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Management Faculty Publications and Presentations
Document Type
Conference Proceeding
Publication Date
8-2024
Abstract
Firms have increasingly engaged in Mergers and Acquisitions (M&A) activities in recent years. A common strategy following M&A is employee downsizing that aims at achieving strategic goals and enhancing performance. This approach, however, raises concerns from a strategic human resource management (HRM) perspective. Research suggests that downsizing may breach employees' psychological contracts and hinder the development of firm-specific human capital. While this viewpoint has an intuitive appeal, we reconsider it by suggesting that, in the M&A context wherein employees expect significant organizational changes, downsizing does not necessarily lead employees to negative reactions. Instead, if acquiring firms have strong employee-oriented HRM policies and continue to adopt similar policies after the acquisition, employees may interpret downsizing as a strategic managerial action to facilitate organizational changes. Using a representative sample of 5,338 firm-year observations from 1,174 U.S. publicly traded firms between 2002 and 2018, we found that both pre-acquisition investment in employee-oriented HRM policies and the post-acquisition adoption of such policies by acquiring firms positively moderate the negative relationship between employee downsizing following M&A and labor productivity. We discuss the implications of these findings for both research and practice.
Recommended Citation
Li, P., Li, M., Chung, H. and Chadwick, C., 2024. The Effect of Employee-Oriented HRM on Employee Downsizing Following Mergers & Acquisitions. In Academy of Management Proceedings (Vol. 2024, No. 1, p. 12367). Valhalla, NY 10595: Academy of Management. https://doi.org/10.5465/AMPROC.2024.188bp
Publication Title
Academy of Management Proceedings
DOI
https://doi.org/10.5465/AMPROC.2024.188bp
Comments
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