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Should the smiling curve frown during an economic downturn to enhance firm performance?

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  • Luan, Chin-jung
  • Tien, Chengli

Abstract

This study examines the efficacy of the smiling curve, and clarifies the relationship between downsizing strategies (advertising, marketing, and research and development, respectively) and firm performance specifically in an economic downturn. This study tests hypotheses using 1996–2010 data from the Taiwan Economic Journal on 436 listed Taiwanese companies. The results indicate that the benefits for firms to follow the smiling curve may not occur in the short term and that downsizing strategies may not always be the appropriate strategy to improve firm performance. During an economic downturn, downsizing strategies do not appear to enhance firm performance, that is, the smiling curve should not frown during an economic downturn to enhance firm performance.

Suggested Citation

  • Luan, Chin-jung & Tien, Chengli, 2015. "Should the smiling curve frown during an economic downturn to enhance firm performance?," Journal of Management & Organization, Cambridge University Press, vol. 21(5), pages 573-593, September.
    • Handle: RePEc:cup:jomorg:v:21:y:2015:i:05:p:573-593_00
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    Cited by:

    1. Mengning He & Raquel Pérez Estébanez, 2023. "Exploring the Relationship between R&D Investment and Business Performance—An Empirical Analysis of Chinese ICT SMEs," Sustainability, MDPI, vol. 15(6), pages 1-17, March.

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