Slash and burn or nip and tuck? Downsizing, innovation and human resources

Abstract

Workforce downsizing has become a popular human resource practice by management over the last few decades. But surprisingly its impact on a number of organizational outcomes remains ambiguous. In this study we examine the link between different types of employee downsizing and organizational innovativeness. Our results, based on a survey of UK firms, indicate that the impact of workforce downsizing on innovation is contingent on the speed of implementation and the motive for downsizing. Contrary to expectations, the results reveal that the size of the workforce reduction has no significant impact on innovation.