Fikri Habibi1, Sumartono2, Bambang Santoso Haryono3, MR. Khairul Muluk4

Universitas Brawijaya, Jawa Timur, Indonesia


[email protected]1, [email protected]2,

�bаmbangsfiа, [email protected]4



Downsizing is the most popular strategic choice in organizational change, especially in the private sector. The strategy often chosen in downsizing is reducing employees, eliminating structure and function to produce efficiency, productivity, and competitiveness. However, a study is needed to elaborate on the concept of downsizing. The purpose of this research is to map the downsizing concept, describe how this strategy is implemented, its dynamics and development, as well as the effectiveness level of downsizing strategy. This research takes the form of a systematic literature review, which involves an assessment based on articles/publications related to downsizing. Downsizing articles are sourced from the Scopus database, and then mapped based on the number of articles per year, authors, countries, affiliations, and sponsors. As a result, the goal of downsizing has not been supported by strong evidence in the field because downsizing and efficiency do not have a strong correlation. Indeed, downsizing results in negative impacts on both organizations and employees. His mistake was to put the strategy of reducing employees and financial efficiency as the main goal. Therefore, downsizing must be part of a paradigmatic organizational change strategy and not merely serve as a short-term strategy.


Keyword: Downsizing, Organization, Systematic Literature Review.


Corresponding Author: Fikri Habibi

E-mail: [email protected]



Productivity and competitiveness (Freeman & Cameron, 1993) reduce costs and increase the efficiency and profits of the organization Freeman and Ehrhardt, (Chhinzer & Currie, 2014), making changes in the organization McManus and Mosca, 2015. (Bear & Hwang, 2017). Because of these goals, downsizing in the view of Cascio and Reynolds 2014 is a characteristic of modern organizations. (Fijalkowska et al., 2017) Downsizing has become an integral part of organizational life in the United States. (Budros & Budros, 1999). This shows that downsizing is a strategic alternative in organizational management.

Downsizing was first done in the 1980s to increase companies' competitiveness in the United States. (Jones, 1998). Downsizing has become a radical strategy in management (Tsai & Yen, 2008). Along with the expansion of capitalism that has penetrated countries worldwide, the wave of downsizing has become increasingly massive. It has become the choice of organizations, both private and public. Not only developed countries such as the United States and Europe but many countries in Asia, Latin America, and Eastern Europe that are new to using the market economy choose to downsize. The peak in the 1990s with the downsizing decade marked how this strategy became the main choice in making organizational changes. (Karfakis & Kokkinidis, 2019) (Budros & Budros, 1999) (Manson, 2014). In the public sector, downsizing has been carried out almost all over the world, especially in Africa, Latin America, and countries experiencing economic transition (Diaz, 2005). The World Bank and IMF make downsizing an option/requirement in assisting in dealing with crises (Rama, 1999).

Conceptually, downsizing is part of the concept of organizational restructuring along with other strategies such as delayering, business process reengineering, and outsourcing Cameron 1994 (Tiwari & Lenka, 2018). Another form of organizational restructuring was put forward by Burdos, which consisted of downsizing, closures, mergers, and privatization (Jung et al., 2018). Another opinion was conveyed by Halley, suggesting 3 (three) methods, namely downsizing, rightsizing, and upsizing (Hertati et al., 2015)

Thus, downsizing is only one of the organizational strategies for improving performance, effectiveness, and efficiency, including dealing with environmental changes. Even though there are many strategies for organizational restructuring, Burdos argues that downsizing is the main or most popular choice to make (Jung et al., 2018), (Heenan, 1989), (Freeman & Cameron, 1993), (Tiwari & Lenka, 2018). The proof is that downsizing has been used by hundreds or even thousands of organizations/companies to improve organizational performance, effectiveness, and efficiency. (Cascio, 1993)

Both restructuring and downsizing are very common practices for making real organizational changes (Cascio, 1993), (Trevor & Nyberg, 2008)(Harney et al., 2018). Both are considered strategic steps to cut costs, maintain organizational survival amid an economic downturn and financial crisis, and improve organizational performance and productivity. (Tiwari & Lenka, 2018)

The current organizational challenge is globalization and digitalization, which demand flexibility and agility. Therefore, one of the factors in choosing downsizing is technological advancement (Sill Jr, 2018). The volatile, uncertain, complex, and ambiguous organizational environment (VUCA) has forced organizations to balance their external and internal factors. In this adaptation effort, the organization carries out a downsizing strategy. Despite being the prima donna in organizational restructuring, downsizing is not without blemishes, and it needs both the process and the resulting impact. Therefore, this study seeks to describe downsizing options, impacts, and improvement efforts or recommendations using a literature study approach.

