Cheng‐Fei Tsai and Yu‐Fang Yen
Downsizing in organizations is a popular management strategy. However, in the field of organization change, the question of whether downsizing practices eventually improve…
Abstract
Purpose
Downsizing in organizations is a popular management strategy. However, in the field of organization change, the question of whether downsizing practices eventually improve performance is frequently asked and is never satisfactorily answered. The consequences have not always materialized over these years. On the negative side, downsizing harms employees, their families, and at the same time causes social chaos. The possible answers could be the ignorance of some important mechanisms between them. The paper aims to explain this issue.
Design/methodology/approach
The paper applies the dynamic strategy capabilities concept from the strategy research field and strategic human resource management (SHRM) practices concept from the SHRM research field.
Findings
A consolidated model is established to explain the relationships among these variables.
Originality/value
The model is expected to provide significant implications for thought leaders to reflect on the topics regarding organizations' changes, firm's strategies and SHRM system and social issues.
Details
Keywords
Philip Cheng-Fei Tsai and Chih-Ting Shih
A subject of continuous debate in the field of organizational change research and management practices is on whether downsizing strategies result in improved firm performance. The…
Abstract
Purpose
A subject of continuous debate in the field of organizational change research and management practices is on whether downsizing strategies result in improved firm performance. The purpose of this paper is to propose and empirically examine dynamic firm capabilities as a major missing mechanism of firm performance.
Design/methodology/approach
This study uses the data of 154 Taiwanese firms that employed an organizational downsizing strategy as the sample for testing the research question.
Findings
The results indicate that a responsible downsizing strategy can result in greater firm performance for the development and enhancement of dynamic firm capabilities.
Originality value
This research introduces dynamic capabilities into the downsizing context, and the empirical results provide new theoretical insight into downsizing and dynamic capabilities research, suggesting that downsizing should be regarded by management as resource management rather than a cost-cutting action.