Learning From Experience? The Impact of Restructuring Experience on a Firm’s Digital

Abstract

Digital innovation is essential for firms to survive in current industrial developments. Firms can increase their digital innovation performance by either developing it themselves or by acquiring it via digital M&A. Although firms want to grow and improve their digital innovation performance, there seems to be no escaping from employee downsizing. This research uses organizational learning theory to discover if having earlier downsizing experience could enhance a firm’s post-employee downsizing digital innovation performance. The results partially support the understanding that having prior employee downsizing experience enhances the firm’s post-employee downsizing digital innovation performance. Furthermore, partial support is found in explaining leadership stability's impact on a firm’s post-employee downsizing digital innovation performance. However, as the analyses have been performed based on a relatively small sample size, the results should be interpreted cautiously. Furthermore, it is suggested that further research is needed to fully discover the potential that organizational learning theory may have to better understand its usage for understanding a firm’s post-employee downsizing performance. Moreover, it is suggested that the context in which the downsizing took place and how the downsizing took place can be of interest for future research.