Research related to downsizing is mostly conducted to explain how the strategy is implemented and the results and impacts it generates. This research attempts to map the concept, strategies employed, impacts, and effectiveness of downsizing. This research is crucial because the mapping results provide an overview of the development and dynamics of downsizing in effecting change within organizations. This strategy is widely popular and a top choice for creating efficiency, productivity, and competitiveness. However, not all organizations opting for downsizing achieve the intended results. In fact, this strategy often has negative impacts on both the organization and its employees.

Therefore, this research is important as a reference for organizations planning to implement downsizing, aiming to achieve a high level of effectiveness. These references are derived from mapping results related to downsizing concepts and experiences from organizations that have undergone downsizing, employing a systematic literature review approach.




This research is a systematic literature review that attempts to map and elaborate the downsizing concepts. An article search was carried out on the Scopus website using the keywords downsizing and organization in the article's title for an unspecified year range. As a result, 37 articles were obtained, which will then be mapped based on Scopus data. The research mapping of downsizing organizations is based on several aspects, such as documents by year, author, country, affiliation, and funding, followed by a discussion on downsizing.

The research process involved several stages, including searching for articles in the Scopus database, followed by article collection, research mapping, and article writing. The classification of articles based on their categories was derived from the mapping done by Scopus. The mapping process involved creating specific tables, especially to explain the downsizing concept, the implementation of downsizing strategies, as well as the results and impacts generated by these strategies. The analysis process in this research did not utilize specific applications or software such as nVivo, atlas.ti, or Vos Viewer. The mapping results served as the material or data for analyzing the downsizing concept and the implementation of downsizing strategies.



Articles by Year of Publication

The first mapping is reviewed from the number of articles published by year, as shown in the diagram below.

Figure 1. Chat Document by Year

Based on the above data, an article discussing downsizing was published in 1982 under Retrenchment: The Uses and Misuses of LIFO In Downsizing An Organization by Ketchum. RH continued with the article Pay Policies While Downsizing The Organization: A Systematic Approach in 1983, written by BR. Ellig. This is in line with the data if downsizing was first carried out in the 1980s in the private sector in the United States (Jones, 1998). The most articles appeared in 1998, which then decreased in 2000. This data has a correlation with the term downsizing decade in the 1990s when the wave of downsizing was widespread not only in Europe and the United States but also in countries in Asia, Latin America, and Eastern Europe (Karfakis & Kokkinidis, 2019)

Since 1982, there have only been 37 articles discussing downsizing organizations, and they continued in 2018. Globalization and capitalism are increasingly sweeping countries in the world, so researchers should pay more attention to looking at downsizing. This provides an opportunity to conduct in-depth research on downsizing (both in the private and public sectors) for 2019-2023 when globalization is so strong.

Article Based on Author

The next article mapping is reviewed by the author, along with the number of articles and their affiliations, as shown in the diagram below.

Figure 2. Chart Documents by Author

The diagram above shows no dominant author in the study of downsizing organizations. Five writers have the highest number of articles (2 articles each) in the study of downsizing organizations, namely Ilksen Gorkem and Pilar Pazos, who both wrote articles together (Gorkem & Pazos, 2014) and (Gorkem et al., 2015) Antony Travaglione dan Bernadette Cross (Travaglione & Cross, 2006) (Cross & Travaglione, 2004), dan Ronal J. Burke (Burke, 1998; Burke & Nelson, 1997). Moreover, each author only has 1 article, thus allowing researchers to continue conducting in-depth studies on downsizing organizations.

Affiliate Based Articles

The image below describes the affiliation of the authors who have articles in the study of downsizing organizations.

