The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy

Pablo Doucet; Pedro de Faria; Ignacio Requejo; Isabel Suárez-González

doi:10.5465/AMPROC.2023.102bp

The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy

Pablo Doucet, Pedro de Faria, Ignacio Requejo, Isabel Suárez-González

Innovation & Organisation

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Academic › peer-review

Abstract

This paper investigates how the division of a firm into multiple legally independent entities—namely, asset partitioning—affects its propensity to downsize in response to negative demand shocks. We propose that asset partitioning increases the extent of employee downsizing since it compartmentalizes firm reputation and disincentivizes cross-subsidization among the firm’s partitions. Our analysis of 62,624 European firms between 2012 and 2019 (321,094 firm-year observations) supports our prediction, offering new important insights on why firms differ in their downsizing behavior.

Original language	English
Title of host publication	Academy of Management Annual Meeting Proceedings
Publisher	Academy of Management
DOIs	https://doi.org/10.5465/AMPROC.2023.102bp
Publication status	Published - 2023
Event	83rd Annual Meeting of the Academy of Management, AOM 2023 - Boston, United States Duration: 4-Aug-2023 → 8-Aug-2023

Publication series

Name	Academy of Management Annual Meeting Proceedings
Publisher	Academy of Management
Number	1
Volume	2023
ISSN (Print)	0065-0668

Conference

Conference	83rd Annual Meeting of the Academy of Management, AOM 2023
Country/Territory	United States
City	Boston
Period	04/08/2023 → 08/08/2023

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10.5465/AMPROC.2023.102bp

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title = "The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy",

abstract = "This paper investigates how the division of a firm into multiple legally independent entities—namely, asset partitioning—affects its propensity to downsize in response to negative demand shocks. We propose that asset partitioning increases the extent of employee downsizing since it compartmentalizes firm reputation and disincentivizes cross-subsidization among the firm{\textquoteright}s partitions. Our analysis of 62,624 European firms between 2012 and 2019 (321,094 firm-year observations) supports our prediction, offering new important insights on why firms differ in their downsizing behavior.",

author = "Pablo Doucet and {de Faria}, Pedro and Ignacio Requejo and Isabel Su{\'a}rez-Gonz{\'a}lez",

note = "Publisher Copyright: {\textcopyright} 2023, Academy of Management. All rights reserved.; 83rd Annual Meeting of the Academy of Management, AOM 2023 ; Conference date: 04-08-2023 Through 08-08-2023",

year = "2023",

doi = "10.5465/AMPROC.2023.102bp",

language = "English",

series = "Academy of Management Annual Meeting Proceedings",

publisher = "Academy of Management",

number = "1",

booktitle = "Academy of Management Annual Meeting Proceedings",

}

Doucet, P, de Faria, P, Requejo, I & Suárez-González, I 2023, The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy. in Academy of Management Annual Meeting Proceedings. Academy of Management Annual Meeting Proceedings, no. 1, vol. 2023, Academy of Management, 83rd Annual Meeting of the Academy of Management, AOM 2023, Boston, United States, 04/08/2023. https://doi.org/10.5465/AMPROC.2023.102bp

The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy. / Doucet, Pablo; de Faria, Pedro; Requejo, Ignacio et al.
Academy of Management Annual Meeting Proceedings. Academy of Management, 2023. (Academy of Management Annual Meeting Proceedings; Vol. 2023, No. 1).

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Academic › peer-review

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AU - Suárez-González, Isabel

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AB - This paper investigates how the division of a firm into multiple legally independent entities—namely, asset partitioning—affects its propensity to downsize in response to negative demand shocks. We propose that asset partitioning increases the extent of employee downsizing since it compartmentalizes firm reputation and disincentivizes cross-subsidization among the firm’s partitions. Our analysis of 62,624 European firms between 2012 and 2019 (321,094 firm-year observations) supports our prediction, offering new important insights on why firms differ in their downsizing behavior.

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The Impact of Asset Partitioning on the Use of Downsizing as a Reactive Strategy

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