 2012
References
, , and 1997. “Customers satisfaction, productivity, and profitability: Differences between goods and services.” Marketing Science 16(2): 129–145.CrossRefGoogle Scholar
1965. Corporate Strategy: An Analytic Approach to Business Policy for Growth and Expansion. New York: McGraw Hill.Google Scholar
and 1989. “Social identity and the organization.” Academy of Management Review 14: 20–39.CrossRefGoogle Scholar
1988. Social Foundations of Thought and Action: A Social Cognitive Theory. Englewood, NJ: Prentice-Hall.Google Scholar
1988. “The concept of ‘impartation’ policies: A different approach to vertical integration strategies.” Strategic Management Journal 9(5): 507–520.CrossRefGoogle Scholar
and 1986. “Interactional justice: Communication criteria for fairness,” in (ed.), Research on Negotiation in Organizations, Vol. I. Greenwich, CT: JAI, pp. 43–55.Google Scholar
and 1996. “Value-based business strategy.” Journal of Economics and Management Strategy 5(1): 5–24.CrossRefGoogle Scholar
1988. “The effects of work layoffs on survivors: Research, theory and practice,” in and (eds.), Research in Organizational Behavior, Vol. X. Greenwich, CT: JAI Press, pp. 213−255.Google Scholar
1990. “Scope of justice in the workplace: How survivors react to co-worker layoffs.” Journal of Social Issues 46: 95–106.CrossRefGoogle Scholar
, , , and 1990. “When it is especially important to explain why: Factors affecting the relationship between managers’ explanations of a layoff and survivors’ reaction to the layoff.” Journal of Experimental and Social Psychology 26: 389–407.CrossRefGoogle Scholar
and 1990. “The impact of layoffs on survivors: An organizational justice perspective,” in (ed.), Applied Social Psychology and Organizational Settings. Hillsdale, NJ: Erlbaum, pp. 45–75.Google Scholar
, , , , and 1987. “Survivors reactions to layoffs: We get by with a little help for our friends.” Administrative Science Quarterly 32(2): 526–541.CrossRefGoogle Scholar
, , and . 1992. “The influence of prior commitment to an institution on reactions to perceived unfairness: The higher they are, the harder they fall.” Administrative Science Quarterly 37(2): 241–261.CrossRefGoogle Scholar
1999. “A conceptual framework for analyzing why organizations downsize.” Organization Science 10(1): 69−82CrossRefGoogle Scholar
and 1983. “Matching managerial strategies to conditions of decline.” Human Resource Management 22(4): 359–375.CrossRefGoogle Scholar
1993. “Downsizing: What do we know? What have we learned?” Academy of Management Executive 7(1): 95–104.Google Scholar
2002. Responsible Restructuring: Creative and Profitable Alternatives to Layoffs. San Francisco, CA: Berrett-Koehler.Google Scholar
2009. Employment Downsizing and Its Alternatives. Alexandria, VA: Society for Human Resource Management.Google Scholar
, , and 1997. “Financial consequences of employment change decisions in major US corporations.” Academy of Management Journal 40: 1175–1189.Google Scholar
2010. “Value creation, competition, and performance in buyer−supplier relationships.” Strategic Management Journal 32: 76–102.CrossRefGoogle Scholar
, , , and 2010. “Causes and effects of employee downsizing: A review and synthesis.” Journal of Management 36(1): 281–348.CrossRefGoogle Scholar
, , , and 2004. “New evidence regarding organizational downsizing and a firm’s financial performance: A long-term analysis.” Journal of Managerial Issues 16(2): 155–177.Google Scholar
and 1984. “Dimensions of organizational task environments.” Administrative Science Quarterly 29: 52–73.CrossRefGoogle Scholar
1991. “Strategies for downsizing: Breaking up is hard to do.” Unpublished Ph.D. dissertation. NY: Columbia University.
