The effect of downsizing on the financial performance and employee productivity of Korean firms

International Journal of Manpower

Volumn 27, Issue 3, 2006, Pages 230-250

  Yu, Gyu Chang ^a,c   Park, Jong Sung ^b,d  

^a Hanyang University   (South Korea)

^b Sookmyung Women's University   (South Korea)

^c Hanyang University   (South Korea)

^d Korean Accounting Association   (South Korea)

Author keywords

Downsizing; Employees; Financial performance; Korea; Productivity rate

Indexed keywords

EID: 33745451846     PISSN: 01437720     EISSN: None     Source Type: Journal    
DOI: 10.1108/01437720610672158     Document Type: Article

References (44)

1. Ahmakjian, C.L. and Robinson, P. (2001), "Safety in numbers: downsizing and the deinstitutionalization of permanent employment in Japan", Administrative Science Quarterly, Vol. 46 No. 4, pp. 622-48.
2. Balkin, D.B. (1992), "Managing employee separations with the reward system", Academy of Management Executive, Vol. 6 No. 4, pp. 64-71.
3. Bamber, G.J. and Lansbury, R.D. (Eds) (1998), International and Comparative Employment Relations, Sage, London.
4. Brockner, J. (1992), "Managing the effects of layoffs on survivors", California Management Review, Vol. 34 No. 2, pp. 9-28.
5. Cameron, K.S. (1994), "Strategies for successful organizational downsizing", Human Resource Management, Vol. 33 No. 2, pp. 189-212.
6. Cameron, K.S., Freeman, S.J. and Mishra, A.K. (1991), "Best practices in white collar downsizing: managing contradictions", Academy of Management Executive, Vol. 5, pp. 57-73.
7. Cascio, W.F. and Young, C.E. (2003), "Financial consequences of employment-change decisions in major US corporations, 1982-2000", in De Meuse, K.P. and Marks, M.L. (Eds), Resizing the Organization: Managing Layoffs, Divestitures, and Closings, Jossey-Bass, San Francisco, CA.
8. Cascio, W.F., Young, C.E. and Morris, J.R. (1997), "Financial consequences of employment-change decisions in major US corporations", The Academy of Management Journal, Vol. 40 No. 5, pp. 1175-89.
9. Chadwick, C., Hunter, L.W. and Walston, S.L. (2004), "Effects of downsizing practices on the performance of hospitals", Strategic Management Journal, Vol. 25, pp. 405-27.
10. Chalos, P. and Chen, C.J.P. (2002), "Employee downsizing strategies: market reaction and post announcement financial performance", Journal of Business Finance & Accounting, Vol. 29 Nos 5/6, pp. 847-70.
11. Chen, P., Mehrotra, V., Sivakumar, R. and Yu, W.W. (2001), "Layoffs, shareholders' wealth, and corporate performance", Journal of Empirical Finance, Vol. 8, pp. 171-99.
12. Cho, Y.H. (2000), "Designing flattening structure", in Korea Labor Institute (Ed.), Human Resource Management in the 21st century, Myung-Kyung Publishing Co., Seoul (in Korean).
13. Choi, K. and Lee, K. (1998), Current Situations of Downsizing in Korea, Korea Labor Institute, Seoul (in Korean).
14. Davidson, W.N. III, Worrell, D.L. and Fox, J.B. (1996), "Early retirement programs and firm performance", Academy of Management Journal, Vol. 39 No. 4, pp. 970-84.
15. De Meuse, K.P. and Tornow, W.W. (1990), "The employer-employee attachment continues to erode as companies try to make ends meet", in Levit, R.A. and Gikakis, C. (Eds), Best Practices in HRD for the 21st Century, Human Resource Planning Society, Washington, DC.
16. De Meuse, K.P., Vanderheiden, P.A. and Bergmann, T.J. (1994), "Announced layoffs: their effect on corporate financial performance", Human Resource Management, Vol. 33 No. 4, pp. 509-30.
17. DeWitt, R.L. (1998), "Firm, industry, and strategy influences on choice of downsizing approach", Strategic Management Journal, Vol. 9, pp. 59-79.
18. Dyer, L. and Reeves, T. (1995), "Human resource strategies and firm performance: what do we know and where do we need to go?", paper presented at the 10th World Congress of the International Industrial Relations Association, May 31 June 4, Washington, DC.
19. Espahbodi, R., John, T.A. and Vasudevan, G. (2000), "The effects of downsizing on operating performance", Review of Quantitative Finance and Accounting, Vol. 15, pp. 107-26.
