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This study examined the work environment for creativity at a large high-technology firm before, during, and after a major downsizing. Creativity and most creativitysupporting aspects of the perceived work environment declined significantly during the downsizing but increased modestly later; the opposite pattern was observed for creativity-undermining aspects. Stimulants and obstacles to creativity in the work environment mediated the effects of downsizing. These results suggest ways in which theories of organizational creativity can be expanded and ways in which the negative effects of downsizing might be avoided or alleviated.
A downsizing such as this one is always difficult for employees. But out of tough times can come strength, creativity and teamwork. [We are] fortunate to retain committed, hard-working and cr eative employees, who will find substantial motivation and fulfillment as we all work together in 1995 to achieve [our] turnaround. (From the letter to shareholders in the 1994 annual report of a United States software company)
Our strategy is to reduce operating costs to a level commensurate with projected sales levels. To accomplish this goal, we have implemented a number of tough cost-cutting measures, which include downsizing of the workforce, facilities and other operating costs. In addition to cutting costs, we are focusing on product innovation through our highly effective Research and Development team. (From the letter to shareholders in the 1996 annual report of an international electronic games company)
American companies continued to downsize their workforces through most of the 1990s, but they also continued to emphasize the importance of innovation to long-term success. Do the two goals go hand-in-hand, as these letters to shareholders suggest, or are they incompatible?
As noted by McKinley and his colleagues (McKinley, 1993; Mone, McKinley, & Barker, 1998), there is considerable controversy among theoreticians about the effects of downsizing on a variety of organizational outcomes, including innovation. Most scholars have adopted a definition of downsizing similar to that of Freeman and Cameron (1993), describing it as an intentional management action involving a reduction in force and designed to improve a company's competitive position. Some theorists have taken the viewpoint expressed in the first letter to shareholders quoted earlier, arguing that a reduction in force will have generally positive effects on a company's efficiency, reducing waste and leading to...