Incorporates: Journal of Management History (Archive)
Online from: 1967
Subject Area: Accounting and Finance
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|Title:||Downsizing strategies and organizational performance: a longitudinal study|
|Author(s):||Zachary Sheaffer, (Department of Management & Economics, Open University of Israel, Ra'anana, Israel), Abraham Carmeli, (Graduate School of Business Administration, Bar-Ilan University, Ramat-Gan, Israel), Michal Steiner-Revivo, (School of Management, Ben Gurion University of the Negev, Beer Sheba, Israel), Shaul Zionit, (Department of Management & Economics, Open University of Israel, Ra'anana, Israel)|
|Citation:||Zachary Sheaffer, Abraham Carmeli, Michal Steiner-Revivo, Shaul Zionit, (2009) "Downsizing strategies and organizational performance: a longitudinal study", Management Decision, Vol. 47 Iss: 6, pp.950 - 974|
|Keywords:||Downsizing, Organizational performance|
|Article type:||Research paper|
|DOI:||10.1108/00251740910966677 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors wish to thank the Editor and two anonymous reviewers of this journal for their helpful comments and suggestions.|
Purpose – How does downsizing affect long- and short-term organizational performance? The present study aims to address this important question and attempts to extend previous research by examining the effect of both personnel and assets reduction on long- and short-term firm performance.
Design/methodology/approach – The paper uses data collected through secondary sources on 196 firms traded on the Tel Aviv Stock Exchange (TASE) between 1992 and 2001.
Findings – Econometric analyses indicate the positive impact of a combination of downsizing strategies on short-term performance, and the negative effect of this combination on long-term performance and high-tech industry performance is negatively related to assets and personnel cutbacks. Whereas downsizing affects the short-term performance of larger and established companies positively, it generally affects long-term performance inversely.
Originality/value – This study offers a first examination of the effects of simultaneous cutbacks in personnel and assets. This combined strategy goes further than dismissing employees, since layoffs are linked to the sale of such tangible assets as product lines or manufacturing facilities. By so doing, firms downscale their activities commensurate with the reduction in workforce and are less likely to generate excess workload on the remaining employees.
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