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A Conceptual Framework for Analyzing Why Organizations Downsize

Author

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  • Art Budros

    (Department of Sociology, McMaster University, 1280 Main Street, West, Hamilton, Ontario, Canada L8S 4M4)

Abstract

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, which 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 framework 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 characterize 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.

Suggested Citation

  • Art Budros, 1999. "A Conceptual Framework for Analyzing Why Organizations Downsize," Organization Science, INFORMS, vol. 10(1), pages 69-82, February.
    • Handle: RePEc:inm:ororsc:v:10:y:1999:i:1:p:69-82
    DOI: 10.1287/orsc.10.1.69
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    References listed on IDEAS

    as
    1. Michele Kremen Bolton, 1993. "Organizational Innovation and Substandard Performance: When is Necessity the Mother of Innovation?," Organization Science, INFORMS, vol. 4(1), pages 57-75, February.
    2. Richard A. Wolfe, 1994. "Organizational Innovation: Review, Critique And Suggested Research Directions," Journal of Management Studies, Wiley Blackwell, vol. 31(3), pages 405-431, May.
    3. Mohr, Lawrence B., 1969. "Determinants of Innovation in Organizations," American Political Science Review, Cambridge University Press, vol. 63(1), pages 111-126, March.
    4. Rocki-Lee DeWitt, 1993. "The Structural Consequences of Downsizing," Organization Science, INFORMS, vol. 4(1), pages 30-40, February.
    5. Sarah J. Freeman & Kim S. Cameron, 1993. "Organizational Downsizing: A Convergence and Reorientation Framework," Organization Science, INFORMS, vol. 4(1), pages 10-29, February.
    6. Bart Victor & Carroll Stephens, 1994. "The Dark Side of the New Organizational Forms: An Editorial Essay," Organization Science, INFORMS, vol. 5(4), pages 479-482, November.
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