CORPORATE DOWNSIZING FROM THE PERSPECTIVE OF MACROECONOMICS

Abstract

The subject of downsizing has gained increasing prominence, making news headlines frequently and even figuring in political debates. Yet, it has also been described as "the most pervasive yet understudied" activity in the corporate world. A vast proportion of the limited literature on downsizing emanates from the sociological, management and business and finance perspectives. This academic exercise represents a departure from the existing literature. Specifically, an empirical and theoretical framework will be developed to explain the proliferation of downsizing and the implications that this might have for the macroeconomy. At the same time, this exercise will examine the theory of profit-sharing and make a case for profit-sharing as an anti-downsizing tool which economies may equip themselves with.