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Journal of Business Ethics (2007) 72:149162 Springer 2006 DOI 10.1007/s10551-006-9162-x
Downsizing and Stakeholder Orientation Among the Fortune 500: Does Family Ownership Matter?
Eleni Stavrou 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. We 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 to downsize and the drivers of their stakeholder management practices.
KEY WORDS: downsizing, family business, performance, stakeholder orientation
Eleni T. Stavrou is an Assistant Professor of Management and Organization at the Department of Public and Business Administration of the University of Cyprus. She received her Ph.D. in Management and Organization from George Washington University, USA. Her work has been published in various academic journals including Entrepreneurship Theory and Practice, Journal of Applied Social Psychology, Journal of Organizational Behavior, Journal of Small Business Management, International Small Business Journal and Journal of European Industrial Training. Her research interests are: exibility at work, strategic human resource management, succession planning, group and family dynamics, intergenerational transitions, and organizational culture.
George I. Kassinis is an Assistant Professor of Management at the Department of Public and Business Administration of the University of Cyprus. He received his Ph.D. from Princeton University, USA. His work has been published in various academic journals including the Academy of Management Journal, Production and Operations Management and Strategic Management Journal. His research focuses on stakeholders, organizations and the natural environment, environmental management issues in services, social networks, and industrial ecology. He serves on the editorial board of Organisation Studies.Alexis Filotheou holds an MSc in Finance from the University of Cyprus and is currently employed in the private sector in Cyprus.
Introduction
Over the past 15 years or so, downsizing has been utilized widely by American corporations...