Downsizing and stakeholder orientation among the Fortune 500: Does family ownership matter?
PublisherAffiliation: Department of Public and Business Administration, University of Cyprus, 1678 Nicosia, Cyprus
Correspondence Address: Stavrou, E.
Department of Public and Business Administration, University of Cyprus, 1678 Nicosia, Cyprus
SourceAcademy of Management 2006 Annual Meeting: Knowledge, Action and the Public Concern, AOM 2006
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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.