Downsizing and firm performance: evidence from German firm data

Tim Goesaert, Matthias Heinz and Stijn Vanormelingen

Industrial and Corporate Change, 2015, vol. 24, issue 6, 1443-1472

Abstract: This article uses a unique data set to study the short-term effects of downsizing on operational and financial performance of large German firms. In general, productivity and profitability after downsizing are—at the best—comparable to their pre-downsizing levels. During the downsizing event, the performance even drops. Moreover, we make a distinction between firms downsizing because of a business downturn and firms downsizing to increase efficiency. Especially downsizing for the latter firms appears to be unsuccessful.

Date: 2015
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