1993. “The structural consequences of downsizing.” Organization Science 4(1): 30–40.CrossRefGoogle Scholar
1998. “Firm, industry and strategy influences on choice of downsizing approach.” Strategic Management Journal 19(1): 59–79.3.0.CO;2-2>CrossRefGoogle Scholar
, , and 1998. “Downsizing strategically,” in (ed.), Advances in Applied Business Strategy. Greenwich, CT: JAI Press, pp. 5, 21–36.Google Scholar
, , and 2003. “Stuck in the middle: A control-based model of managers’ reactions to their subordinates’ layoffs.” Journal of Managerial Issues 15(1): 32–49.Google Scholar
, , and 2008. “Relationship clean-up time: Using meta-analysis and path analysis to clarify the relationships among job satisfaction, perceived fairness, and citizenship behaviors.” Journal of Management 34: 161–188.CrossRefGoogle Scholar
1980. “The occurrence of structural hysteresis in declining organizations.” Academy of Management Review 5(4): 589–598.Google Scholar
1999. “The gestalt of organizational downsizing: Downsizing strategies as packages of change.” Human Relations 52(12): 1505–1541.CrossRefGoogle Scholar
and 1993. “Organizational downsizing: A convergence and reorientation framework.” Organization Science 4: 10–29.CrossRefGoogle Scholar
1974. “Organization design: An information processing view.” Interfaces 4(3): 28–36.CrossRefGoogle Scholar
, , and 1999. “A meta-analysis of satisfaction in marketing channel relationships.” Journal of Marketing Research 36(2): 223–238.CrossRefGoogle Scholar
1996. “Toward a knowledge-based theory of the firm.” Strategic Management Journal 17: 109–122.CrossRefGoogle Scholar
, , and 1988. “Determinants of work force reduction strategies in declining organizations.” Academy of Management Review 13(2): 241–254.CrossRefGoogle Scholar
, , , , and 1994. “Putting the service profit chain to work.” Harvard Business Review 72(2): 164–174.Google Scholar
and 1994. Downscoping: How to Tame the Diversified Firm. New York: Oxford University Press.Google Scholar
1980. “Effective vertical integration and disintegration strategies,” in (ed.), Business Policy and Strategic Management. New York: McGraw-Hill, pp. 256–263.Google Scholar
, , and 1995. “The effects of perceived interdependence on dealer attitudes.” Journal of Marketing Research 32: 348–356.CrossRefGoogle Scholar
and 1992. Coping with Job Loss: How Individuals, Organizations, and Communities Respond to Layoffs. New York: Lexington Books.Google Scholar
2001. “The effects of downsizing on organizational buying behavior: An empirical investigation.” Journal of the Academy of Marketing Science 29(2): 151–164.CrossRefGoogle Scholar
2003. “An empirical investigation of the effects of downsizing on buyer−seller relationships.” Journal of Business Research 56(2): 283−293.CrossRefGoogle Scholar
, , and 2010. “Firm downsizing and satisfaction among United States and European customers.” Journal of Business Research 63(7): 697–706.CrossRefGoogle Scholar
and 2008. “The impact of supplier downsizing on performance, satisfaction over time, and repurchase intentions.” Journal of Business and Industrial Marketing 23(4): 249–255.CrossRefGoogle Scholar
2004. How Industries Evolve: Principles for Achieving and Sustaining Superior Performance. Boston, MA: Harvard Business School Press.Google Scholar
, , and 1995. “Organizational downsizing: Constraining, cloning, learning.” Academy of Management Executive 9: 32–42.Google Scholar
and 1998. “Explaining how survivors respond to downsizing: The roles of trust, empowerment, justice, and work redesign.” Academy of Management Review 23(3): 567–588.CrossRefGoogle Scholar
and 2000. “When others retire early: What about me?” Academy of Management Journal 43: 1068–1075.CrossRefGoogle Scholar
, , and 1982. Employee− Organization Linkages: The Psychology of Commitment, Turnover and Absenteeism. New York: Academic Press.Google Scholar
, , , and 2004. “Market reactions to announcements of corporate downsizing action and implementation strategies.” Strategic Management Journal 25(11): 1121–1129.CrossRefGoogle Scholar
1988. Organizational Citizenship Behavior: The Good Soldier Syndrome. Lexington, MA: Lexington Books.Google Scholar
, , and 2010. “Creating value in the modern organization: The role of leveraging technology.” Organizational Dynamics 39(3): 226–239.CrossRefGoogle Scholar
, , and 2006. “Balancing vertical integration and strategic outsourcing: Effects on product portfolio, product success, and firm performance.” Strategic Management Journal 27: 1033–1056.CrossRefGoogle Scholar
and 1991. “Fairness and implied contract obligations in job terminations: The role of contributions, promises, and performance.” Journal of Organizational Behavior 12: 287–299.CrossRefGoogle Scholar
, , and 1995. “The customer satisfaction/logistics interface.” Journal of Business Logistics 16(2): 1–21.Google Scholar
and 2010. “Assessing the effects of mergers and acquisitions on firm performance, plant productivity, and workers: New evidence from matched employer−employee data.” Strategic Management Journal 31(8): 903–916.Google Scholar
, , and 1981. “Threat-rigidity effects in organizational behavior.” Administrative Science Quarterly 26(3): 501–524.CrossRefGoogle Scholar
and 1989. “Decreasing organizational size: Untangling the effects of money and people.” Academy of Management Review 14(2): 194–212.CrossRefGoogle Scholar
2006. The Disposable American: Layoffs and Their Consequences. New York: Alfred A. Knopf.Google Scholar
and 2000. “The impact of workforce reductions on financial performance: A longitudinal perspective.” Journal of Management 26(2): 341–363.CrossRefGoogle Scholar
1975. Markets and Hierarchies: Analysis and Antitrust Implications. New York: Free Press.Google Scholar
, , and 1991. “Layoff announcements and stockholder wealth.” Academy of Management Journal 34: 662–678.Google Scholar
and 1985. “Environmental decline and organizational response,” in and (eds.), Research in Organizational Behavior, Vol. VII. Greenwhich, CT: JAI Press, pp. 223–262.Google Scholar
, , and 2009. “Do buyer cooperative actions matter under relational stress? Evidence from Japanese and US assemblers in the US automotive industry.” Journal of Operations Management 27(6): 479–494.CrossRefGoogle Scholar
Accessibility standard: Unknown
Why this information is here
This section outlines the accessibility features of this content - including support for screen readers, full keyboard navigation and high-contrast display options. This may not be relevant for you.Accessibility Information
Accessibility compliance for the PDF of this chapter is currently unknown
and may be updated in the future.