Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-28T15:21:10.186Z Has data issue: false hasContentIssue false
  • English
  • Français

When responsible downsizing strategy meets employee-oriented leadership: Implications for downsizing performance

Published online by Cambridge University Press:  21 May 2014

Philip Cheng-Fei Tsai  and
Chih-Ting Shih
Philip Cheng-Fei Tsai
Affiliation:
Department of International Business Administration, Wenzao Ursuline University of Languages, Taiwan, ROC
Chih-Ting Shih*
Affiliation:
Department of Business Administration, National Pingtung Institute of Commerce, Taiwan, ROC
*
Corresponding author. [email protected], [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This study examines whether a responsible downsizing strategy and employee-oriented leadership are complementary in strengthening firm performance after downsizing. This study investigated 154 firms that have used an organizational downsizing strategy with surveys and follow-up focus groups. Results of both the empirical evidence and qualitative data demonstrates that for firms adopting an employee-oriented leadership style, the level of responsible downsizing strategy is high and firm performance is significantly increased. Specifically, the results of the focus groups indicate that a responsible downsizing strategy deepens the loyalty and faith of employees to their employer. These theoretical and practical implications are also discussed.

Keywords

responsible downsizingleadership stylefirm performance
Type
Research Article
Information
Journal of Management & Organization , Volume 19 , Issue 5 , September 2013 , pp. 583 - 597
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2013 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aiken, L. S., West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.Google Scholar
Appelbaum, S. H., Everard, A., Hung, T. S. (1999). Strategic downsizing: Critical success factors. Management Decision, 37(7), 535–552.Google Scholar
Arthur, J. B. (1992). The link between business strategy and industrial relations system in American steel mini-mills. Industrial & Labor Relations Review, 45(3), 488–506.Google Scholar
Bass, B. M. (1985). Leadership and performance beyond expectations. New York, NY: Free Press.Google Scholar
Battilana, J., Gilmartin, M., Sengul, M., Pache, A.-C., Alexander, J. A. (2010). Leadership competencies for implementing planned organizational change. Leadership Quarterly, 21(3), 422–438.Google Scholar
Beam, H. H. (1997). Survivors: How to keep your best people on board after downsizing. Academy of Management Executive, 11(2), 92–94.Google Scholar
Bennis, W., Nanus, B. (1985). Leaders: The strategies for taking charge. New York, NY: Harper and Row.Google Scholar
Blake, R. R., Mouton, J. S. (1965). The managerial grid. Houston, TX: Gulf Publishing Company.Google Scholar
Brockner, J. (1988). The effects of work layoffs on survivors: Research, theory and practice. Research in Organizational Behavior, 10, 213–255.Google Scholar
Brockner, J., Spreitzer, G., Mishra, A., Hochwarter, W., Pepper, L., Weinberg, J. (2004). Perceived control as an antidote to the negative effects of layoffs on survivors’ organizational commitment and job performance. Administrative Science Quarterly, 49(1), 76–100.Google Scholar
Brockner, J., Wiesenfeld, B. M., Reed, T., Grover, S., Martin, C. (1993). Interactive effect of job content and context on the reactions of layoff survivors. Journal of Personality and Social Psychology, 64(2), 187–197.Google Scholar
Budros, A. (1999). A conceptual framework for analyzing why organizations downsize. Organization Sciences, 10(1), 69–82.Google Scholar
Cameron, K. S. (1994). Strategies for successful organizational downsizing. Human Resource Management, 33(2), 189–211.Google Scholar
Cameron, K. S., Freeman, S. J., Mishra, A. K. (1993). Downsizing and redesigning organizations. New York, NY: Oxford.Google Scholar
Carmeli, A., Sheaffer, Z. (2009). How leadership characteristics affect organizational decline and downsizing. Journal of Business Ethics, 86(3), 363–378.Google Scholar
Cascio, W. F. (1993). Downsizing: What do we know? What have we learned? Academy of Management Executive, 7(1), 95–106.Google Scholar
Cascio, W. F. (2002). Strategies for responsible restructuring. Academy of Management Executive, 16(3), 80–91.Google Scholar
Cascio, W. F., Wynn, P. (2004). Managing a downsizing process. Human Resource Management, 43(4), 425–436.Google Scholar
Chadwick, C., Hunter, L. W., Walston, S. L. (2004). Effects of downsizing practice on the performance of hospitals. Strategic Management Journal, 25(5), 405–427.Google Scholar
Chien, Y.-F. (1994). Reconsideration on Integrating Qualitative and Quantitative Research Methods. National Cheng-Chi University Review, 68, 1–16.Google Scholar
Cho, J., Dansereau, F. (2010). Are transformational leaders fair? A multi-level study of transformational leadership, justice perceptions, and organizational citizenship behaviors. Leadership Quarterly, 21(3), 409–421.Google Scholar
Datta, D. K., Guthrie, J., Basuil, D., Pandey, A. (2010). Causes and effects of employee downsizing: A review and synthesis. Journal of Management, 36, 281–348.Google Scholar
Delery, J. E., Shaw, J. D. (2001). The strategic management of people in work: review, synthesis and extension. Research in Personnel and Human Resources Management, 20, 165–197.Google Scholar
De Meuse, K. P., Marks, M. L., Dai, G. (2011). Organizational downsizing, mergers and acquisitions, and strategic alliances: Using theory and research to enhance practice. Vol. 3: Maintaining, expanding, and contracting the organization. In Zedeck, S. (Ed.), APA handbook of industrial and organizational psychology (pp. 729–768), Washington, DC: American Psychological Association.Google Scholar
