Dumb and dumber: The impact of downsizing on firm performance as moderated by industry conditions

Organization Science

Volumn 19, Issue 1, 2008, Pages 108-123

  Guthrie, James P ^a   Datta, Deepak K ^b  

^a UNIVERSITY OF KANSAS   (United States)

^b UNIVERSITY OF TEXAS AT ARLINGTON   (United States)

Author keywords

Downsizing; Firm performance; Industry

Indexed keywords

EID: 43049145227     PISSN: 10477039     EISSN: 15265455     Source Type: Journal    
DOI: 10.1287/orsc.1070.0298     Document Type: Article

References (111)

1. Ahmadjian, C. L., P. Robinson. 2001. Safety in numbers: Downsizing and deinstitutionalization of permanent employment in Japan. Admin. Sci. Quart. 46 622-658.
2. Aiken, L. S., S. G. West. 1991. Multiple Regression: Testing and Interpreting Interactions. Sage. Newbury Park, CA.
3. Amabile, T. M., R. Conti. 1999. Changes in the work environment for creativity during downsizing. Acad. Management J. 42 630-640.
4. Aragon-Correa, J. A., S. Sharma. 2003. A contingent resource-based view of proactive corporate environmental strategy. Acad. Management Rev. 28 71-88.
5. Armstrong, S. J., T. S. Overton. 1977. Estimating non-response bias in mail surveys. J. Marketing Res. 14 396-402.
6. Bain, J. S., P. D. Quails. 1987. Industrial Organization: A Treatise. JAI Press, Greenwich, CT.
7. Bamberger, P., B. Meshoulam. 2000. Human Resource Strategy: Formulation, Implementation and Impact. Sage Publications, Thousand Oaks, CA.
8. Bamberger, P., B. Phillips. 1991. Organizational environment and business strategy: Parallel versus conflicting influences on human resource strategy in the pharmaceutical industry. Human Resource Management 30 153-182.
9. Batt, R. 2002. Managing customer services: Human resource practices, quit rates, and sales growth. Acad. Management J. 45 587-597.
10. Baum, J. R., W. Stefan. 2003. Strategic decision speed and firm performance. Strategic Management J. 24 1107-1129.
11. Baumol, W. J., A. Blinder, A. E. N. Wolff. 2003. Downsizing in America: Reality, Causes, and Consequences. Russell Sage Foundation, New York.
12. Becker, B. E., M. A. Huselid. 1998. High performance work systems and firm performance: A synthesis of research and managerial implications. K. M. Rowland, G. R. Ferris, eds. Research in Personnel and Human Resource Management. JAI Press, Greenwich, CT, 53-101.
13. Berk, R. A. 1983. An introduction to sample selection bias in sociological data. Amer. Sociol. Rev. 48 386-398.
14. Bliese, P. 2000. Within-group agreement, non-independence, and reliability: Implications for data aggregation and analysis. K. J. Klein, S. W. J. Kozlowski, eds. Multilevel Theory, Research, and Methods in Organizations. Jossey Bass, San Francisco, CA, 349-381.
15. Bruton, G., J. Keels, C. Shook. 1996. Downsizing the firm: Answering the strategic questions. Acad. Management Executive 10 38-45.
16. Bryk, A. S., S. W. Raudenbush. 1992. Hierarchical Linear Models. Sage, Newbury Park, CA.
17. Bryne, J. A. 1994. There is an upside to downsizing. Bus. Week 9(May) 69.
18. Budros, A. 1999. A conceptual framework for analyzing why organizations downsize. Organ. Sci. 10 69-82.
19. Bureau of Labor Statistics. 2004. Mass Layoffs (Monthly). http://stats. bls.gov/news.release/mmls.toc.htm.
20. Burns, T., G. M. Stalker. 1961. The Management of Innovation. Tavistock, London.
21. Burt, R. 1997. The contingent value of social capital. Admin. Sci. Quart. 42 339-365.
22. Cameron, K. S. 1994. Investigating organizational downsizing: Fundamental issues. Human Resource Management 33 183-188.
23. Cameron, K. S., S. J. Freeman, A. K. Mishra. 1991. Best practices in white collar downsizing: Managing contradictions. Acad. Management Executive 5 57-73.
24. Cameron, K. S., D. A. Whetton, M. U. Kim. 1987. Organizational dysfunctions of decline. Acad. Management J. 30 126-138.
25. Cannella, A., W. Shen. 2001. So close and yet so far: Promotion versus exit for CEO heirs apparent. Acad. Management J. 44 252-271.
26. Cappelli, P. 1999. The New Deal at Work: Managing the Market-Driven Workforce. Harvard Business School Press, Boston, MA.
