A Conceptual Framework for Analyzing Why Organizations Downsize

Although downsizing has become an integral part of organizational life in the U.S., there is little serious theoretical or empirical work on this issue. Nearly all of the completed work addresses the effects of downsizing, whic h usually are negative. Therefore, an important yet unanswered question is: Why do organizations downsize in the first place? In addressing this question, I offer some systematic thoughts on the causes of downsizing. Specifically, I develop a conceptual f ramework for studying organizational innovation that draws on two overlooked dimensions associated with this phenomenon, the basis of social action (rational versus arational) and social context (organizational versus extraorganizational). I then characte rize downsizing as an organizational innovation and develop propositions that explain why organizations downsize. Finally, I emphasize that empirical evaluation of these propositions will help us to understand a pivotal organizational development of recent decades.

[1]  W. Powell,et al.  The iron cage revisited institutional isomorphism and collective rationality in organizational fields , 1983 .

[2]  J. Coleman,et al.  The Diffusion of an Innovation Among Physicians , 1957 .

[3]  J. Coleman.  Relational Analysis: The Study of Social Organizations with Survey Methods , 1958 .

[4]  Elihu Katz,et al.  The Social Itinerary of Technical Change: Two Studies on the Diffusion of Innovation , 1961 .

[5]  E. Rogers.  Diffusion of Innovations , 1962 .

[6]  J. Hage,et al.  Program Change and Organizational Properties a Comparative Analysis , 1967, American Journal of Sociology.

[7]  Lawrence B. Mohr,et al.  Determinants of Innovation in Organizations , 1969, American Political Science Review.

[8]  G. Zaltman,et al.  Innovations and organizations , 2020, Organizational Innovation.

[9]  M. Moch,et al.  Size, Centralization and Organizational Adoption of Innovations , 1977 .

[10]  John W. Meyer,et al.  Institutionalized Organizations: Formal Structure as Myth and Ceremony , 1977, American Journal of Sociology.

[11]  J. Pfeffer,et al.  The External Control of Organizations. , 1978 .

[12]  W. Richard Scott.  Organizations: Rational, Natural, and Open Systems , 1981 .

[13]  Pamela S. Tolbert,et al.  Institutional Sources of Change in the Formal Structure of Organizations: The Diffusion of Civil Service Reform, 1880-1935 , 1983 .

[14]  William A. Kracaw.  Banking, Deregulation, and the New Competition. , 1984 .

[15]  D. Fraser,et al.  Banking deregulation and the new competition in financial services , 1984 .

[16]  Paul M. Hirsch,et al.  From Ambushes to Golden Parachutes: Corporate Takeovers as an Instance of Cultural Framing and Institutional Integration , 1986, American Journal of Sociology.

[17]  Frank Dobbin,et al.  War and Peace: The Evolution of Modern Personnel Administration in U.S. Industry , 1986, American Journal of Sociology.

[18]  Robert M. Tomasko.  Downsizing: Reshaping the Corporation for the Future , 1987 .

[19]  R. Hall.  Organizations: Structures, Processes, and Outcomes , 1987 .

[20]  E. Rogers,et al.  Innovations and Organizations , 1988 .

[21]  R. I. Sutton,et al.  Determinants of Work Force Reduction Strategies in Declining Organizations , 1988 .

[22]  Michael L. Tushman,et al.  Introduction: Technology, Organizations, and Innovation. , 1990 .

[23]  Neil Fligstein,et al.  FROM THE TRANSFORMATION OF CORPORATE CONTROL , 2021, The New Economic Sociology.

[24]  Ronald S. Burt,et al.  Interorganization Contagion in Corporate Philanthropy , 1991 .

[25]  W. Powell.  Expanding the Scope of Institutional Analysis , 1991 .

[26]  Wallace N. Davidson,et al.  RESEARCH NOTES. LAYOFF ANNOUNCEMENTS AND STOCKHOLDER WEALTH. , 1991 .

[27]  G. Davis.  Agents without Principles? The Spread of the Poison Pill through the Intercorporate Network , 1991 .

[28]  Wallace N. Davidson,et al.  Layoff Announcements and Stockholder Wealth , 1991 .

[29]  F. Damanpour.  Organizational Innovation: A Meta-Analysis Of Effects Of Determinants and Moderators , 1991 .

[30]  Eric Abrahamson.  Managerial Fads and Fashions: The Diffusion and Rejection of Innovations , 1991 .

[31]  G. Gordon.  Industry Determinants of Organizational Culture , 1991 .

[32]  Gerald F. Davis,et al.  Organization Theory and the Market for Corporate Control: A Dynamic Analysis of the Characteristics of Large Takeover Targets, 1980-1990 , 1992 .

