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Ownership Traits and Downsizing Behaviour: Evidence for the Largest Spanish Firms, 1990–1998

Published on Nov 1, 2007in Organization Studies 3.54
· DOI :10.1177/0170840607076591
José David Vicente Lorente5
Estimated H-index: 5
(University of Salamanca),
Isabel Suárez-González7
Estimated H-index: 7
(University of Salamanca)
Cite
Abstract
This paper explores and tests the differences in downsizing behaviour depending upon three ownership-based traits of the largest Spanish companies: stock versus privately held corporations, foreign versus domestic firms and state-owned versus private companies. From a theoretical standpoint, we develop an explanatory model of downsizing that accounts for techno-economic, institutional, and socio-cognitive explanations which serves as a conceptual basis for generating hypotheses on the role of ownership in downsizing decisions. Probit estimates using a sample of large Spanish firms (1990—1998) confirm that stock corporations and state-owned firms engaged in a privatization process are more likely to downsize than privately held domestic companies. We found less conclusive results about the downsizing behaviour of foreign firms. Finally, our findings corroborate the relevance of organizational decline and institutional factors for predicting the downsizing event.
  • References (43)
  • Citations (22)
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References43
Newest
Marc S. Mentzer6
Estimated H-index: 6
(U of S: University of Saskatchewan)
Abstract Three competing models of downsizing-the "rational," asymmetrical/hysteretic, and institutional approacheswere tested, using data from large Canadian companies. Although none of the approaches was fully supported, it was noted that there was no consistent relationship between past profit and propensity to downsize, nor was there any consistent relationship between extent of downsizing and future profit. Downsizing is all around us, yet this phenomenon is based on heroic assumptions abou...
Kai Lamertz1
Estimated H-index: 1
(U of T: University of Toronto),
Joel A. C. Baum47
Estimated H-index: 47
(U of T: University of Toronto)
Abstract We track the cognitive legitimation of organizational downsizing over time through an evolution of explanatory accounts in newspaper reports of middle-management layoffs in Canadian companies from January 1988 to December 1994. We advance an integrative typology of accounts and argue that the form and content of accounts capture sense-making activity by the press. We find support for our prediction that the form and content of these accounts changes over time as managerial downsizing is...
Published on Dec 1, 2005in Strategic Management Journal 5.57
E. Geoffrey Love7
Estimated H-index: 7
(UIUC: University of Illinois at Urbana–Champaign),
Nitin Nohria42
Estimated H-index: 42
(Harvard University)
We conceptualize downsizing as an attempt to reduce organizational slack. We suggest that the degree to which downsizing will improve firm performance will be contingent on conditions under which the downsizing occurs. We emphasize the level of organizational slack as an important contingency, and also examine two other contingencies: (1) whether the scope of the downsizing is narrow (restricted to personnel reductions) or broad (involves organizational redesign); and (2) if the downsizing is co...
Published on Sep 1, 2004in Organization Studies 3.54
Arndt Sorge13
Estimated H-index: 13
(UG: University of Groningen),
Witteloostuijn van Arjen33
Estimated H-index: 33
The global business world is infected by a virus that induces a permanent need for organizational change, which is fed by the management consultancy industry. The nature of the organizational change hype changes colour frequently, through the emergence of new universal management fashions. An urge to change is understandable from the perspectives of the consultant and the manager, but often organizational changes are ineffective or counter-productive when implemented. In this context, this artic...
Published on Sep 1, 2004in Organization Studies 3.54
Craig R. Littler4
Estimated H-index: 4
,
Peter Innes5
Estimated H-index: 5
Delayering and the flattening of organizational hierarchies was a widespread trend through the 1990s. Peters (1992) in the USA promoted flattening as an organizational strategy and Keuning and Opheij (1994) promoted the prescriptions in Europe. Despite these strategies and apparent structural changes, the number and ratio of managers appears to have grown. This paradox of managerial downsizing has not been adequately probed in the literature. The predominant explanation, that there has been a 'm...
