When is organisational resizing helpful or harmful for innovation outputs?

Ramdani, Boumediene; Guermat, Cherif; Boukrami, Elias

Abstract

Studies on the effect of downsizing on organisational innovation have generated mixed and often contradictory results. Recent evidence has attempted to reconcile such inconsistencies by showing that downsizing has a dual effect on innovation, contingent on the firm’s level of resources prior to downsizing. Since firms seek to downsize as well as upsize their staffing levels, the effect of resizing (downsizing and upsizing) on innovation and the magnitude of such effect is still unknown. Using a longitudinal dataset of UK firms, we examine the effect of resizing on innovation outputs in firms experiencing resource slack and constraints. Our results suggest that upsizing in firms experiencing resource constraints and downsizing in firms experiencing resource slack have positive effects on innovation outputs, whereas upsizing in firms experiencing resource slack and downsizing in firms experiencing resource constraints have the reverse effects. Compared with firms experiencing resource slack, the effect of resizing on innovation outputs is more pronounced in firms experiencing resource constraints. These results suggest revisiting existing policy and managerial implications on the effectiveness of resizing strategies.

• Journal Article Type: Article
• Acceptance Date: Jul 27, 2024
• Online Publication Date: Jul 30, 2024
• Publication Date: Oct 1, 2024
• Deposit Date: Mar 17, 2024
• Publicly Available Date: Sep 23, 2024
• Print ISSN: 0275-5319
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 72
• Issue: Part A
• Article Number: 102503
• DOI: https://doi.org/10.1016/j.ribaf.2024.102503
• Public URL: https://uwe-repository.worktribe.com/output/11822408