The Effect of Announced Downsizing on Workplace Performance: Evidence from a Retail Chain

Guido Friebel (), Matthias Heinz () and Nick Zubanov
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Matthias Heinz: University of Cologne

No 9739, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We estimate the effect of downsizing announcement on workplace performance using data from a German bakery chain of 193 shops. Faced with intensified competition, the firm decided to sell or close down 57 of its worst performing shops. We identify the effect of downsizing from a plausibly exogenous variation in the timing of the sale or closure announcement in the individual shops. We find that the announcements of the shop being sold to a new owner and being closed down reduce sales by six and 21 percent, respectively. The negative effect of downsizing increases with the share of workers with a permanent contract, even though permanent workers faced a much lower unemployment risk. We relate our findings to the literatures on downsizing and psychological contract.

Keywords: downsizing; psychological contract; retail; teams; statistical analysis (search for similar items in EconPapers)
JEL-codes: M12 M54 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2016-02
New Economics Papers: this item is included in nep-eur, nep-hrm and nep-ure
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Citations: View citations in EconPapers (4)

Published - published in: S.W. Polachek, K. Tatsiramos, G. Russo, and G. van Houten (Eds.) Workplace Productivity and Management Practices, Research in Labor Economics, 49, Emerald Publishing Limited, Bingley, 2021, 79-205.

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