The double-edged sword of Employee Downsizing: Examining the moderating roles of Digitalization and Industry Characteristics
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2024-06-12
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en
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Digital technologies are transforming how firms capture and create value, forcing
corporate strategists to reassess downsizing effectiveness in this new digital age. This thesis
dives into the complex relationship between employee downsizing and firm performance in the
context of digitalization and different industry characteristics. Grounded in the resource-based
view, this thesis aims to better understand how this relationship evolves within the changing
business environment. Results derived from automated content analysis and traditional
financial data revealed that small-scale downsizing, depending on the industry, may be more
disruptive than prior literature suggested. Furthermore, the findings did not significantly
establish a decisive conclusion on the role of digitalization within the downsizing context,
underscoring the complexity that surrounds employee downsizing. This thesis contributes to
the existing body of knowledge on downsizing in literature and provides managers with
valuable practical considerations when engaging in employee downsizing practices. It
emphasises the need for careful assessment of firm and industry-specific factors.
Moreover, it leaves an interesting avenue for future research on how downsizing
practices could leverage digitalization to reduce the negative impacts on firm performance.
While literature suggests that digitalization can migrate negative impacts of downsizing,
findings indicate that those capabilities are hard to leverage. Future research should aim to
identify under which conditions digitalization can have a positive influence on the downsizing
outcomes.
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Faculteit der Managementwetenschappen