27. Cappelli, P. 2000. Examining the incidence of downsizing and its effect on establishment performance. NBER Working Paper 7742, National Bureau of Economic Research, Inc., Cambridge, MA.
28. Cascio, W. 1993. Downsizing: What do we know? What have we learned? Acad. Management Executive 7 95-103.
29. Cascio, W. F. 2002. Responsible Restructuring: Creative and Profitable Alternatives to Layoffs. Berrett-Koehler, San Fransisco, CA.
30. Cascio, W., C. E. Young, J. R. Morris. 1997. Financial consequences of employment-change decisions in major U.S. corporations. Acad. Management J. 40 1175-1189.
31. Caves, R., M. Krepps. 1993. Fat: The displacement of nonproduction workers from U.S. manufacturing industries. Brookings Papers Econom. Activity: Microeconomics (2) 227-288.
32. Chadwick, C., L. W. Hunter, S. L. Walston. 2004. Effects of downsizing practices on the performance of hospitals. Strategic Management J. 25 405-427.
33. Chang, S. J., H. Singh. 1999. The impact of modes of entry and resource fit on modes of exit by multibusiness firms. Strategic Management J. 20 1019-1035.
34. Chamess, G., D. I. Levine. 2000. When are layoffs acceptable? Evidence from a quasi-experiment. Indust. Labor Relations Rev. 53 381-200.
35. Chatman, J. A., K. A. Jehn. 1994. Assessing the relationship between industry characteristics and organizational culture: How different can you be? Acad. Management J. 37 522-533.
36. Datta, D. K., N. Rajagopalan. 1998. Industry structure and CEO characteristics: An empirical study of succession events. Strategic Management J. 19 833-852.
37. Datta, D. K., J. P. Guthrie, P. M. Wright. 2005. HRM and labor productivity: Does industry matter? Acad. Management J. 48 135-145.
38. Delery, J. E., H. D. Doty. 1996. Modes of theorizing in strategic human resource management: Tests of universalistic, contingency and configurational performance predictions. Acad. Management J. 39(4) 802-835.
39. Delery, J. E., J. D. Shaw. 2001. The strategic management of people in work organizations: Review, synthesis and extension. K. M. Rowland, G. R. Ferris, eds. Research in Personnel and Human Resource Management. JAI Press, Greenwich, CT, 165-197.
40. De Meuse, K. P., W. W. Tornow. 1990. The tie that binds-Has become very, very frayed! Human Resource Planning 13 203-213.
41. Dess, G. G., J. D. Shaw. 2001. Voluntary turnover, social capital, and organizational performance. Acad. Management Rev. 26 446-456.
42. DeWitt, R. 1998. Firm, industry, and strategy influences on choice of downsizing approach. Strategic Management J. 19 59-80.
43. Dougherty, D., E. H. Bowman. 1995. The effects of organizational downsizing on product innovation. California Management Rev. 37(4) 28-34.
44. Edwards, J. R., M. E. Parry. 1993. On the use of polynomial regression equations as an alternative to difference scores in organizational research. Acad. Management Rev. 36 1577-1613.
45. Espahbodi, R., T. A. John, G. Vasudevan. 2000. The effects of downsizing on operating performance. Rev. Quant. Finance Accounting 15 107-126.
46. Farber, H. S. 1997. The changing face of job loss in the United States: 1981-1995. Brookings Papers Econom. Activity: Microeconomics 55-128.
47. Filatotchev, I., T. Buck, V. Zhukov. 2000. Downsizing in privatized firms in Russia, Ukraine, and Belarus. Acad. Management J. 43 286-304.
48. Forelle, C. 2005. IBM plans restructuring, job cuts. Wall Street J. (May 5) A3.
49. Freeman, S. J. 1994. Organizational downsizing as convergence or reorientation: Implications for human resource management. Human Resource Management 33 213-238.
50. Freeman, S. J., K. Cameron. 1993. Organizational downsizing: A convergence and reorientation framework. Organ. Sci. 4 10-29.
51. Fuchsberg, G. 1993. Why shakeups work for some, not for others. Wall Street J. (October 1) B1, B5.
52. Gerhart, B., P. Wright, G. McMahan, S. Snell. 2000. Error in research on human resources and firm performance: How much error is there and how does it influence effect size estimates? Personnel Psych. 53 803-834.
