Family firms and employment downsizing

Abstract

This chapter is connected in a direct way to the main research question of this thesis: whether family firms are more long-term-oriented than non-family firms are. Under particular circumstances, downsizing can be regarded as a short-term strategy. This is the case if, for the sake of shareholders’ (short-term) profits, the firm engages in deep job cuts and releases the skills and knowledge embodied in their workforce. Thus, if family firms are more long-term-oriented than non-family firms, they should also be less likely to downsize than non-family firms are. Besides comparing family and non-family firms, I also distinguish between family management and family ownership as two dimensions of family firms and analyze their respective influence on downsizing. In general, little is known about the relationship between family firms and their employees. This chapter aims to shed more light on this issue.