International Journal of Business and Economics Volume 10, No. 1 April, 2011

Downsizing and Profitability: An Empirical Study of Portuguese Firms in 1993–2005

Tânia Marques

School of Technology and Management, Management for Sustainability Research Center, Polytechnic Institute of Leiria, Portugal

Isabel Suárez González

Department of Business Administration and Management, University of Salamanca, Spain

Pedro Cruz

ISG Business School, CIGEST/ID+ Research Units, Lisbon/Aveiro, Portugal

Manuel Portugal Ferreira

Polytechnic Institute of Leiria, GlobADVANTAGE—Center of Research in International Business & Strategy, Portugal

Abstract

Although firms may resort to downsizing strategies to improve financial performance, the actual outcome of downsizing is inconclusive. Testing a sample of 1,357 Portuguese firms, we conclude that firms that downsize tend to continue to underperform compared to those that do not downsize.

Keywords：downsizing effects, downsizing performance, financial performance, Portugal.

JEL Classifications：G34, M19.

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