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Corporate Downsizing to Rebuild Team Spirit

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  • Antonio Cabrales
  • Antoni Calvó-Armengol

Abstract

We propose a new theory for downsizing, based on strategic reasons, rather than technological ones. A crisis may lead to a decrease in the willingness to cooperate in an organization, and therefore to a bad equilibrium. A consensual downsizing episode may signal credibly that survivors are willing to cooperate, and thus, it may be optimal and efficiency-enhancing, as the empirical evidence suggests. A variation of the same mechanism leads to "efficient" upsizing.

Suggested Citation

  • Antonio Cabrales & Antoni Calvó-Armengol, 2003. "Corporate Downsizing to Rebuild Team Spirit," Working Papers 183, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:183
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    References listed on IDEAS

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    Cited by:

    1. Doh‐Shin Jeon & Domenico Menicucci, 2011. "Interconnection among academic journal websites: multilateral versus bilateral interconnection," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 363-386, June.

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