Downsizing and Stakeholder Orientation among the Fortune 500: Does Family Ownership Matter?

• Published in: Journal of business ethics Vol. 72; no. 2; pp. 149 - 162
• Main Authors: Stavrou, Eleni, Kassinis, George, Filotheou, Alexis
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer 01.05.2007; Springer Nature B.V
• Series: Journal of Business Ethics
• Subjects: Business ethics; Business structures; Business studies; Community relations; Corporate strategies; Costs; Downsizing; Economic performance; Empirical tests; Employees; family business; Family firms; Family owned businesses; Financial management; Globalization; Human resource management; Human resources; Hypotheses; Large enterprises; Layoffs; Management decisions; Management principles; Operations management; Owner operator; Ownership and control; Profit sharing plans; Size of enterprise; Small business; Stakeholder; Stakeholder management; stakeholder orientation; Stakeholders; Statistical analysis; Strategic management; Succession planning; Cyprus
• ISSN: 0167-4544; 1573-0697
• DOI: 10.1007/s10551-006-9162-x

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.