A Resource-Acquisition Perspective: Examining the Effects of Downsizing on Work-Related Relationships and Performance

Abstract

Today’s corporations increasingly use downsizing as a change strategy to improve organizational performance. Although downsizing and employee networks have garnered attention from both scholars and practitioners, few studies have investigated the influence of downsizing on the temporal dynamics of communication networks among surviving employees or how changes in communication patterns in organizations affect performance. To study how downsizing affects layoff survivors—extending Conservation of Resources theory to longitudinal network and employee-performance data—we examine the impact of downsizing on both the behavioral and structural consequences in an organizational network and test whether temporal changes in network members’ degree centrality predict how employees who survive a downsizing event perform in their jobs. Results indicate that, during the period immediately following a downsizing event, survivors’ new tie-seeking behavior results in gains in degree centrality when compared with degree centrality before the downsizing or after organization routines stabilize. Moreover, survivors with lower pre-downsizing degree centrality achieved greater gains in degree centrality than those with higher degree centrality. We find that substantial gains in degree centrality are positively related to post-downsizing performance. Efforts to regain degree centrality are abandoned during the stabilization period, and changes in degree centrality are no longer positively related to post-downsizing performance. Our results demonstrate that dynamic changes in degree centrality during disruption and stabilization periods following a downsizing event have differential effects on work-related relationships and performance. We discuss the theoretical and managerial implications of these results and suggest future research directions.

Keywords

downsizing communication networks degree centrality survivor performance conservation of resources theory

Get full access to this article

View all access options for this article.

References

Aalbers

(2020). Rewiring the intrafirm network under downsizing: The role of tie loss on discretionary tie formation. Long Range Planning, 53(3), 1–13. https://doi.org/10.1016/j.lrp.2018.11.002

Ahuja

Soda

Zaheer

(2012). The genesis and dynamics of organizational networks. Organization Science, 23(2), 434–448. https://doi.org/10.1287/orsc.1110.0695

Allatta

J. T.

Singh

(2011). Evolving communication patterns in response to an acquisition event. Strategic Management Journal, 32(10), 1099–1118. https://doi.org/10.1002/smj.930

Allen

T. D.

Freeman

D. M.

Russell

J. E.

Reizenstein

R. C.

Rentz

J. O.

(2001). Survivor reactions to organizational downsizing: Does time ease the pain? Journal of Occupational and Organizational Psychology, 74(2), 145–164. https://doi.org/10.1348/096317901167299

Apascaritei

Elvira

M. M.

(2022). Dynamizing human resources: An integrative review of SHRM and dynamic capabilities research. Human Resource Management Review, 32(4), 1–16. https://doi.org/10.1016/j.hrmr.2021.100878.

Armstrong-Stassen

(2002). Designated redundant but escaping lay-off: A special group of lay-off survivors. Journal of Occupational and Organizational Psychology, 75(1), 1–13. https://doi.org/10.1348/096317902167603

Arshad

Sparrow

(2010). Downsizing and survivor reactions in Malaysia: Modelling antecedents and outcomes of psychological contract violation. The International Journal of Human Resource Management, 21(11), 1793–1815. https://doi.org/10.1080/09585192.2010.505080

Azoulay

Liu

C. C.

Stuart

T. E.

(2017). Social influence given (partially) deliberate matching: Career imprints in the creation of academic entrepreneurs. American Journal of Sociology, 122(4), 1223–1271. https://doi.org/10.1086/689890

Balkundi

Kilduff

(2006). The ties that lead: A social network approach to leadership. The Leadership Quarterly, 17(4), 419–439. https://doi.org/10.1016/j.leaqua.2006.01.001

10.

Bardoel

E. A.

Drago

(2021). Acceptance and strategic resilience: An application of conservation of resources theory. Group & Organization Management, 46(4), 657–691. https://doi.org/10.1177/10596011211022488

11.

Battilana

Casciaro

(2012). Change agents, networks, and institutions: A contingency theory of organizational change. Academy of Management Journal, 55(2), 381–398. https://doi.org/10.5465/amj.2009.0891

12.

Bhardwaj

Qureshi

Konrad

A. M.

Lee

S. H.

(2016). A two-wave study of self-monitoring personality, social network churn, and in-degree centrality in close friendship and general socializing networks. Group & Organization Management, 41(4), 526–559. https://doi.org/10.1177/1059601115608027

13.

Bilgili

T. V.

Ellstrand

A. E.

(2022). Relationship formation and change in ego networks: A regulatory focus framework. Group & Organization Management, 0(0), 1–35. https://doi.org/10.1177/10596011221133492.

