How leadership characteristics affect organizational decline and downsizing

Abraham Carmeli, Zachary Sheaffer

Research output: Contribution to journalArticlepeer-review

50 Scopus citations

Abstract

While studies have investigated the moral issue associated with downsizing, little research attention has been directed to leaders' behaviors that result in organizational decline and eventually lead them to make a downsizing decision. This study tests a sequence-based model to assess (1) the impact of leaders' risk-aversion and self-centeredness on organizational decline and downsizing and (2) the impact of organizational and industry decline on organizational downsizing. We address a gap in the decline literature that has only implicitly alluded to leadership characteristics as forerunners of decline. Data collected from 85 firms indicate that both leadership risk-aversion and self-centeredness are significantly related to organizational decline. This results in intensified organizational downsizing. However, industry decline affects downsizing more significantly.

Original languageEnglish
Pages (from-to)363-378
Number of pages16
JournalJournal of Business Ethics
Volume86
Issue number3
DOIs
StatePublished - May 2009

Keywords

  • Industry decline
  • Leadership
  • Organizational decline
  • Organizational downsizing

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