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The effect of downsizing on innovation outputs: The role of resource slack and constraints

Year: 2020

Type: article

Abstract: Although the practice of downsizing is prevalent, its effects on organisational outcomes remain poorly understood. This article examines how and when downsizing affects organisational innovation. Using a unique data set of UK firms over a period of 22 years, we test the effect of downsizing on innovation outputs by considering the moderating role of resource slack and constraints. We argue and empirically demonstrate that downsizing has a dual effect on innovation, contingent on the firm’s level of resources. Our results reveal that downsizing affects innovation outputs positively in firms experiencing resource slack and negatively in firms experiencing resource constraints. We also show that the effect is more immediate in resource-constrained firms. Theoretical and managerial implications of these results are discussed. JEL Classification: J63, L25, M51, O32

Source: Australian Journal of Management

DOI: 10.1177/0312896220970609

Authors: Boumediene Ramdani, Cherif Guermat, Kamel Mellahi

Institutions: Qatar University, University of the West of England

Language: English

Topic: Organizational Downsizing and Restructuring

Subfield: Organizational Behavior and Human Resource Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,000