An examination of the impact of organizational downsizing and discrimination activities on corporate social responsibility as measured by a company’s reputation index

Abstract

This research empirically tests the relationship between a company’s social responsibility (CSR) performance as measured by the company’s reputation index, on the one hand, and the degree of downsizing of employees and a company’s discriminatory practices, on the other. The sample consists 178 large publicly‐held US‐based corporations which announced their intentions to downsize during the 1990‐1992 period. The statistical analysis does support the hypothesis that as companies eliminate jobs and layoff workers, they are perceived as being less reputable, hence, less socially responsible. The analysis, further, supported previous research which revealed a positive association between a company’s social performance (CSP), as measured by a company’s reputation index, and its financial performance as measured by its return on equity (ROE). The analysis, however, did not support the hypothesis of a negative relationship between CSP and a company’s discriminatory practices. Further, our statistical analysis failed to support the results of previous research which revealed a positive relationship between a company’s size and its CSP. This unexpected result may have been biased by the choice of companies in our sample.

Citation

Karake, Z.A. (1998), "An examination of the impact of organizational downsizing and discrimination activities on corporate social responsibility as measured by a company’s reputation index", Management Decision, Vol. 36 No. 3, pp. 206-216. https://doi.org/10.1108/00251749810209011