Perceptions of Organizational Downsizing*

In the last two decades, considerable research has been devoted to the topic of organizational downsizing, which is usually defined as intentional workforce reduction by an organization (see McKinley, Zhao, & Rust, 2000 for a recent review of this literature). Downsizing research has expanded with the increased incidence of downsizing in large corporations and the emergence of downsizing as an institutionalized management practice (McKinley, Sanchez, & Schick, 1995). Baumol, Blinder, and Wolff (2003) pointed out that 57% of the American Management Association members were considered job eliminators in 2000-2001.

The most extensive stream of organizational downsizing research to date has been concerned with the effects of downsizing on the financial performance of organizations. The basic conclusion of this stream of research is that the financial benefits often claimed by managers for downsizing and layoffs are uncertain (see, for example, Cascio & Young, 2003; Cascio, Young, & Morris, 1997; De Meuse, Bergmann, Vanderheiden, & Roraff, 2004; De Meuse, Vanderheiden, & Bergmann, 1994; Kets de Vries & Balazs, 1997; Mentzer, 1996).

Complementing this research, another stream (Leana & Feldman, 1992; Leana & Ivancevich, 1987; Pugh, Skarlicki, & Passell, 2003) has studied the influence of downsizing on its victims - those employees who lose their jobs. This work suggests a number of detrimental physical and psychological consequences associated with downsizing-related job loss. Yet a third research stream (Brockner, 1988; Brockner, Grover, Reed, DeWitt, & O'Malley, 1987; Brockner, Spreitzer, Mishra, Hochwarter, Pepper, & Weinberg, 2004; Mishra & Spreitzer, 1998; Mone, 1997) focuses not on downsizing victims but on those individuals who remain after a downsizing has taken place - the survivors. Basic findings in this stream include the conclusion that the effects of layoffs on survivors are contingent on their relationships with those who lose their jobs, their perceptions of how the victims are treated, and their perceived control (Brockner et al., 1987; Brockner et al, 2004). There is also a growing body of work (Budros, 1999; Lamertz & Baum, 1998; McKinley et al., 1995; McKinley, Mone, & Barker, 1998; Mentzer, 2005) that addresses downsizing from neoinstitutional and ideological perspectives. This research suggests that downsizing is now taken for granted by managers and supported by specific ideologies that they and their employees share.

Supporting this idea of downsizing as taken for granted are articles in the popular press focused on how to implement downsizing (Colliver, 2001; Dunham, 2001; Kidwell, 1995). These articles represent a movement to try to identify the factors that translate into successful organizational downsizing. Often this approach emphasizes the need for restructuring rather than just workforce reduction to cut costs. Researchers like Cascio (1998) call for "responsible restructuring" which focuses on understanding that the value of employees is in viewing them as assets instead of costs.

With few exceptions, the studies of downsizing cited above have conceptualized downsizing as an objective phenomenon, and only a handful of studies have dealt with observers' perceptions of downsizing. Those reports (e.g., Edwards, Rust, McKinley, & Moon, 2003; Skarlicki, Ellard, & Kellin, 1998) have investigated observers' perceptions of downsizing along single dimensions, such as the perceived procedural justice of a layoff (Skarlicki et al., 1998) or the perceived psychological contract breach entailed in downsizing (Edwards et al., 2003). No empirical investigation, to our knowledge, has analyzed observers' perceptions of organizational downsizing along multiple dimensions, as we do in this study.

In this paper we conceptualize and measure perceptions of organizational downsizing along four distinct dimensions: the degree to which downsizing is perceived as financially effective; the degree to which downsizing is perceived as inevitable; the degree to which downsizing is perceived as a liberating event for its victims (Noer, 1993); and the degree to which downsizing is perceived as a breach of the implied employment contract between employer and employee (Rousseau, 1995). The selection of these dimensions was based on their widespread discussion in business research and the popular business press and their potential role in influencing observers' reactions to downsizing events. For example, the ideas that downsizing is financially effective and inevitable appear as two prominent claims in the popular press (Byrne, 1994; Dentzer, 1995; Haseltine, 1994). Likewise the discussion of downsizing as liberating has been a salient feature of books written by consultants (e.g., Noer, 1993). The fourth dimension, the degree to which downsizing is perceived as a breach of the implied employment contract, has been studied by previous researchers (Edwards et al., 2003; Rust, McKinley, & Edwards, 2005; Rust, McKinley, Moon, & Edwards, 2005) and including it in this study provides for a replication and extension of those results using a different data set than those earlier investigations. We believe that the four perceptual dimensions described above are important because they likely influence the acceptability of downsizing to the perceiver, and therefore may influence whether the perceiver is willing to embrace downsizing as a taken-for-granted management practice (McKinley et al., 1995).