53. Grant, R. M. 2005. Contemporary Strategic Analysis. Blackwell Publishing, Oxford, UK.
54. Guthrie, J. P. 2001. High involvement work practices, turnover and productivity: Evidence from New Zealand. Acad. Management J. 44 180-190.
55. Guthrie, J. P., C. M. Grimm, K. G. Smith. 1991. Environmental change and management staffing: An empirical study. J. Management 17 735-748.
56. Guthrie, J. P., J. D. Olian. 1991. Does context affect staffing? The case of general managers. Personnel Psych. 44 263-292.
57. Haleblian, J., S. Finkelstein. 1993. Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Acad. Management J. 36 844-863.
58. Hambrick, D. C., C. Abraharnson. 1995. Assessing the amount of managerial discretion in different industries: A multi-method approach. Acad. Management J. 38 1427-1441.
59. Hambrick, D. C., A. A. Cannella. 2004. CEOs who have COOs: Contingency analysis of an unexplored structural form. Strategic Management J. 25 959-979.
60. Hambrick, D. C., S. Finkelstein. 1987. Managerial discretion: A bridge between polar views on organizations. L. L. Cummings, B. M. Staw, eds. Research in Organizational Behavior, Vol. 9. JAI Press, Greenwich, CT, 369-406.
61. Hambrick, D. C., D. Lei. 1985. Toward an empirical prioritization of contingency variables for business strategy. Acad. Management J. 28 763-788.
62. Harrigan, K. R. 1980. Strategy formulation in declining industries. Acad. Management Rev. 5 599-605.
63. Heckman, J. J. 1979. Sample selection bias as a specification error. Econometrica 47 153-161.
64. Henkoff, R. 1994. Getting beyond downsizing. Fortune 129(1) 58-64.
65. Huselid, M. A. 1995. The impact of human resource management practices on turnover, productivity, and corporate. Acad. Management J. 38 635-672.
66. Huselid, M. A., B. E. Becker. 2000. Comment on "Measurement error on research on human resources and firm performance: How much error is there and does it influence effect size estimates." Personnel Psych. 53 835-854.
67. ILCA Online. 2005. Cuts and fissures: The AFL-CIO announces layoffs. http://www.ilcaonline.org/.
68. Jackson, S. E., R. S. Schuler. 1995. Understanding human resource management in the context of organizations and their environments. Annual Rev. Psych. 46 237-264.
69. Keats, B., M. A. Hitt. 1988. Causal model of linkages among environmental dimensions, macro organizational characteristics, and performance. Acad. Management J. 31 570-598.
70. Kets deVries, M. F. R., K. Balzas. 1997. The downside of downsizing. Human Relations 50(1) 11-50.
71. Koch, M. J., R. G. McGrath. 1996. Improving labor productivity: Human resource management policies do matter. Strategic Management J. 17 335-354.
72. Koretz, G. 1997. Big payoffs from layoffs. Bus. Week 30 (February 24).
73. Lawrence, P., J. Lorsch. 1967. Organization and Environment. Harvard Business School, Boston, MA.
74. Leana, C. R., H. J. Van Buren. 2000. Eroding organizational social capital among U.S. firms: Price of job instability. R. J. Burke, C. L. Cooper, eds. Downsizing, Restructuring, and Privatization. Blackwell Publishers, Oxford, UK, 220-232.
75. Lee, C. 1997. Trust me. Training 34(1) 28-37.
76. Lepak, D. P., S. A. Snell. 1999. The human resource architecture: Toward a theory of human capital allocation and development. Acad. Management J. 24 31-48.
77. Lepak, D. P., R. Takeuchi, S. A. Snell. 2003. Employment flexibility and firm performance: Examining the interaction effects of employment mode, environmental dynamism, and technological intensity. J. Management 29 681-703.
78. Levering, R., M. Moskowitz. 1993. The 100 Best Companies to Work for in America. Penguin Books, New York.
79. Levering, R., M. Moskowitz. 1997. The 100 best companies to work for in America. Fortune 137(1) 84-95.
80. Littler, C. R., P. Innes. 2004. The paradox of managerial downsizing. Organ. Stud. 25 1159-1184.
81. McKinley, W. 1992. Decreasing organizational size: To untangle or not to untangle? Acad. Management Rev. 17 112-123.
