Does downsizing improve organisational performance? An analysis of Spanish manufacturing firms Articles uri icon

publication date

  • July 2011

start page

  • 2924

end page

  • 2945

issue

  • 14

volume

  • 22

international standard serial number (ISSN)

  • 0958-5192

electronic international standard serial number (EISSN)

  • 1466-4399

abstract

  • The objective of this study is to examine the effect of downsizing on corporate performance, considering a sample of manufacturing firms drawn from the Spanish Survey of Business Strategies for the 1993&-2005 period. No significant difference in post-downsizing performance arises between companies that downsize and those that do not. Likewise, we find that substantial workforce reductions through collective layoffs do not lead to improved performance levels either. Downsizing may not, therefore, be a way for managers to enhance performance. This is particularly true of Spain, where the labour market is characterised by the ring-fencing of employees' rights and substantial severance costs.

keywords

  • corporate performance; downsizing; spanish labour market