Downsizing

Over the past decades, downsizing strategies turned out to be part of the changes in corporate governance. Within this historical setting, managers have aimed to achieve increasing short-term profits and dividends for shareholders by means of downsizing practices, which came to be known as cost reduction strategies. As a result, managers have applied rationalization practices as a cost reduction strategy through recomposition of tasks, labor turnover, dismissal of workers, in addition to outsourcing jobs and agreements, among others.

Actually, business strategies have varied over time. From World War II till the 1970s, it was widely believed that a firm’s long-term sustainability depended both on increasing levels of investment and on improvement in workers’ real wages. The academic researchers William Lazonick and Mary O’sullivan described this business ...