Published on May 1, 2004in Strategic Management Journal 5.57
Clint Chadwick12
Estimated H-index: 12
(UIUC: University of Illinois at Urbana–Champaign),
Larry W. Hunter16
Estimated H-index: 16
(UW: University of Wisconsin-Madison),
Stephen L. Walston1
Estimated H-index: 1
(IUPUI: Indiana University – Purdue University Indianapolis)
Research has found that downsizing is not generally followed by improved organizational performance. Using a sample of hospitals that recently downsized, we evaluate the effects on performance of the human resource management (HRM) practices used in layoffs. Strategic HRM theory suggests that practices can have an impact on performance outcomes. We find that showing consideration for employees' morale and welfare during downsizing is positively related both to perceived success of downsizing and...
Published on Jun 1, 2002in Sociological Forum 1.78
Art Budros4
Estimated H-index: 4
(McMaster University)
Despite the longevity and pervasiveness of downsizing, our knowledge about this practice is inadequate for at least two reasons. One involves underanalysis of the historical context in which downsizing has evolved and the other involves the tendency to equate downsizings with layoffs even though layoffs represent only one of numerous downsizing strategies. I address the one inadequacy by identifying two institutional factors—the spread of economic competition and shareholder activism—that have m...
Published on Dec 1, 2001in Administrative Science Quarterly 8.02
Christina L. Ahmadjian6
Estimated H-index: 6
(University of California, Berkeley),
Patricia Robinson3
Estimated H-index: 3
(University of California, Berkeley)
This study examines the role of downsizing in the deinstitutionalization of permanent employment among publicly listed companies in Japan between 1990 and 1997. We found that although economic pressure triggered downsizing, social and institutional pressures shaped the pace and process by which downsizing spread. Large, old, wholly domestically owned, and high-reputation Japanese firms were resistant to downsizing at first, as were firms with high levels of human capital, as reflected by high wa...
Neil Thomson1
Estimated H-index: 1
,
Carla C.J.M. Millar1
Estimated H-index: 1
We review the argument for and against keeping slack during the transformation of a plan-filling organization to a profit-seeking firm. Before the demise of the command economies, organizations in Central and Eastern European (CEE) countries were typified as being overstaffed, although the degree of overstuffing (slack) varied from country to country. This article reports on two small empirical studies in East Germany and Slovenia and examines the experiences of downsizing and its effects on the...
Published on Feb 1, 2000in Academy of Management Journal 7.19
Priti Pradhan Shah7
Estimated H-index: 7
(UMN: University of Minnesota)
Downsizing disrupts existing social networks in organizations. Layoff survivors' reactions to losses of both friends and coworkers in similar structural positions (structural equivalents) are examined here. A field study conducted in a consumer electronics firm revealed negative reactions to the loss of friends and positive reactions to the loss of coworkers in similar structural positions. The loss of friends weakened survivors' network centrality, but the loss of structural equivalents benefit...
Cited By22
Newest
Published on Jan 22, 2019in Journal of Management 9.06
Laszlo Tihanyi32
Estimated H-index: 32
(A&M: Texas A&M University),
Ruth V. Aguilera34
Estimated H-index: 34
(Ramon Llull University)
+ 4 AuthorsRoxana Turturea1
Estimated H-index: 1
(Aalto University)
The influence of the state on firms in the global economy is alive and well. States have become dominant owners of companies in many countries around the world. Firms have also increasingly established political connections to access resources and improve their competitive positions. Nonetheless, our understanding of how state ownership and political connections affect firm performance remains limited and marked by conflicting findings. Using meta-analytical techniques on a sample of 210 studies...
Published on Jun 1, 2019in Organization Studies 3.54
Carlo Salvato20
Estimated H-index: 20
(Bocconi University),
Francesco Chirico18
Estimated H-index: 18
(Jönköping University)
+ 1 AuthorsDavid Seidl26
Estimated H-index: 26
(UZH: University of Zurich)
Family-controlled firms are the most widespread form of business organization, but they have so far attracted limited attention from organizational scholars. The present work suggests that coupling research on family business organizations with organization studies will substantially benefit both areas of scholarly research. We explore how the five core defining features of family firms – ownership, management and governance, transgenerational intention, generational involvement and perceived id...
