An empirical research on the institutional theory of downsizing: Evidence from MNC's subsidiary companies in Taiwan

Abstract

The research uses 18 business cases to verify the institutional theory of downsizing (McKinley et al., 2000). It shows that the rationale behind enterprises' downsizing practices is mixed with economic factors, institutional factors and social cognition processes. Moreover, the influences of institutionalization appear not only on the motivation of downsizing, but also on the practices used by enterprises to execute the downsizing strategies. The implications are: institutionalization would influence the entire process of downsizing and the future research should try to make the institutional theory of downsizing more concrete and complete. Meanwhile, the findings are useful references for enterprises and employees when dealing with the labour relations when downsizing, especially for the global HRM strategies in MNCs.