Stratejik downsizing and financial performance (A survey on the firms in İMKB)

SUMMARY Downsizing phenomenon is a continuously spreading managerial device that emerged in the near past. In accordance with the re-definition of the state's and private sector's functions downsizing came to the agenda as an important managerial tool. As the 'new ideological climate' (i.e., neo-liberalism) emerged more and more public and private companies have implemented downsizing and layoffs more boldly. As this tool is often used particularly during the economic recession periods, its social, organisational and individual dimensions are becoming of importance. On the other hand, by implementing downsizing, firms endanger their reputation and employee loyalty. Hence, there is a risk of loosing reputation and loyalty in order to improving their financial performance. The aim of this study is to identify if downsized companies financial performance is improved. In this study, the pre and after downsizing financial performance of the firms is measured by using different ratios. In accordance with the literature of downsizing, if a firm reduced its annual average employees at least 10 per cent within one year period between 1996-1999, it is considered as a downsizing firm. The statistical analysis indicates that the difference between two periods is not significant. Hence, for the most firms downsizing did not produced expected outcomes. In this case, it is necessary for the firm to consider alternatives to downsizing. VII