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The effect of downsizing on innovation outputs: The role of resource slack and constraints

Ramdani, Boumediene; Guermat, Cherif; Mellahi, Kamel

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Authors

Boumediene Ramdani

Kamel Mellahi



Abstract

Although the practice of downsizing is prevalent, its effects on organisational outcomes remain poorly understood. This article examines how and when downsizing affects organisational innovation. Using a unique data set of UK firms over a period of 22 years, we test the effect of downsizing on innovation outputs by considering the moderating role of resource slack and constraints. We argue and empirically demonstrate that downsizing has a dual effect on innovation, contingent on the firm’s level of resources. Our results reveal that downsizing affects innovation outputs positively in firms experiencing resource slack and negatively in firms experiencing resource constraints. We also show that the effect is more immediate in resource-constrained firms. Theoretical and managerial implications of these results are discussed.

Citation

Ramdani, B., Guermat, C., & Mellahi, K. (2021). The effect of downsizing on innovation outputs: The role of resource slack and constraints. Australian Journal of Management, 46(2), 346-365. https://doi.org/10.1177/0312896220970609

Journal Article Type Article
Acceptance Date Aug 31, 2020
Online Publication Date Nov 30, 2020
Publication Date May 1, 2021
Deposit Date Dec 1, 2020
Publicly Available Date Jul 7, 2021
Journal Australian Journal of Management
Print ISSN 0312-8962
Electronic ISSN 1327-2020
Publisher SAGE Publications
Peer Reviewed Peer Reviewed
Volume 46
Issue 2
Pages 346-365
DOI https://doi.org/10.1177/0312896220970609
Keywords General Business, Management and Accounting, Constraints, Downsizing, Innovation, Layoffs, Patents, Resource, Slack
Public URL https://uwe-repository.worktribe.com/output/6913119

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