British Log of Supervision, Vol. sixteen, 253–259 (2005)
DOI: 12. 1111/j. 1467-8551. 2005. 00460. x
The Impact of Downsizing on Company
Stelios C. Zyglidopoulos
The Judge Institute of Management, University of Cambridge, Trumpington Streets, Cambridge, CB2 1AG, UK E-mail: [email protected] com
This study investigates the impact that downsizing is wearing corporate standing. Drawing on the relevant literatures, two hypotheses will be developed and tested. The ﬁndings from the study are as follows. Initially, downsizing includes a negative impact on corporate popularity. Second downsizing is more harmful to business reputation than ‘downscoping'–the sale of a division.
Downsizing, irrespective of its elevating acceptance by
corporations, has always been a controversial topic.
Scientific evidence do not support the notion that
downsizing leads to excellent ﬁnancial functionality in the long run (Baily, Bartelsman and Haltiwanger, year 1994; Cascio, Small, and Morris,
1997; Sobre Meuse, Bergmann and Vaderheiden,
1997). A lot of academics demand that downsizing, if
completed strategically, can beneﬁt the ﬁrm (Burton,
Keels and Shook, 1996), while others declare that
downsizing like a strategy for improvement is ‘by
and large, a failure' (Cameron, 1996). Despite
this lack of consistent evidence, however , managers have continued its practice (McKinley, Mone and Barker, 1998).
Through this context, the downsizing literary works
has looked into numerous problems, but provides paid
little attention to the impact of downsizing on
corporate and business reputation. This kind of paper, using data
via Fortune's ‘America's Most Respected Corporations (AMAC) survey, details this issue by simply investigating just how downsizing influences corporate standing, which is necessary for two factors. First, an improved understanding of the eﬀect of downsizing about corporate reputation assists in the
management of just one of the most intentionally
important intangible ﬁrm solutions, reputation
(Barney, 1991; Dierickx and Amazing, 1989; Fombrun, 1996; Roberts and Dowling, 1997). Second, r 2006 British School of Managing
from a downsizing materials perspective, this
study helps in better understanding the controversy surrounding downsizing.
Downsizing and company Reputation
Although the term ‘downsizing' has frequently been
employed in the materials to involve a number of
related activities (Cameron, 1996; Cascio, Young
and Morris, 1997), for the purposes on this study
that refers exclusively to work downsizing.
There are two conditions used in the literature to
classify a personnel lowering as downsizing.
First, the reduction must be signiﬁcant; Cascio,
Young and Morris (1997) employed a five per cent reduction while
a cut-oﬀ point. Second, this reduction must be
intentional (Cameron, 1996), but given that signiﬁcant labor force reductions happen to be ‘less probably be due to attrition' (Littler and Innes, 2004), it
is usually suﬃcient to talk about that a ﬁrm engaging in a
signiﬁcant workforce reduction is definitely downsizing.
Nevertheless is a worker reduction as a result of the
sale of a split downsizing? Below, ‘downsizing'
is used exclusively to refer to signiﬁcant reductions in personnel due to layoﬀs (Burton, Keels and Shook, mil novecentos e noventa e seis; Worrell, Davidson and
Sharma, 1991), whereas ‘downscoping', which
has been accustomed to refer to ideal divestiture
programmes (Hoskinson and Hitt, 1991; Hoskinson, Johnson and Moesel, 1994), refers to signiﬁcant reductions in personnel because of the sale
of a division. Basically, while downsizing
involves employees losing their very own jobs, downscoping involves personnel keeping their particular jobs although working for diﬀerent owners.
Company reputation, ‘the overall evaluation in
which in turn a particular company is placed by its various
constituents' (Fombrun, 1996, p. 37), is one of the
most crucial intangible resources of a firm. Research in strategic managing suggests that a favourable reputation is an important
source of sustainable competitive advantage
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