Management Faculty Publications
Document Type
Article
Publication Date
11-11-2025
Abstract
Although some scholars in strategic human resource management (SHRM) research have suggested that HRM investments can be effective in reducing the negative repercussions of employee downsizing, other scholars have argued that such HRM investments could convey contradictory messages to employees, resulting in more negative employee reactions and decreased firm performance. In this research, we addressed this unsettled question by looking into the mergers and acquisitions (M&A) context, where we theorized that the acquiring firm’s HRM investments can positively moderate the negative effect of employee downsizing on firm performance by invoking positive sensemaking processes from remaining acquired firm employees. Moreover, the positive sensemaking effects of HRM investments extend beyond remaining acquired firm employees to influence the overall performance of the merged firm. We examined established HRM investments by acquiring firms prior to the M&A and additional HRM investments made after the M&A. Using a representative sample of 5,467 firm-year observations from 1,214 U.S. publicly traded firms between 2002 and 2018, we found that both pre- and post-acquisition HRM investments by acquiring firms mitigate the negative effect of employee downsizing following M&A on firm performance. We discuss the implications of these findings for both research and practice.
Recommended Citation
Li, P., Li, M., Chung, H. and Chadwick, C., 2025. It’s Different: Examining the Effect of HRM Investments on Employee Downsizing Following Mergers and Acquisitions. Journal of Management, p.01492063251382856. https://doi.org/10.1177/01492063251382856
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Publication Title
Journal of Management
DOI
10.1177/01492063251382856
Comments
© The Author(s) 2025. This article is distributed under the terms of the Creative Commons Attribution 4.0 License (https://creativecommons.org/licenses/by/4.0/) which permits any use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access pages