14.

Bizzi

(2022). At the origin of network centrality: How to design jobs to make employees central. Group & Organization Management, 49(1), 40–73. https://doi.org/10.1177/10596011221087494.

15.

Borgatti

S. P.

(2005). Centrality and network flow. Social Networks, 27(1), 55–71. https://doi.org/10.1016/j.socnet.2004.11.008

16.

Borgatti

S. P.

Everett

M. G.

Freeman

L. C.

(2002). UCINET 6 for windows: Software for social network analysis version 6.2.5. Analytic Technologies. https://doi.org/10.1007/978-1-4939-7131-2_316

17.

Brass

D. J.

(2022). New developments in social network analysis. Annual Review of Organizational Psychology and Organizational Behavior, 9(1), 225–246. https://doi.org/10.1146/annurev-orgpsych-012420-090628

18.

Brass

D. J.

Borgatti

S. P.

(2019). Social networks at work. Routledge. https://doi.org/10.4324/9780203701942

19.

Brass

D. J.

Burkhardt

M. E.

(1992). Centrality and power in organizations. In Nohria

Eccles

(Eds.), Networks and organizations: Structure, form, and actions (pp. 191–215). Harvard Business School Press.

20.

Brockner

Konovsky

Cooper-Schneider

Folger

Martin

Bies

R. J.

(1994). Interactive effects of procedural justice and outcome negativity on victims and survivors of job loss. Academy of Management Journal, 37(2), 397–409. https://doi.org/10.5465/256835

21.

Brockner

Spreitzer

Mishra

Hochwarter

Pepper

Weinberg

(2004). Perceived control as an antidote to the negative effects of layoffs on survivors’ organizational commitment and job performance. Administrative Science Quarterly, 49(1), 76–100. https://doi.org/10.2307/4131456

22.

Burkhardt

M. E.

Brass

D. J.

(1990). Changing patterns or patterns of change: The effects of a change in technology on social network structure and power. Administrative Science Quarterly, 35(1), 104–127. https://doi.org/10.2307/2393552

23.

Burt

R. S.

(1992). Structural holes: The social structure of competition. Harvard University Press.

24.

Burt

R. S.

(2000). The network structure of social capital. In Sutton

Staw

(Eds.), Research in Organizational Behavior (pp. 345–423). JAI Press. https://doi.org/10.1016/S0191-3085(00)22009-1.

25.

Cameron

K. S.

(1994). Strategies for successful organizational downsizing. Human Resource Management, 33(2), 189–211. https://doi.org/10.1002/hrm.3930330204

26.

Cascio

W. F.

(2002). Strategies for responsible restructuring. Academy of Management Perspectives, 16(3), 80–91. https://doi.org/10.5465/ame.2002.8540331.

27.

Cascio

W. F.

Chatrath

Christie-David

R. A.

(2021). Antecedents and consequences of employee and asset restructuring. Academy of Management Journal, 64(2), 587–613. https://doi.org/10.5465/amj.2018.1013

28.

Chen

Mehra

Tasselli

Borgatti

S. P.

(2022). Network dynamics and organizations: A review and research agenda. Journal of Management, 48(6), 1602–1660. https://doi.org/10.1177/01492063211063218

29.

Contractor

Forbush

(2017). Networks. In Scott

Lewis

(Eds.), The international encyclopedia of organizational communication. https://doi.org/10.1002/9781118955567.wbieoc148

30.

Costenbader

Valente

T. W.

(2003). The stability of centrality measures when networks are sampled. Social Networks, 25(4), 283–307. https://doi.org/10.1016/S0378-8733(03)00012-1

31.

Cross

Borgatti

S. P.

(2004). The ties that share: Relational characteristics that facilitate information seeking. In Huysman

Wulf

(Eds.), Social capital and information technology. MIT Press. https://doi.org/10.7551/mitpress/6289.003.0009

32.

Cross

Cummings

J. N.

(2004). Tie and network correlates of individual performance in knowledge-intensive work. Academy of Management Journal, 47(6), 928–937. https://doi.org/10.5465/20159632

33.

Danowski

J. A.

Edison-Swift

(1985). Crisis effects on intraorganizational computer-based communication. Communication Research, 12(2), 251–270. https://doi.org/10.1177/009365085012002005

34.

Datta

D. K.

Basuil

D. A.

Radeva

E. A.

(2012). Employee downsizing and organizational performance: What do we know? In Cooper

C. L.

Pandey

Quick

J. C.

(Eds.), Downsizing: Is less still more? (pp. 199–227). Cambridge University Press.

35.