82. McKinley, W., M. A. Mone, V. Barker. 1998. Some ideological foundations of organizational downsizing. J. Management Inquiry 7 198-212.
83. McKinley, W., J. Zhao, K. Rust. 2000. A socio-cognitive interpretation of organizational downsizing. Acad. Management Rev. 25 227-233.
84. Morris, J. R., W. R. Cascio, C. E. Young. 1999. Downsizing after all these years: Questions and answers about who did it, how many did it, and who benefited from it. Organ. Dynam. 27(3) 78-87.
85. Morrison, E. W., S. L. Robinson. 1997. When employees feel betrayed: A model of how psychological contract violation develops. Acad. Management Rev. 22 226-256.
86. Murray, M. 1995. Amid record profits, companies continue to lay off employees. Wall Street J. (May 4) Al, A4.
87. Myers, R. H. 1990. Classical and Modern Regression with Applications, 2nd ed. Duxbury Press, Belmont, CA.
88. Neter, J., W. Wasserman, M. H. Kutner. 1985. Applied Linear Statistical Models. Irwin, Homewood, IL.
89. Nixon, R. D., M. A. Hitt, H. Lee, E. Jeong. 2004. Market reactions to announcements of corporate downsizing actions and implementation strategies. Strategic Management J. 25 1121-1129.
90. Oppenheim, A. N. 1966. Questionnaire Design and Attitude Measurement. Basic Books, Inc., New York.
91. Palmon, O., H. Sun, A. Tang. 1997. Layoff announcements: Stock market impact and financial performance. Financial Management 26 54-68.
92. Penrose, E. 1959. The Theory of the Growth of the Firm. Oxford University Press, Oxford, UK.
93. Pfeffer, J. 1998. The Human Equation: Building Profits by Putting People First. Harvard Business School Press, Boston, MA.
94. Pfeffer, J., G. R. Salancik. 1978. The External Control of Organizations: A Resource Dependence Perspective. Harper and Row, New York.
95. Porter, M. E. 1980. Competitive Strategy. The Free Press, New York.
96. Rajagopalan, N., D. K. Datta. 1996. CEO characteristics: Does industry matter? Acad. Management J. 39 197-215.
97. Reichheld, F. F. 1996. The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value. Harvard Business School Press, Cambridge, MA.
98. Rousseau, D. M. 1995. Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements. Sage Publications, Thousand Oaks, CA.
99. Scherer, F. M. 1980. Industrial Market Structure and Economic Performance. Rand McNally, Chicago, IL.
100. Selznick, P. 1957. Leadership in Administration: A Sociological Interpretation. Row, Peterson, and Co., Evanston, IL.
101. Siegel, P. A., D. C. Hambrick. 2005. Pay disparities within top management groups: Evidence of harmful effects on performance in high-technology firms. Organ. Sci. 16 259-274.
102. Terpstra, D. E., E. J. Rozzell. 1993. The relationship of staffing practices to organizational level measures of performance. Personnel Psych. 46 27-48.
103. Thompson, J. A. 1967. Organizations in Action. McGraw-Hill, New York.
104. Venkatraman, N. 1989. Strategic orientation of business enterprises: The construct, dimensionality, and measurement. Management Sci. 35 942-962.
105. Wayhan, V. B., S. Werner. 2000. The impact of workface reductions on financial performance: A longitudinal perspective. J. Management 26 341-363.
106. Wemerfelt, B. 1984. A resource-based view of the firm. Strategic Management J. 5 171-180.
107. Worrell, D. L., W. N. Davidson III, V. M. Sharma. 1991. Layoff announcements and stockholder wealth. Acad. Management J. 43 662-678.
108. Wright, P. M., S. A. Snell. 1998. Toward a unifying framework for exploring fit and flexibility in strategic human resource management. Acad. Management Rev. 23 756-772.
109. Youndt, M. A., S. A. Snell, J. W. Dean, D. P. Lepak. 1996. Human resource management, manufacturing strategy, and firm performance. Acad. Management J. 39 836-865.
110. Zahra, S. A., J. G. Covin. 1993. Business strategy, technological policy and firm performance. Strategic Management J. 14 451-478.
111. Zhang, Y., N. Rajagopalan. 2004. When the known devil is better than an unknown god: An empirical study of the antecedents and consequences of relay CEO successions. Acad. Management J. 47 483-500.