Financial Performance Outcomes of Downsizing

This dissertation explores how and when firms engage in downsizing with one central theme: how downsizing affects the financial performance of the firm. In response to recent calls, this dissertation investigates strategic actions such as acquisitions and digital transformation, where downsizing is used applied to unlock benefits. This dissertation examines the timing and magnitude of downsizing decisions and how firms can offset negative workforce effects, thereby securing financial performance. The findings presented in this dissertation suggest that a misjudgment of the magnitude of downsizing, wrong timing, or not taking the impact on employees into consideration can potentially lead to diminished financial performance. However, the insights gained from the various studies in this dissertation above all reinforce the awareness that downsizing under the right circumstances, strategically aligned with firm objectives, and especially with considerations for employees, both victims and survivors, can reap financial benefits.