Blackwell Reference Online

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This term refers to a set of activities, undertaken on the part of the management of an organization, designed to reduce expenses or enhance competitiveness. This is usually, but not exclusively, accomplished by shrinking the size of the workforce. However, downsizing is a term used to encompass a wide range of activities from personnel layoffs and hiring freezes to consolidations and mergers of organizational units. Beginning in the 1980s, downsizing came into prominence as a topic of both practical and scholarly interest. This is because, on a practical basis, more than three fourths of all medium and large sized companies in North America and Europe downsized in that decade. Two thirds of companies that engaged in downsizing did so more than once. The popularity of downsizing brought into question the common assumptions that increased size, complexity, and resources are inherently associated with organizational effectiveness. Smaller and leaner became associated with success, not largesse and over‐abundance. The concept of downsizing has arisen out of popular usage, not precise theoretical construction. In fact, identifying the definition and conceptual boundaries of downsizing is more relevant for theoretical purposes than for practical ones. The terminology used to describe downsizing activities is relatively unimportant to practicing managers, and many terms are used as synonyms ... log in or subscribe to read full text