Dimaggio, P. J., Powell, W. W. (1983). The iron cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147–160.Google Scholar
Filatotchev, I., Buck, T., Zhukov, V. (2000). Downsizing in privatized firms in Russia, Ukraine, and Belarus. Academy of Management Journal, 43(3), 286–304.Google Scholar
Fisher, S. R., White, M. A. (2000). Downsizing in a learning organization: Are there hidden cost? Academy of Management Review, 25(1), 224–251.Google Scholar
Freeman, S. J. (1999). The gestalt of organizational downsizing: Downsizing strategies as package of change. Human Relations, 52(12), 1505–1541.Google Scholar
Gowing, M. K., Kraft, J. D., Quick, J. C. (1998). The new organizational reality: Downsizing, restructuring, and revitalization. Washington, DC: American Psychological Association.Google Scholar
Hodgetts, R. M. (1996). Leadership in the midst of downsizing. Organizational Dynamics, 25(1), 72–78.Google Scholar
Hu, L. T., Bentler, P. M. (1998). Fit indices in covariance structure modeling: Sensitivity to underparameterized model misspecification. Psychological Methods, 3(4), 424–453.Google Scholar
Jung, D., Yammarino, J., Lee, J. K. (2009). Moderating role of subordinates’ attitudes on transformational leadership and effectiveness: A multi-cultural and multi-level perspective. Leadership Quarterly, 20(4), 586–603.Google Scholar
Krueger, R., Casey, M. (2000). Focus Group: A Practical Guide for Applied Research, Thousand Oaks, CA: Sage Publications.Google Scholar
Likert, R. (1979). From product and employee centeredness to system 1-4. Journal of Management, 5, 147–156.Google Scholar
Lippitt, R., Lippitt, G. (1984). Human downsizing: Organizational renewal versus organizational depression. Advanced Management Journal, 7, 15–21.Google Scholar
Love, E. G., Kraatz, M. (2009). Character, conformity or the bottom line? How and why downsizing affected corporate reputation. Academy of Management Journal, 52(2), 314–335.Google Scholar
Lowe, K. B., Galen, K. K. (1996). Effectiveness correlates of transformational and transactional leadership: A meta-analytic. Leadership Quarterly, 7(3), 385–425.Google Scholar
Lowe, K. B. (1998). Downsizing and firm performance: panacea or paradise lost? Academy of Management Executive, 12(4), 130–131.Google Scholar
Mckee-Ryan, F. M., Kinicki, A. J. (2002). Coping job loss: A life-facet perspective. International Review of Industrial and Organizational Psychology, 17, 1–29.Google Scholar
McKinley, W., Sanchez, C. M., Schick, A. G. (1995). Organizational downsizing: Constraining, cloning, learning. Academy of Management Executive, 9(3), 32–44.Google Scholar
Millward, L. J., Brewerton, P. M. (2002). Psychological contracts: Employee relations for the twenty-first century? International Review of Industrial and Organizational Psychology, 15, 1–61.Google Scholar
Muñoz-Bullon, F., Sanchez-Bueno, M. J. (2011). Does downsizing improve organizational performance? An analysis of Spanish manufacturing firms. International Journal of Human Resource Management, 22(14), 2924–2945.Google Scholar
Naumann, E. S., Bies, J. R., Martin, L. C. (1995). The roles of organizational support and justice during a layoff. Academy of Management Journal, Special issue, 89–95.Google Scholar
Naumann, E. S. (1998). Laid off, but still loyal: The influence of perceived justice and organizational support, International Journal of Conflict Management, 9(4), 356–368.Google Scholar
Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., Podsakoff, N. P. (2003). Common Method Biases in Behavioral Research: A Critical Review of the Literature and Recommended Remedies. Journal of Applied Psychology, 88(5), 879–903.Google Scholar
Porter, M. E. (1980, 1985). Competitive Strategy, New York: Free Press.Google Scholar
Reddin, W. J. (1970). Managerial effectiveness. New York, NY: McGraw-Hill.Google Scholar
Rigby, D. (2002). Look before you lay off. Harvard Business Review, 80(4), 20–21.Google Scholar
Seligman, M. E. P. (1998). Learned optimism (2nd ed.). New York, NY: Simon & Schuster.Google Scholar
Shah, P. P. (2000). Network destruction: The structural implications of downsizing. Academy of Management Journal, 43(1), 101–112.Google Scholar
Sherer, P. D., Leblebici, H. (2001). Bring Variety and Change into Strategic Human Resource Management Research, Research in Personnel and Human Resources Management, 20, 199–230.Google Scholar
Smith, B. T. (2001). Downsizing: The survivor syndrome and proactive leadership: A review of the literature. Journal of Hospital Librarianship, 1(2), 93–96.Google Scholar
Sutton, R. I. (2009). How to be a good boss in a bad economy? Harvard Business Review, 87(6), 42–50.Google Scholar
Tsai, P. C. F., Yen, Y. F. (2008). A model to explore the mystery between organizations’ downsizing strategies and firm performance: Integrating the perspectives of organizational change, strategy and strategic human resource management. Journal of Organizational Change Management, 21(3), 367–384.Google Scholar
Tsai, P. C. F., Shih, C. T. (2013). The role of labor union negotiations in responsible downsizing: Stepping stones or stumbling blocks? International Journal of Human Resource Management, 24(3), 601–620.Google Scholar
Vigoda-Gadot, E., Beeri, I. (2012). Change-oriented organizational citizenship behavior in public administration: The power of leadership and the cost of organizational politics. Journal of Public Administration Research and Theory, 22(3), 573–596.Google Scholar
Walter, F., Bruch, H. (2010). Structural impacts on the occurrence and effectiveness of transformational leadership: An empirical study at the organizational level of analysis. Leadership Quarterly, 21(5), 765–782.Google Scholar