Does downsizing improve organizational performance? An analysis of Spanish manufacturing firms

Fernando Muñoz-Bullón and María José Sánchez-Bueno

DEE - Working Papers. Business Economics. WB from Universidad Carlos III de Madrid. Departamento de Economía de la Empresa

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 during the 1993- 2005 period. No significant differences in post-downsizing performance arise between companies which downsize and those that do not. Likewise, we find that substantial workforce reductions through collective dismissals do not either lead to improved performance levels. Downsizing, therefore, may not be a way for managers to increase performance, particularly in a context like the Spanish one, where the labour market is characterized by a high protection of employees’ rights and substantial contract termination costs.

Keywords: Downsizing; Corporate; performance; Spanish; labour; market (search for similar items in EconPapers)
JEL-codes: J21 J65 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eec and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:cte:wbrepe:wb083007

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