Figure 3. Chart Documents by Affiliation

The distribution of articles by affiliation is the same as the distribution of authors, where the top 5 affiliates are Charles Sturt University, Old Dominion University, York University, Edith Cowan University, and Schulich School of Business, each of which has two articles. While other authors, affiliations only have the number of 1 article consisting of;

1.    The University of Manchester

2.    Indian Institute of Technology Kharagpur

3.    The University of Auckland

4.    H�gskolan Kristianstad

5.    Oklahoma State University

6.    Pfizer Inc.

7.    The University of Texas at Dallas

8.    The University of Newcastle, Australia

9.    Tata Iron & Steel Company Limited

10. Auburn University

11. The University of Tennessee, Knoxville

12. SUNY Empire State College

13. University of Toronto

14. Erasmus Universiteit Rotterdam

15. Oklahoma State University � Oklahoma City

16. Medical University of South Carolina

17. Alliance Manchester Business School

18. University of Nebraska�Lincoln

19. Missouri Western State University

20. Lunds Universitet

21. Columbia University

22. California State University, East Bay

23. CQ University Australia

24. University of Central Lancashire

25. Bond University

26. Wenzao Ursuline University of Languages

27. Open University of Cyprus

28. D'Amore-McKim School of Business

29. Mays Business School

30. Lancashire School of Business and Enterprise

31. Bond Business School

32. University of Wolverhampton Business School

33. Vinod Gupta School of Management

Articles by Country

The diagram below maps articles based on countries or territories, which the USA dominates with 16 articles, followed by Australia with six articles, Canada and India with two articles. If you look at the documents by country, it is dominated by developed countries in the Americas and Europe. And Australia. Meanwhile, India and Taiwan are the two countries representing Asia. This shows that the topic of downsizing organizations has received very serious attention from researchers in the USA. At the same time, there are only two countries in Asia, namely India and Taiwan.

Figure 4. Chart Document by Country of Territory

Articles Based on Funding

Finally, the mapping is based on funding sponsors, which only places Harvard Business School as the only one identified as funding in the downsizing organization article writing.

Figure 5. Chart Document by Funding Sponsor

The United States is the country that appears most often in the study of downsizing organizations both from the number of documents, authors, and affiliations, based on country/territory and funding, namely the Harvard Business School located in the USA. This is very logical because the United States was the first country to downsize both the private and public sectors of Feldheim (Feldheim, 2007) (Rich, 1986) (Jones, 1998). Also, the spread of downsizing must be kept from the United States. As previously explained, downsizing always goes hand in hand with capitalism and the United States.

Downsizing is a strategic choice in organizations due to various backgrounds, such as the economic crisis (Alakent & Lee, 2010), organizational changes (Tsai & Yen, 2008) (Travaglione & Cross, 2006) (Fisher & White, 2000a), global competition (Burke & Nelson, 1997), increasing costs and decreasing profits (Luthans & Sommer, 1999). The organization responds to the dynamics of its environment and strives to adjust to these changes. The response was through downsizing in various forms, although downsizing was the most common choice.

Goals such as increasing effectiveness, efficiency, productivity, profitability, and so on can be achieved through downsizing. It is just that, based on several studies, they could have shown satisfactory results. Even though downsizing has become the choice of many organizations, this strategy is inseparable from weaknesses and negative sides, especially related to its impact.

For example, financial efficiency is the goal of downsizing; even though the organization is efficient, it may not result from the downsizing strategy (Morris et al., 1999). Even downsizing does not have a significant impact on the financial health and market valuation (Carriger & Carriger, 2016) (Carriger & Carriger, 2017) (Carriger & Carriger, 2018). Even though there was a decrease or reduction in costs due to downsizing, the result was less than planned (Appelbaum et al., 1998). Liou and Wang reinforce the relationship between downsizing and financial conditions that "financial conditions, including budget surpluses and fund deficits, are not related to downsizing strategies." (Liou & Wang, 2019). Based on these facts, the relationship between downsizing and financial efficiency is indisputable.