20. Feldman, D.C. and Leana, C.R. (1994), "Better practices in managing layoffs", Human Resource Management, Vol. 33 No. 2, pp. 239-60.
21. Fisher, S.R. and White, M.A. (2000), "Downsizing in a learning organization: are there hidden costs?", Academy of Management Review, Vol. 25 No. 1, pp. 244-52.
22. Freeman, S.J. and Cameron, K.S. (1993), "Organizational downsizing: a convergence and reorientation framework", Organization Science, Vol. 4 No. 1, pp. 10-29.
23. Gombola, M.J. and Tsetsekos, G.P. (1992), "The information content of plant closing announcements: evidence from financial profiles and the stock price reaction", Financial Management, Vol. 21, pp. 31-40.
24. Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. (2004), Managing Human Resources, Prentice-Hall, Upper Saddle River, NJ.
25. Hallock, K.F. (1998), "Layoffs, top executive pay, and firm performance", The American Economic Review, Vol. 88 No. 4, pp. 711-23.
26. Hendricks, C.F. (1992), The Rightsizing Remedy, Irwin, Homewood, IL.
27. Holstein, W.J. (2002), "Samsung's golden touch", Fortune, April 1, pp. 28-34.
28. Hwang, I. (2002), "Chaebol structure, diversification and performance", in Rhee, Y. and Chang, E. (Eds), Korean Business and Management, Hollym, Elizabeth, NJ.
29. Karake, Z.A. (1997), "Relative index for downsizing employees (RIDE): a measure of performance", Logistics Information Management, Vol. 10 No. 6, pp. 264-74.
30. Kinney, M.R. and Wempe, W.F. (2002), "Further evidence on the extent and origins of JIT's profitability effects", The Accounting Review, Vol. 77, pp. 203-25.
31. Kitt, B.M. (2003), "Downsizing Korea? The difficult demise of lifetime employment and the prospects for further reform", Law and Policy in International Business, Vol. 34 No. 2, pp. 537-72.
32. Kozlowski, S.W., Chao, G.T., Smith, E.M. and Hedlund, J. (1993), "Organizational downsizing: strategies, interventions, and research implications", International Review of Industrial and Organizational Psychology, Vol. 8, pp. 263-332.
33. Lee, P.M. (1997), "A comparative analysis of layoff announcements and stock price reactions in the United States and Japan", Strategic Management Journal, Vol. 18, pp. 879-94.
34. Mishra, A.K. and Mishra, K.E. (1994), "The role of mutual trust in effective downsizing strategies", Human Resource Management, Vol. 33 No. 2, pp. 261-80.
35. Mishra, K.E., Spreitzer, G.M. and Mishra, A.K. (1998), "Preserving employee morale during downsizing", Sloan Management Review, Vol. 39, pp. 83-95.
36. Mroczkowski, T. and Hanaoka, M. (1997), "Effective rightsizing strategies in Japan and America: is there a convergence of employment practices?", The Academy of Management Executive, Vol. 11 No. 2, pp. 57-67.
37. Park, D.J., Park, J. and Yu, G.C. (2001), "Assessment of labor market response to the labor law changes introduced in 1998", in Park, F., Park, Y., Betcherman, G. and Dar, A. (Eds), Labor Market Reforms in Korea: Policy Options for the Future, WorldBank, Seoul.
38. Rogers, W.M. and Wright, P.M. (1998), "Measuring organizational performance in strategic human resource management: problems, prospects, and performance information markets", Human Resource Management Review, Vol. 8 No. 3, pp. 311-31.
39. Shah, P.P. (2000), "Network destruction: the structural implications of downsizing", Academy of Management Journal, Vol. 43 No. 1, pp. 101-12.
40. Suarez-Gonzalez, I. (2001), "Downsizing strategy: does it really improve organizational performance?", International Journal of Management, Vol. 18 No. 3, pp. 301-7.
41. Worrell, D.L., Davidson, W.N. III and Sharma, V.M. (1991), "Layoff announcements and stockholder wealth", Academy of Management Journal, Vol. 34, pp. 662-78.
42. Wright, P.M. and McMahan, G.C. (1992), "Theoretical perspectives for strategic human resource management", Journal of Management, Vol. 18 No. 2, pp. 295-320.
43. Yu, G.C. and Park, J.S. (2003), "The effect of downsizing on a firm's financial performance", Personnel Management, Vol. 27, pp. 275-302 (in Korean).
44. Feldman, L. (1989), "Duracell's first aid for downsizing survivors", Personnel Journal, Vol. 68 No. 8, pp. 91-4.