Datta

D. K.

Guthrie

J. P.

Basuil

Pandey

(2010). Causes and effects of employee downsizing: A review and synthesis. Journal of Management, 36(1), 281–348. https://doi.org/10.1177/0149206309346735

36.

Dlouhy

Casper

(2021). Downsizing and surviving employees’ engagement and strain: The role of job resources and job demands. Human Resource Management, 60(3), 435–454. https://doi.org/10.1002/hrm.22032

37.

Doerfel

M. L.

Lai

C. H.

Chewning

L. V.

(2010). The evolutionary role of interorganizational communication: Modeling social capital in disaster contexts. Human Communication Research, 36(2), 125–162. https://doi.org/10.1111/j.1468-2958.2010.01371.x

38.

Freeman

L. C.

Romney

A. K.

Freeman

S. C.

(1987). Cognitive structure and informant accuracy. American Anthropologist, 89(2), 310–325. https://doi.org/10.1525/aa.1987.89.2.02a00020

39.

Freeman

L. C.

(1978). Centrality in social networks conceptual clarification. Social networks, 1(3), 215–239. https://doi.org/10.1016/0378-8733(78)90021-7.

40.

Freeman

S. J.

Ehrhardt

(2012). The antecedents of downsizing. In Cooper

C. L.

Pandey

Quick

J. C.

(Eds.), Downsizing: Is less still more? (pp. 76–100). Cambridge University Press.

41.

Fugate

Kinicki

A. J.

Prussia

G. E.

(2008). Employee coping with organizational change: An examination of alternative theoretical perspectives and models. Personnel Psychology, 61(1), 1–36. https://doi.org/10.1111/j.1744-6570.2008.00104.x

42.

Fugate

Kinicki

A. J.

Scheck

C. L.

(2002). Coping with an organizational merger over four stages. Personnel Psychology, 55(4), 905–928. https://doi.org/10.1111/j.1744-6570.2002.tb00134.x

43.

Gandolfi

Hansson

(2011). Causes and consequences of downsizing: Towards an integrative framework. Journal of Management & Organization, 17(4), 498–521. https://doi.org/10.5172/jmo.2011.17.4.498

44.

Grimm

K. J.

McArdle

J. J.

Zonderman

A. B.

Resnick

S. M.

(2012). Recent changes leading to subsequent changes: Extensions of multivariate latent difference score models. Structural Equation Modeling: A Multidisciplinary Journal, 19(2), 268–292. https://doi.org/10.1080/10705511.2012.659627

45.

Guthrie

J. P.

Datta

D. K.

(2008). Dumb and dumber: The impact of downsizing on firm performance as moderated by industry conditions. Organization Science, 19(1), 108–123. https://doi.org/10.1287/orsc.1070.0298

46.

Hargrove

M. B.

Cooper

C. L.

Quick

J. C.

(2012). The stress outcomes of downsizing. In Cooper

C. L.

Pandey

Quick

J. C.

(Eds.), Downsizing: Is less still more? (pp. 293–325). Cambridge University Press.

47.

V. T.

Pollack

J. M.

(2014). Passion isn’t always a good thing: Examining entrepreneurs’ network centrality and financial performance with a dualistic model of passion. Journal of Management Studies, 51(3), 433–459. https://doi.org/10.1111/joms.12062

48.

Hobfoll

S. E.

(1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44(3), 513–524. https://doi.org/10.1037/0003-066x.44.3.513

49.

Hobfoll

S. E.

Freedy

(1993). Conservation of resources: A general stress theory applied to burnout. In Professional burnout: Recent developments in theory and research Series in applied psychology: Social issues and questions (pp. 115–133). Taylor & Francis. https://doi.org/10.4324/9781315227979-9

50.

Hobfoll

S. E.

Halbesleben

Neveu

J. P.

Westman

(2018). Conservation of resources in the organizational context: The reality of resources and their consequences. Annual Review of Organizational Psychology and Organizational Behavior, 5(1), 103–128. https://doi.org/10.1146/annurev-orgpsych-032117-104640

51.

Isabella

L. A.

(1990). Evolving interpretations as a change unfolds: How managers construe key organizational events. Academy of Management Journal, 33(1), 7–41. https://doi.org/10.5465/256350

52.

Iverson

R. D.

Zatzick

C. D.

(2011). The effects of downsizing on labor productivity: The value of showing consideration for employees’ morale and welfare in high-performance work systems. Human Resource Management, 50(1), 29–44. https://doi.org/10.1002/hrm.20407

53.

Johnstone

(2023). Downsizing. In Encyclopedia of human resource management. Edward Elgar Publishing. https://doi.org/10.4337/9781800378841.D.14

54.

