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The Perceived Fairness of Layoffs in Germany: Participation, Compensation, or Avoidance?

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  • Christian Pfeifer

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Abstract

This study analyses to what extend and under what circumstances layoffs are accepted in Germany. Principles of distributive justice and rules of procedural justice form the theoretical framework of the analysis. Based on this, hypotheses are generated, which are tested empirically in a telephone survey conducted between East and West Germans in 2004 (n = 3036). The empirical analysis accounts for the different points of views of implicated stakeholders and impartial spectators. Key findings are: (1) The management of a company can increase the acceptance of layoffs if the employees get some participation rights. (2) For impartial spectators generous compensation for those made redundant leads to a higher degree of perceived fairness. But job alliances are not even preferred to layoffs without measures to soften the blow of job loss. (3) Implicated stakeholders accept job alliances and perceive wage cuts as more fair than layoffs. However, compensation does not have the expected impact. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Christian Pfeifer, 2007. "The Perceived Fairness of Layoffs in Germany: Participation, Compensation, or Avoidance?," Journal of Business Ethics, Springer, vol. 74(1), pages 25-36, August.
  • Handle: RePEc:kap:jbuset:v:74:y:2007:i:1:p:25-36
    DOI: 10.1007/s10551-006-9217-z
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    References listed on IDEAS

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    1. Rabin, Matthew, 2002. "A perspective on psychology and economics," European Economic Review, Elsevier, vol. 46(4-5), pages 657-685, May.
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    Cited by:

    1. Evelien Croonen, 2010. "Trust and Fairness During Strategic Change Processes in Franchise Systems," Journal of Business Ethics, Springer, vol. 95(2), pages 191-209, August.
    2. Majid Ghorbani & Yuan Liao & Sinan Çayköylü & Masud Chand, 2013. "Guilt, Shame, and Reparative Behavior: The Effect of Psychological Proximity," Journal of Business Ethics, Springer, vol. 114(2), pages 311-323, May.

    More about this item

    Keywords

    distributive justice; downsizing; fairness; job alliance; layoffs; procedural justice; severance pay; works councils; D63; J63; M12; M51;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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