Do product innovation-related activities affect downsizing decisions? An organizational efficiency perspective

Abstract

Firms’ innovation strategy typically involves the need to shape organizational changes within work structures and routines, even those concerning employee downsizing decisions. However, little effort has been directed toward exploring the role of firm innovation strategy as a determinant of downsizing. Drawing on organizational efficiency perspective, this study proposes a framework to examine the impact of product innovation-related activities on downsizing. The model will be tested using data from a longitudinal sample of Spanish innovative manufacturing firms. It is expected that the results show that firms developing product and process innovations are associated with downsizing decisions. Furthermore, companies that use formal protection of intellectual property through patents, utility models, trademarks and copyrights are believed to keep their personnel. The study attempt to unravel the impact of firm innovation on downsizing decisions and to offer guidance on how innovative firms might operate to control negative effects on their workforce.