Ownership Traits and Downsizing Behaviour: Evidence for the Largest Spanish Firms, 1990–1998

Universidad de Salamanca, Spain

^* To whom correspondence should be addressed.

	Abstract

This paper explores and tests the differences in downsizing behaviour depending upon three ownership-based traits of the largest Spanish companies: stock versus privately held corporations, foreign versus domestic firms and state-owned versus private companies. From a theoretical standpoint, we develop an explanatory model of downsizing that accounts for techno-economic, institutional, and socio-cognitive explanations which serves as a conceptual basis for generating hypotheses on the role of ownership in downsizing decisions. Probit estimates using a sample of large Spanish firms (1990–1998) confirm that stock corporations and state-owned firms engaged in a privatization process are more likely to downsize than privately held domestic companies. We found less conclusive results about the downsizing behaviour of foreign firms. Finally, our findings corroborate the relevance of organizational decline and institutional factors for predicting the downsizing event.

Key Words: downsizing, short-termism, ownership, Spanish firms

First published on September 26, 2007, doi:10.1177/0170840607076591

Organization Studies 2007;28:1613.

A more recent version of this article appeared on November 1, 2007


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