The role of agent conscientiousness and reciprocity norm in employee layoff decisions

Purpose - The purpose of this paper is to better understand the main effects of agent conscientiousness and reciprocity norm and the interaction effect of these two factors on layoff decisions in firm‐employee relationships. Design/methodology/approach - A scenario‐based experiment with 331 business professionals was conducted and three regression models were run to test three hypotheses proposed in the paper. Findings - The norm of reciprocity reduces decision‐making agents' tendency to lay off employees in the face of an environmental change. In addition, the norm of reciprocity interacts with decision‐making agents' conscientiousness in influencing their layoff decision. Research limitations/implications - The limitations of this study are the use of single‐agent decision scenario and the specific focus on one aspect of agent personality – conscientiousness and its collective influence on layoff decisions. In a broader picture, the results of this study support the cross‐level analytical approach to investigating organizational phenomena, in which individual‐level and organizational‐level factors interact and determine organizational outcomes. Practical implications - Recruiting and promoting managers who exhibit high levels of conscientiousness, coupled with proactively cultivating the norm of reciprocity with employees, are critical to a firm's thrust in attaining and sustaining stakeholder management practices with the emphasis on employees' well‐being. Originality/value - While the extant literature focuses largely on the effects of layoff and the individual perceptions of downsizing and layoff, this paper examines what actually influences decision‐making agents' layoff decisions. The paper expands the literature by investigating the impacts of agent conscientiousness and reciprocity norm on layoff decisions.