J. K.

Harrison

D. A.

Gray

S. M.

(2021). The ties that cope? Reshaping social connections in response to pandemic distress. Journal of Applied Psychology, 106(9), 1267–1282. https://doi.org/10.1037/apl0000955

55.

Kilduff

Tsai

Hanke

(2006). A paradigm too far? A dynamic stability reconsideration of the social network research program. Academy of Management Review, 31(4), 1031–1048. https://doi.org/10.5465/amr.2006.22528168

56.

Kim

T. Y

Swaminathan

(2006). Framing interorganizational network change: A network inertia perspective. Academy of Management Review, 31(3), 704–720. https://doi.org/10.5465/amr.2006.21318926

57.

Kline

R. B.

(2016). Principles and practice in structural equation modeling (4th ed.). Guilford Press.

58.

Koka

B. R.

Madhavan

Prescott

J. E.

(2006). The evolution of interfirm networks: Environmental effects on patterns of network change. Academy of Management Review, 31(3), 721–737. https://doi.org/10.5465/amr.2006.21318927

59.

Laumann

E. O.

Marsden

P. V.

Prensky

(1983). The boundary specification problem in network analysis. In Burt

R. S.

Minor

M.J.

(Eds.), Applied network analysis: A methodological introduction (pp. 18–34). Sage. https://doi.org/10.1017/9781108878296.030.

60.

Lewis

Sahay

(2017). Change, organizational. In Scott

C. R.

Lewis

(Eds.), The international encyclopedia of organizational communication (pp. 221–243). Wiley Blackwell.

61.

Lim

J. H.

Tai

Bamberger

P. A.

Morrison

E. W.

(2020). Soliciting resources from others: An integrative review. Academy of Management Annals, 14(1), 122–159. https://doi.org/10.5465/annals.2018.0034

62.

Majchrzak

Jarvenpaa

S. L.

Hollingshead

A. B.

(2007). Coordinating expertise among emergent groups responding to disasters. Organization Science, 18(1), 147–161. https://doi.org/10.1287/orsc.1060.0228

63.

Matusik

J. G.

Hollenbeck

J. R.

Mitchell

R. L.

(2021). Latent change score models for the study of development and dynamics in organizational research. Organizational Research Methods, 24(4), 772–801. https://doi.org/10.1177/1094428120963788

64.

McArdle

J. J.

(2009). Latent variable modeling of differences and changes with longitudinal data. Annual Review of Psychology, 60(1), 577–605. https://doi.org/10.1146/annurev.psych.60.110707.163612.

65.

McArdle

J. J.

Nesselroade

J. R.

(2014). Longitudinal data analysis using structural equation models. American Psychological Association.

66.

McElroy

J. C.

Morrow

P. C.

Rude

S. N.

(2001). Turnover and organizational performance: A comparative analysis of the effects of voluntary, involuntary, and reduction-in-force turnover. Journal of Applied Psychology, 86(6), 1294–1299. https://doi.org/10.1037/0021-9010.86.6.1294

67.

McEvily

Soda

Tortoriello

(2014). More formally: Rediscovering the missing link between formal organization and informal social structure. Academy of Management Annals, 8(1), 299–345. https://doi.org/10.5465/19416520.2014.885252

68.

McKinley

Zhao

Rust

K. G.

(2000). A sociocognitive interpretation of organizational downsizing. Academy of Management Review, 25(1), 227–243. https://doi.org/10.5465/amr.2000.2791612

69.

Merton

R. K.

(1968). The Matthew effect in science: The reward and communication systems of science are considered. Science, 159(3810), 56–63. https://doi.org/10.1126/science.159.3810.56

70.

Monge

P. R.

Contractor

N. S.

(2001). Emergence of communication networks. In The new handbook of organizational communication (pp. 440–502). Sage Publications. https://doi.org/10.4135/9781412986243.n12

71.

Nelson

Winter

(1982). An evolutionary theory of economic change. Harvard University Press.

72.

Newsom

J. T.

(2015). Longitudinal Structural Equation Modeling: A Comprehensive Introduction. Routledge. https://doi.org/10.4324/9781315871318

73.

Nicholson

West

(1988). Managerial job change: Men and women in transition. Cambridge University Press. https://doi.org/10.1017/cbo9780511522116

74.

Oreg

Vakola

Armenakis

(2011). Change recipients’ reactions to organizational change: A 60-year review of quantitative studies. The Journal of Applied Behavioral Science, 47(4), 461–524. https://doi.org/10.1177/0021886310396550.

75.