To predict variations in respondents' perceptions of organizational downsizing, we focus on the respondent's past experience as a layoff agent, specifically whether or not the respondent has ever assisted in the implementation of a layoff or downsizing initiative in an organization for which (s)he has worked. Drawing on the cognitive dissonance framework (Festinger, 1957; Harmon-Jones & Mills, 1999), we develop a theory about how experience as a layoff agent affects perceptions of downsizing along our four dimensions and test hypotheses derived from that theory. In articulating our theory, we consider cognitive dissonance a mediating construct that explains the effects of layoff agency on perceptions of organizational downsizing. This mediating construct is not measured in our empirical analysis, a practice that is consistent with the use of mediating constructs in many organizational theories (e.g., Hannan & Carroll, 1992).

In conducting our hypothesis tests, we hold constant the effects of four ideological beliefs about business that were investigated in past studies (Rust & McKinley, 2002; Edwards et al., 2003; Rust, McKinley, Moon, & Edwards, 2005). These control variables measure the degree to which each respondent believes in the ideology of market competition, the ideology of shareholder wealth, the ideology of employee worth, and the ideology of employee selfreliance. The ideology of market competition is defined as the belief that market competition is beneficial for industries, customers, and organizations (Rust, McKinley, Moon, & Edwards, 2005). The ideology of shareholder wealth is defined as the belief that shareholder value should be the dominant criterion for management decision making (Rust, McKinley, Moon, & Edwards, 2005). The ideology of employee worth is defined as the belief that employees are the most valuable corporate resource because they provide critical inputs to business processes (Rust, McKinley, Moon, & Edwards, 2005). Finally, the ideology of employee self-reliance is defined as the belief that employees should be as independent of employers as possible, particularly regarding their own employability (Edwards et al. 2003; McKinley et al, 1998).

We also control for the respondent's past experience as a layoff victim ~ whether (s)he has ever lost a job as a result of an organized workforce reduction - and the respondent's demographic attributes, for example age, educational level, and gender. These controls allow us to test for the independent effects of layoff agency on perceptions of organizational downsizing over and above the effects of ideological beliefs, layoff victim status, age, educational level, and gender. We discuss our findings at the end of the paper, and derive implications for future theory and research.

This paper is important because it is the first to study perceptions of downsizing along multiple dimensions and contains the only data set we are aware of that measures perceptions of downsizing along multiple dimensions. Building upon past research studying a single dimension, this paper increases the sensitivity to multiple dimensions of perceptions of downsizing. An important implication of this paper is that if layoff agency does influence perceptions of downsizing, past layoff agency experience may play a role in determining the palatability of downsizing for the respondent. For example, if a respondent's past experience as a layoff agent causes that respondent to perceive downsizing as more inevitable, that respondent may also view downsizing more favorably, and may be more willing to accept it as a taken-for-granted practice.

Theoretical Background

In developing hypotheses to predict the effects of layoff agency on perceptions of organizational downsizing, we draw on cognitive dissonance theory (Festinger, 1957; Harmon-Jones & Mills, 1999). Cognitive dissonance theory argues that when an individual has two inconsistent cognitions, or a cognition that is inconsistent with a behavior the individual has engaged in, the individual will experience a state of discomfort called cognitive dissonance. Since cognitive dissonance is uncomfortable, the individual will be motivated to find ways to reduce it. According to cognitive dissonance theorists (Festinger, 1957; Harmon-Jones & Mills, 1999), there are a number of ways to reduce cognitive dissonance: the individual can change her behavior to be more consonant with her cognitions; the individual can modify her cognitions to be more consistent with her behavior; or the individual can deemphasize the importance of a dissonant cognition.

Festinger (1957) and Harmon-Jones and Mills (1999) used the example of smoking to illustrate the construct of cognitive dissonance and the various mechanisms of dissonance reduction. A smoker who is aware of research on the negative health consequences of smoking will experience cognitive dissonance because of the inconsistency between her smoking behavior and her cognitions about the effects of that behavior. The smoker can reduce cognitive dissonance by changing her behavior (quitting smoking); by modifying her perceptions of the health consequences of smoking so that she assumes away the negative consequences (I won't get cancer); or by adding a cognition that is consonant with the behavior of smoking (smoking helps me relax). Each of these behavioral or cognitive changes has the potential to move the smoker away from a state of cognitive dissonance and therefore to reduce discomfort.

Applying this reasoning to the situation of a layoff agent, we assume that if such a person has assisted in the conduct of a layoff at work, she will experience at least some degree of cognitive dissonance. This cognitive dissonance stems from the inconsistency between the behavior engaged in (assisting in the layoff of fellow workers) and norms of acceptable workplace conduct (one doesn't behave in ways that harm fellow workers). The existence of such dissonance is suggested by Kets de Vries and Balazs' (1997) interviews with layoff agents. Kets de Vries and Balazs (1997: 41) summarized these interviews by stating that "Executives tended to perceive themselves as the 'builders' of the organization and the ensurers of the well-being of their employees. Downsizing forced them to reduce staff by firing people - thus violating what they saw as their proper role."

Given the likelihood of cognitive dissonance as an outcome of a layoff agent's role, how might a layoff agent reduce that dissonance? One way would be for the agent to modify her perceptions of downsizing in such a way that it was construed positively, or at least interpreted to be of minimal harm to the employees who lose their jobs. If the agent could successfully accomplish such an interpretation of downsizing, cognitive dissonance would be reduced. Thus we argue that the experience of layoff agency, and the cognitive dissonance it arguably generates, creates incentives for layoff agents to adjust their perceptions of organizational downsizing to emphasize its positive attributes.

One such perceptual modification that might play a role in relieving the cognitive dissonance of a layoff agent is the perception that downsizing is financially effective. As noted in the introduction, the business press often makes claims about the financial benefits of organizational downsizing, although those benefits have not been demonstrated conclusively by empirical research (McKinley et al., 2000). If a layoff agent perceives organizational downsizing as financially effective, however, the agent produces a cognition that is consonant with the behavior of participating in downsizing activities. Even if the agent believes that the downsizing has done harm to the employees who lost their jobs, that cognition is balanced, at least to some degree, by the perceived financial benefits for the organization as a whole. The dissonance-reducing consequences of a perception that downsizing is financially effective will, we argue, reinforce the adoption of such a perception by layoff agents. This leads to our first hypothesis:

Hypothesis 1: Individuals with past layoff agency experience will perceive downsizing as more financially effective than individuals without such experience.

A second cognition that may reduce a layoff agent's cognitive dissonance is the perception that downsizing is inevitable. As is true for claims of financial effectiveness, claims of downsizing's inevitability are a common feature of workforce reduction announcements in the business press, and this is why we choose to focus on them here. Top managers announcing layoffs and workforce reductions frequently state or imply that downsizing is inevitable, a natural law of capitalism or globalization. If a layoff agent adopts such a view, that person will reduce cognitive dissonance by construing her past behavior as part of an unstoppable economic process. A layoff agent's perception of downsizing as inevitable facilitates situational attributions (Augoustinos & Walker, 1995) for contranormative behavior, and such attributions engender less dissonance than attributions of full agent responsibility. Thus we predict that layoff agents will have an incentive to adopt the position frequently articulated in the business press and perceive downsizing as inevitable. This leads to a second hypothesis:

Hypothesis 2: Individuals with past layoff agency experience will perceive downsizing as more inevitable than individuals without such experience.

In an effort to help heal the wounds caused by massive downsizing programs in U.S. companies, Noer (1993) suggested that employees should be aware of the benefits that downsizing has for those who lose their jobs. Noer (1993) argued that one of those benefits is liberation from the bureaucracy that characterizes large corporations (see also Kets de Vries & Balazs, 1997). Noer (1993) described the case of an employee who lost her job in a large corporate downsizing and ended up in a more interesting job with a small consulting firm. He contrasted this case with another case of an employee who kept his job in the midst of a large corporate downsizing but ended up plateaued and dissatisfied at the end of his career. The point of Noer's (1993) stories was to present downsizing as a liberating event for laid-off employees. Baumol et al. (2003), in their review of articles published by the Wall Street Journal and The New York Times during the period 1993-1997, also found many stories about downsized individuals who made the transition to entrepreneurs. We argue that a perception that downsizing is liberating for laid-off employees will constitute a consonant cognition with potential to reduce the cognitive dissonance felt by layoff agents. If a layoff agent perceives downsizing as liberating for laid-off employees, this consonant cognition suggests benefit for the employees and offsets other cognitions about the financial and emotional harm done to them. Thus if a layoff agent adopts a cognition that downsizing is liberating for laid-off employees, the agent's cognitive dissonance should be reduced. This implies that:

Hypothesis 3: Individuals with past layoff agency experience will perceive downsizing as more liberating for laid-off employees than individuals without such experience.

Finally, we draw the reader's attention to the body of literature that describes the phenomenon of contract breach in employment relationships (e.g., Morrison & Robinson, 1997; Robinson, 1996; Robinson & Morrison, 1995; Robinson & Rousseau, 1994; Rousseau, 1995). According to these authors contract breach exists when promises or obligations made to an employee by an employer are not fulfilled by the employer. Building on this notion, the concept of implied contract breach (Rousseau, 1995) is defined here as an observer's perception that the implied contract between an employer and an employee has been breached by the employer. Downsizing is likely to foster a perception of implied contract breach on the part of third-party observers, because downsizing deprives laid-off employees of their jobs and violates the traditional expectation that employers will try to preserve employee job security (Cappelli, 1999). However, we argue that layoff agents seeking to reduce cognitive dissonance will have an incentive to perceive downsizing as involving low contract breach. To perceive downsizing in this way is to produce a cognition that is more consonant with the act of layoff agency than a perception of downsizing as entailing high contract breach. If a layoff agent sees downsizing as involving low breach of the implied employment contract, the perceived damage to employees from downsizing will be less, and it will be easier for the agent to reconcile herself to her past layoff agency behavior. This reasoning supports a final hypothesis:

Hypothesis 4: Individuals with past layoff agency experience will perceive downsizing as less of an implied contract breach than individuals without such experience.

Method

Sample

The four hypotheses listed above were tested with data from a random sample of respondents drawn from the alumni records of a college of business in a large Midwestern state university. As noted above, this sample was different from data in recent studies that have examined third-party observers' perceptions of organizational downsizing along single dimensions (e.g., Edwards et al., 2003; Rust, McKinley, & Edwards, 2005; Rust, McKinley, Moon, & Edwards, 2005). The university currently has about 20,000 students and is publicly supported. The complete alumni record of the College of Business and Administration was sampled with a random start point and an algorithm that chose every other name. This generated a sampling frame of approximately 8,000 individuals, all of whom were contacted by the researchers. Each individual was sent a letter explaining the purpose of the study and a questionnaire with items designed to collect information about the individual's layoff agency experience, his/her layoff victim experience, his/her beliefs about certain business ideologies (Edwards et al., 2003; Rust, McKinley, Moon, & Edwards, 2005) and his/her perceptions of organizational downsizing.

Of the approximately 8,000 individuals contacted, 1,916 respondents returned usable questionnaires, for a response rate of 24%. The average age of the 1,916 respondents in the final data set was 46 years, and twenty-two percent were female. The relatively low representation of women in the data set reflects the skewed gender distribution that characterized business school enrollments until the 1990s. Thirty-three percent of the 1,916 respondents in the data set reported that they had been layoff agents at least once in their careers and 30% reported that they had been layoff victims. Layoff agency experience and layoff victim experience were not always mutually exclusive ~ 14% of the respondents reported being both layoff agents and layoff victims at various times in their careers.

Respondents and non-respondents were compared in terms of year degree awarded, highest degree awarded, and gender. Among recipients of bachelor's degrees, respondents, on average, received the degree in 1979, while nonrespondents, on average, received the degree in 1983. Among recipients of master's degrees the respondents, on average, received the degree in 1985, while the non-respondents, on average, received the degree in 1987. T-tests for the significance of the differences between these means yielded statistically significant results in both cases (average year degree awarded for bachelor's students, p < .001; average year degree awarded for master's students, p < .05). These results suggest that respondents were slightly older than non-respondents, perhaps because older graduates of the College had more stable addresses and were easier to track in a mail survey. This difference in average year degree awarded was smaller for doctoral students (1991.67 for respondents and 1992.24 for non-respondents) and the difference was not statistically significant.

