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Downsizing and Stakeholder Orientation Among the Fortune 500: Does Family Ownership Matter?

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  • Eleni Stavrou

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  • George Kassinis

    ()

  • Alexis Filotheou

Abstract

While downsizing has been widely studied, its connection to firm ownership status and the reasons behind it are missing from extant research. We explore the relationship between downsizing and family ownership status among Fortune 500 firms. Weâ\x90£propose that family firms downsize less than non-family firms, irrespective of performance, because their relationship with employees is based on normative commitments rather than financial performance alone. We suggest that their actions are related to employee- and community-friendly policies. We find that family businesses do downsize less irrespective of financial performance considerations. However, their actions are not related to their employee- or community-friendly practices. The results raise issues related to the motivations of large multinationals toâ\x90£downsize and the drivers of their stakeholder management practices. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Eleni Stavrou & George Kassinis & Alexis Filotheou, 2007. "Downsizing and Stakeholder Orientation Among the Fortune 500: Does Family Ownership Matter?," Journal of Business Ethics, Springer, vol. 72(2), pages 149-162, May.
  • Handle: RePEc:kap:jbuset:v:72:y:2007:i:2:p:149-162
    DOI: 10.1007/s10551-006-9162-x
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    References listed on IDEAS

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    1. Mabert, Vincent A. & Schmenner, Roger W., 1997. "Assessing the roller coaster of downsizing," Business Horizons, Elsevier, vol. 40(4), pages 45-53.
    2. Hosmer, LaRue Tone, 1994. "Why Be Moral? A Different Rationale for Managers," Business Ethics Quarterly, Cambridge University Press, vol. 4(02), pages 191-204, April.
    3. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation," Scholarly Articles 29407535, Harvard University Department of Economics.
    4. Kets De Vries, Manfred & Balazs, Katharina, 1996. "The human side of downsizing," European Management Journal, Elsevier, vol. 14(2), pages 111-120, April.
    5. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December.
    6. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
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