[33]  W. Powell,et al.  The New Institutionalism in Organizational Analysis , 1992 .

[34]  John W. Meyer,et al.  Institutional conditions for diffusion , 1993 .

[35]  Heather A. Haveman.  Follow the leader: Mimetic isomorphism and entry into new markets , 1993 .

[36]  B. Mintz,et al.  Executive Defense: Shareholder Power and Corporate Reorganization. , 1993 .

[37]  Wayne F. Cascio,et al.  Downsizing: What do we know? What have we learned? , 1993 .

[38]  Pamela R. Haunschild.  Interorganizational imitation: The impact of interlocks on corporate acquisition activity , 1993 .

[39]  Rocki-Lee Dewitt.  The Structural Consequences of Downsizing , 1993 .

[40]  L. Burns,et al.  Adoption and abandonment of matrix management programs: effects of organizational characteristics and interorganizational networks. , 1993, Academy of Management journal. Academy of Management.

[41]  Xueguang Zhou,et al.  Late Adoption of the Multidivisional Form by Large U.S. Corporations: Institutional, Political, and Economic Accounts , 1993 .

[42]  M. Bolton,et al.  Organizational Innovation and Substandard Performance: When is Necessity the Mother of Innovation? , 1993 .

[43]  K. Cameron,et al.  Organizational Downsizing: A Convergence and Reorientation Framework , 1993 .

[44]  Kim S. Cameron,et al.  Strategies for successful organizational downsizing , 1994 .

[45]  Kenneth P. De Meuse,et al.  Announced layoffs: Their effect on corporate financial performance , 1994 .

[46]  Karen E. Mishra,et al.  The role of mutual trust in effective downsizing strategies , 1994 .

[47]  Sarah J. Freeman,et al.  Organizational downsizing as convergence or reorientation: Implications for human resource management , 1994 .

[48]  Gerald F. Davis,et al.  The Decline and Fall of the Conglomerate Firm in the 1980s: The Deinstitutionalization of an Organizational Form , 1994 .

[49]  Bart Victor,et al.  The Dark Side of the New Organizational Forms: An Editorial Essay , 1994 .

[50]  H. Prechel,et al.  Economic Crisis and the Centralization of Control Over the Managerial Process: Corporate Restructuring and Neo-Fordist Decision-Making , 1994 .

[51]  Mark S. Mizruchi,et al.  A Longitudinal Study of Borrowing by Large American Corporations , 1994 .

[52]  Jennifer A. Chatman,et al.  Assessing the Relationship between Industry Characteristics and Organizational Culture: How Different can You Be? , 1994 .

[53]  Tracy A. Thompson,et al.  A Social Movement Perspective on Corporate Control , 1994 .

[54]  R. Wolfe.  ORGANIZATIONAL INNOVATION: REVIEW, CRITIQUE AND SUGGESTED RESEARCH DIRECTIONS* , 1994 .

[55]  Kim S. Cameron,et al.  Guest editor's note: Investigating organizational downsizing—fundamental issues , 1994 .

[56]  E. H. Bowman,et al.  The Effects of Organizational Downsizing on Product Innovation , 1995 .

[57]  Douglas D. Moesel,et al.  The Market for Corporate Control and Firm Innovation , 1996 .

[58]  C. Fiol.  Squeezing Harder Doesn't Always Work: Continuing the Search for Consistency in Innovation Research , 1996 .

[59]  R. Pouder,et al.  Hot Spots and Blind Spots: Geographical Clusters of Firms and Innovation , 1996 .

[60]  D. Dougherty,et al.  Sustained product innovation in large, mature organizations: Overcoming innovation-to-organization problems. , 1996 .

[61]  Michael Useem,et al.  Investor Capitalism : How Money Managers Are Changing the Face of Corporate America , 1996 .

[62]  Ranjay Gulati,et al.  THE INSTITUTIONALIZATION OF TOTAL QUALITY MANAGEMENT: THE EMERGENCE OF NORMATIVE TQM ADOPTION AND THE CONSEQUENCES FOR ORGANIZATIONAL LEGITIMACY AND PERFORMANCE. , 1996 .

[63]  Art Budros,et al.  The New Capitalism and Organizational Rationality: The Adoption of Downsizing Programs, 1979–1994 , 1997 .

[64]  T. Mroczkowski,et al.  Effective rightsizing strategies in Japan and America: Is there a convergence of employment practices? , 1997 .

[65]  Peter W. Roberts,et al.  Integrating Transaction Cost and Institutional Theories: Toward a Constrained-Efficiency Framework for Understanding Organizational Design Adoption , 1997 .