The negative impact from the employee side is that downsizing makes a commitment, job satisfaction, and group trust experience a significant decrease from managers and staff (Luthans & Sommer, 1999). In Mishra's view, downsizing has a psychological impact in the form of employee fear (Aalbers & Bernt, 2018), there is a sense of worry, anger, and decreased employee confidence (Bear & Hwang, 2017), and greatly disrupts work relations within the organization/ company. Even downsizing has the impact that it is difficult for companies/ organizations to retain employees who have the best/ performing achievements (Arshad & Sparrow, 2010) (Arshad, 2016) (de Vries & Balazs, 2006). In public sector organizations, downsizing in the United States resulted in a decrease in the quality of public services (Ashman, 2015), while in Ireland, it resulted in a decrease in employee welfare (Harney et al., 2018).

Finally, based on financial and employee performance achievements, there needs to be more evidence of a significant relationship between downsizing and increasing organizational performance. This strategy can undermine organizational capacity (Fisher & White, 2000b). So, Tsai and Yen assess the mystery between downsizing and increasing company performance (Tsai & Yen, 2008). Because it does not touch the root of the problem, Michael Carriger calls for downsizing as a temporary solution or the term band-aid.

There is a wide enough gap between the goals of downsizing and the objective conditions of public and private organizations implementing this strategy. The reason is that organizations (particularly the private sector) need proper planning for downsizing, including eliminating negative impacts (Cascio, 1993), (Anderson, 2011). Therefore, the downsizing strategy must be carried out carefully to avoid damaging the organization (Fisher & White, 2000a). Some experts then summarize the five causes of downsizing failure (Appelbaum et al., 1998), that is, (1). The governance of downsizing could be better (Cameron 1994a and Freeman 1994), (2). Organizational inability to carry out 3-C principles (command, control, and compartmentalization) (Cascio, 1993), (3). The degree of organizational resistance to change (Cameron, 1994a), (4). Organizational unpreparedness in anticipating problems arising from downsizing (Cascio, 1993; Dougherty and Bowman, 1995; Freeman, 1994), and (5). Downsizing, driven by social factors, does not generate predictable financial motivation and returns (McKinley et al., 1995).

Burke and Nelson (1997) provided input in increasing the effectiveness of downsizing in 3 stages: initiation and planning of the revitalization efforts. The second stage, implementation, outlines the ways of smoothing the transition. The final stage, institutionalization, comes to grips with healing and refocusing the organization. Planning before carrying out must be carried out carefully involving workers and management, including building good communication between the two. Thus, the success of downsizing is highly dependent on preparation, participation, leadership, treatment of workers, cost reduction, performance measurement, and implementation processes (Tsai & Yen, 2008). Not much different, Mone (1994) emphasizes the downsizing process in 3 aspects: planning, implementing, and using human resource management during and after downsizing.

Not only in the downsizing stages, attention is also focused on employees who experience the impact of downsizing. Overcoming employee stress levels during and after downsizing needs attention. Therefore, dynamic communication patterns between top management, workgroups, and individual workers must be done well (Shaw & Barrett-Power, 1997). Attention in the form of a sense of justice for employees still being maintained in downsizing must be obtained (Brockner, 1994). Tsai dan Yen (Tsai & Yen, 2008) proposed a strategic human resource management system to overcome downsizing. Travaglione and Cross also stated the same thing, that management must restore the human aspect in human resource management (Travaglione & Cross, 2006). Therefore, downsizing has become one of the controversial yet widely implemented strategies in the field of human resource management today (Wilkinson & Dundon, 2021).

Improving the stages of downsizing and attention to employees can increase the effectiveness of this strategy for the organization so that the initial goals of downsizing, such as effectiveness, efficiency, profitability, and so on, can be realized. Attention can also be paid to the type of organization that is pursuing a downsizing strategy. So far, downsizing has often been carried out in private organizations, so that studies on downsizing in the public sector are still open. However, downsizing is also carried out in the public sector, including one of the purposes being to reduce public spending (Pandey et al., 2012)



Downsizing is still an organizational strategy (public and private) for achieving effectiveness, efficiency, and performance improvement. However, downsizing is often understood as a reactive and short-term strategy in simplifying the problem of reducing employees to gain economic efficiency. This view is wrong because downsizing is a strategic step and fundamental organizational reform in the face of a continuing dynamic environment. Downsizing must be placed as part of an organizational paradigmatic/strategic change rather than a technical approach. A comprehensive approach is needed in the downsizing strategy, including structure, culture, human resource management, and leadership changes.


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