Pallotti

Mascia

Giorgio

(2023). A multilevel study of social networks and collective reactions to organizational change. Journal of Organizational Behavior, 44(7), 1109–1128. https://doi.org/10.1002/job.2687

76.

Porter

C. M.

Woo

S. E.

Allen

D. G.

Keith

M. G.

(2019). How do instrumental and expressive network positions relate to turnover? A meta-analytic investigation. Journal of Applied Psychology, 104(4), 511–536. https://doi.org/10.1037/apl0000351

77.

Rafferty

A. E.

Griffin

M. A.

(2006). Perceptions of organizational change: a stress and coping perspective. Journal of Applied Psychology, 91(5), 1154–1162. https://doi.org/10.1037/0021-9010.91.5.1154

78.

Rafferty

A. E.

Jimmieson

N. L.

Armenakis

A. A.

(2013). Change readiness: A multilevel review. Journal of Management, 39(1), 110–135. https://doi.org/10.1177/0149206312457417

79.

Rosseel

(2012). Lavaan: An R package for structural equation modeling. Journal of Statistical Software, 48(2), 1–36. https://doi.org/10.18637/jss.v048.i02

80.

Sahdev

(2003). Survivors’ reactions to downsizing: The importance of contextual factors. Human Resource Management Journal, 13(4), 56–74. https://doi.org/10.1111/j.1748-8583.2003.tb00105.x

81.

Selig

J. P.

Preacher

K. J.

(2009). Mediation models for longitudinal data in developmental research. Research in Human Development, 6(2-3), 144–164. https://doi.org/10.1080/15427600902911247

82.

Schumacker

R. E.

Lomax

R. G.

(2004). A beginner’s guide to structural equation modeling. Laurence Erlbaum Associates.

83.

Shah

P. P.

(2000). Network destruction: The structural implications of downsizing. Academy of Management Journal, 43(1), 101–112. https://doi.org/10.5465/1556389

84.

Sparrowe

R. T.

Liden

R. C.

(2005). Two routes to influence: Integrating leader-member exchange and social network perspectives. Administrative Science Quarterly, 50(4), 505–535. https://doi.org/10.2189/asqu.50.4.505

85.

Susskind

A. M.

(2007). Downsizing survivors communication networks and reactions: A longitudinal examination of information flow and turnover intentions. Communication Research, 34(2), 156–184. https://doi.org/10.1177/0093650206298068

86.

Tasselli

Kilduff

Menges

J. I.

(2015). The microfoundations of organizational social networks: A review and an agenda for future research. Journal of Management, 41(5), 1361–1387. https://doi.org/10.1177/0149206315573996

87.

Tourish

Paulsen

Hobman

Bordia

(2004). The downsides of downsizing: Communication processes information needs in the aftermath of a workforce reduction strategy. Management Communication Quarterly, 17(4), 485–516. https://doi.org/10.1177/0893318903262241

88.

Tröster

Parker

van Knippenberg

Sahlmüller

(2019). The coevolution of social networks and thoughts of quitting. Academy of Management Journal, 62(1), 22–43. https://doi.org/10.5465/amj.2016.0914

89.

Walker

H. A.

Thye

S. R.

Simpson

Lovaglia

M. J.

Willer

Markovsky

(2000). Network exchange theory: Recent developments and new directions. Social Psychology Quarterly, 63(4), 324–337. https://doi.org/10.2307/2695843

90.

Wang

S. C.

McLarnon

M. J. W.

O’Neill

T. A.

Turner

A. L. E.

(2023). Location, location, location: Centrality in team conflict networks and individual outcomes. Group Dynamics: Theory, Research, and Practice, 27(4), 257–275. https://doi.org/10.1037/gdn0000197

91.

Wasserman

Faust

(1994). Social Network Analysis: Methods and Applications. Cambridge University Press.

92.

Wenzel

Danner-Schröder

Spee

A. P.

(2021). Dynamic capabilities? Unleashing their dynamics through a practice perspective on organizational routines. Journal of Management Inquiry, 30(4), 395–406. https://doi.org/10.1177/1056492620916549

93.

Whitney

J. M.

Henry

S. E.

Bradley

B. H.

(2022). Maybe it is who you know: Social networks and leader–member exchange differentiation. Group & Organization Management, 47(2), 300–341. https://doi.org/10.1177/10596011221086327

94.

Zorn

M. L.

Norman

Butler

F. C.

Bhussar

(2017). Cure or curse? Does downsizing increase the likelihood of bankruptcy? Journal of Business Research, 76, 24–33. https://doi.org/10.1016/j.jbusres.2017.03.006

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

0.00 MB

0.50 MB