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Layoffs in SMEs: The Role of Social Proximity

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  • Vivien Lefebvre

    (University of Strasbourg)

Abstract

Abundant research exists on the restructuring operations of large, publicly listed firms. However, little is known about the antecedents of layoffs in small and medium-sized enterprises (SMEs). Building on the stakeholder salience theory and arguments on social proximity, this study posits that SMEs are less likely to dismiss employees than large firms. We argue that the existence of strong interpersonal ties between employees and managers makes it hard for SME owners and managers to dismiss employees. Empirically analyzing a large sample of European Union firms, the results confirm that the likelihood of layoffs is lower in SMEs than in large firms, even when performance declines.

Suggested Citation

  • Vivien Lefebvre, 2024. "Layoffs in SMEs: The Role of Social Proximity," Journal of Business Ethics, Springer, vol. 190(4), pages 801-820, April.
    • Handle: RePEc:kap:jbuset:v:190:y:2024:i:4:d:10.1007_s10551-023-05414-z
    DOI: 10.1007/s10551-023-05414-z
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    More about this item

    Keywords

    Layoffs; SMEs; Social proximity; Stakeholder salience theory;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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