Published on Nov 29, 2018in Benchmarking: An International Journal
Ville Hallavo2
Estimated H-index: 2
(Aalto University),
Markku Kuula8
Estimated H-index: 8
(Aalto University),
Antero Putkiranta3
Estimated H-index: 3
Published on Nov 29, 2018in International Journal of Emerging Markets
Varaporn Pangboonyanon (MU: Mahidol University), Kiattichai Kalasin (National Institute of Development Administration)
Purpose The purpose of this paper is to investigate how within-industry diversification affects the financial performance of small- and medium-sized enterprises (SMEs) in emerging markets (EMs). The authors draw on both the resource-based view and the institutional perspective and argue that within-industry diversification can enhance the financial performance of SMEs in EMs. Due to institutional voids in emerging economies, SMEs can gain additional benefits from scope economies, as well as from...
Published on Oct 1, 2018in Strategic Management Journal 5.57
Ann‐Christine Schulz , Margarethe F. Wiersema24
Estimated H-index: 24
(UCI: University of California, Irvine)
Research Summary: We propose that due to financial market pressures, managers are forward‐looking in their search and decision processes and focus on meeting performance targets set by the financial community. Using panel data on S&P 100 companies, we find that pressure felt by management to meet the analyst consensus earnings estimate influences the extent of corporate downsizing. Moreover, our results show that high levels of institutional investor stock ownership and CEO power attenuate manag...
Published on Jun 4, 2018in Business Process Management Journal
Madhavi Latha Nandi (T. A. Pai Management Institute), Jacob Vakkayil2
Estimated H-index: 2
(Lille Catholic University)
Purpose This study adopts two different perspectives of an organization’s absorptive capacity namely the asset perspective and the capability perspective to examine its impact on ERP assimilation. While prior IT knowledge represents the asset perspective, organization’s combinative capabilities – formalization, cross-functional interfaces, and connectedness represent the capability perspective of absorptive capacity. Design/methodology/approach The study develops hypotheses based theory of absor...
Published on Mar 1, 2018in Scandinavian Journal of Management 1.42
Ann-Christine Schulz1
Estimated H-index: 1
,
Sarah Kim Johann1
Estimated H-index: 1
(Technical University of Berlin)
Abstract This study extends prior research on the impact of downsizing on corporate reputation by investigating how specific aspects of downsizing measures influence this relationship. Using panel data on the S&P 100 companies for the period 1990–2000, we find that downsizing affects corporate reputation negatively and that the size of the effect depends on the content and the context of the downsizing announcement. More specifically, we find that the motive for downsizing, the time period in wh...
Published on Jun 1, 2017in Business Research
Lars Schweizer9
Estimated H-index: 9
(Goethe University Frankfurt),
Andreas Nienhaus1
Estimated H-index: 1
(Goethe University Frankfurt)
Abstract The topic of corporate distress and turnaround has been of interest to organizational change theory for many decades. This article considers existing reviews in discussing the current body of turnaround literature across multiple research fields and structures its work along a holistic framework. The numerous facets of corporate turnaround, resorting to general corporate restructuring research classifications, are clustered in a more detailed manner than those that merely rely on two co...
ABSTRACTThis study examines whether the reduction of the number of employees has actually been efficient in the restructuring undertaken in the European banking sector, focusing on the case of Spain but providing insight into restructuring and downsizing issues similar in other southern countries in Europe. In Spain, the concentration process has been more intense because of the financial crisis. For this purpose, the evolution of the number of employees in the subsector of the listed banks was ...
Published on Jul 4, 2016in Benchmarking: An International Journal
Ville Hallavo2
Estimated H-index: 2
(Aalto University),
Jarmo Toivanen1
Estimated H-index: 1
(Aalto University)
+ 1 AuthorsAntero Putkiranta3
Estimated H-index: 3
Purpose – Ownership change has been an overlooked contingency factor in past plant level practice-performance studies. Therefore, the purpose of this paper is to examine the impact of ownership changes to practice-performance dynamics by longitudinally following the same 23 manufacturing sites from year 1993 to 2010. Design/methodology/approach – Interview data of the made in Finland – study are used for presenting different paths of plant development in the long term. Both narratives and descri...