Tracing Experience: How Success and Failure Shape the Financial Effects of Employee Downsizing
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2025-07-08
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en
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This thesis investigates how organizational experience influences financial performance among firms that engage in employee downsizing. Unlike prior studies treating experience as an aggregated construct, this research distinguishes between successful and failure experiences. Drawing on organizational learning theory, this study hypothesized that prior downsizing experience moderates the relationship between employee downsizing and the financial performance. Using OLS regression, this study examined 244 downsizing events from 127 European firms listed in the STOXX Europe 600 (2009-2019). Experience was classified using cumulative abnormal returns (CAR) and return on assets (ROA) across a ten-year lookback period. The results indicate that employee downsizing does not significantly improve financial performance. Moreover, neither successful nor failure experience led to improved outcomes. These findings suggest firms may not benefit from prior downsizing and that disaggregating experience yields critical insights. This study contributes to the downsizing and organizational learning literature by encouraging more refined approaches to measuring and applying organizational experience.
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Faculteit der Managementwetenschappen