Downsizing implementation and financial performance
Abstract
Purpose
The objective of this paper is to analyze whether the way that downsizing is implemented has any impact on the firm's performance.
Design/methodology/approach
The sample under investigation consists of a set of Spanish companies, which downsized between 1995 and 2001. The paper includes downsizing announcements and combines information from two different datasets (BARATZ and SABI). The focus is placed on the size of downsizing and the use of disengagement incentives.
Findings
A negative relationship between the size of downsizing and post‐downsizing corporate performance is found. In particular, firms which announced severe downsizing experience relatively lower performance in the year following the announcement.
Originality/value
The analysis advances organizational research by reinforcing the concept that firm performance is not only contingent on strategies, but also influenced by the means through which these strategies are implemented.
Keywords
Citation
Muñoz‐Bullon, F. and Sanchez‐Bueno, M.J. (2010), "Downsizing implementation and financial performance", Management Decision, Vol. 48 No. 8, pp. 1181-1197. https://doi.org/10.1108/00251741011076735
Publisher
:Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited