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A company's reduction in the number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability.


To reduce the size of a company. A company downsizes when its operations are perceived to become inefficient and it wishes to concentrate on certain competencies in order to improve profitability and reduce expenses. Downsizing often reduces the number of jobs at the company. Because downsizing reduces expenses, it often increases the company's value and/or dividends for shareholders.


  1. the use of PERSONAL COMPUTERS in a business in place of large mainframe computers. The introduction of smaller, faster and more cost-effective microprocessors has made it possible for tasks which formerly could only be performed by mainframe computers to be carried out at the personal workstation level, allowing a greater devolution of DATA PROCESSING down to the ‘desk top’.
  2. a term for policies aimed at organizational contraction, usually leading to REDUNDANCY for some employees. The oft-stated rationale for downsizing is that a smaller, more flexible ORGANIZATION will be able to respond better to market forces. Cost reduction, however, is probably an equally important motive. See DELAYERING, RIGHTSIZING.


a term used to describe the contraction of a firm's operations to make it ‘leaner and fitter’. The general aim of downsizing is to reduce costs and, by creating a smaller, more flexible organization, make the firm better able to respond quickly to changes in its markets. Downsizing frequently occurs during periods of falling demand or intense competition, and it often involves redundancies or earlier retirements among the workforce. Downsizing may also result from productivity improvements associated with technological changes that enable firms to produce the same or greater outputs with fewer employees.
References in periodicals archive ?
4) We measured group downsizing in the same way as population downsizing: the sum of the number of members of the same group that downsized over the previous three years, minus downsizings by the focal firm, divided by the number of firms in the group minus the focal firm, multiplied by three.
As we noted earlier, downsizings affected the loyalty of the remaining employees, and it is difficult to see how firms can enjoy the same level of employee commitment as under the permanent employment system.
And that's the subject of next month's article--life beyond downsizing.
Three ideal types for downsizing efforts are proposed.
Accordingly, research that focuses on consequences fails to appreciate the internal workings of a downsizing decision.
Downsizing has been directly responsible for major layoffs in the business sector.
Although downsizing has attracted the attention of numerous researchers, the literature on this subject is relatively new, since the majority of existing studies were published in the early days after downsizing started to gain in popularity.
Day t=0 will be designated as the day of downsizing announcement as indicated in The Wall Street Journal.
Additionally, articles were scrutinized when the facts regarding the proposed downsizing were unclear.
There is a great gap between downsizing to maintain a price and cheating on a spouse, but the memory of feeling cheated applies to both, and isn't easily forgotten.
While few understood his prediction at the time, we now know that downsizing has been adopted as a management technique on a global scale (Macky, 2004).
A single definition of downsizing does not exist across studies and disciplines.