As noted above, twenty-two percent of the respondents were female. The equivalent percentage for non-respondents was 28%. The difference between these percentages was statistically significant by a t-test (p < .001). Thus, while underrepresented in the entire sampling frame, women were somewhat more underrepresented in the respondent group than in the non-respondent group. This may have been because women often change their names when they marry, making them harder to track over time on an alumni mailing list and harder to reach in a mail survey. In any event, the proportion of women in both respondent and non-respondent groups was predominantly determined by the overwhelming skew toward male enrollments in American business schools up until the last decade.

Given the relatively minor numerical differences documented above and the lack of any established theoretical link between age or gender and perceptions of downsizing, we have no reason to believe that the respondent data has generated biased results. In the absence of evidence to the contrary, we conclude that our results generalize to the sampling frame from which our respondents were drawn.

Measures

Dependent Variables

We measured the four dependent variables (perceptions of downsizing) with multi-item scales. First, the degree to which downsizing was perceived as financially effective was measured with five items. Respondents were asked to what extent they agreed: 1) that organizational downsizing improves companies' financial performance; 2) that organizational downsizing enhances a company's profitability; 3) that organizational downsizing helps a company's balance sheet; 4) that organizational downsizing is good for a corporation's bottom line; and 5) that organizational downsizing restores companies to financial health. Each of these items was answered with a five-point response format where 1 = strongly disagree, 2 = moderately disagree, 3 = neutral or uncertain, 4 = moderately agree, and 5 = strongly agree. The five items were presented to the respondent randomly interspersed with the other items measuring the other perception of organizational downsizing dimensions.

When factor analyzed with the items measuring the other perception of downsizing dimensions, the five items described above clustered on a single factor and did not load heavily on any other factor (see Table 1, Factor 3). This indicates that the five items are tapping a single underlying construct that is distinct from the other perception of downsizing dimensions. The factor analysis results justified averaging the scores on the five items, and the result was a single score measuring the degree to which each respondent perceived downsizing as financially effective. The alpha coefficient for this scale was .81 (see Table 1).

We also measured the degree to which downsizing was perceived as inevitable. Each respondent was asked to what extent (s)he agreed: 1) that organizational downsizing is a natural law of capitalism; 2) that organizational downsizing is an inevitable fact of corporate life; 3) that organizational downsizing is something organizations have to do; 4) that organizational downsizing is an expected part of the business cycle; and 5) that organizational downsizing is an inevitable byproduct of our economic system. The response format for these items was the same as that for the five items described in the previous paragraph. As shown in Table 1, the five items designed to measure the degree to which downsizing was perceived as inevitable clustered on a single factor (Factor 2) and did not load heavily on any other factor. This indicates that all those items tapped a single underlying construct and the construct is distinct from the other perceptions of downsizing dimensions being measured. Each respondent's scores on the five items were averaged, producing a single score that measured the degree to which each respondent perceived downsizing as inevitable. The alpha coefficient for the scale was .86 (see Table 1).

Third, we measured the degree to which downsizing was perceived as liberating for laid-off employees with five items whose response format was the same as those for the other items described above. We asked each respondent to what extent (s)he agreed: 1) that organizational downsizing frees employees to pursue new opportunities; 2) that organizational downsizing liberates the employees who are laid off; 3) that organizational downsizing frees laid-off employees to realize their full potential; 4) that organizational downsizing releases employees to explore new careers; and 5) that organizational downsizing frees laid-off employees to learn new skills. Table 1 shows that these five items clustered on a single factor (Factor 1) and did not load heavily on any other factor. This indicates that the five items were tapping a single construct that is distinct from the other perception of downsizing dimensions. Given these results, we averaged respondent scores across the five items, generating a single score that measured the degree to which each respondent perceived organizational downsizing as liberating for laid-off employees. The alpha coefficient for the scale was .85 (Table 1).

The fourth perceptual dimension, the degree to which downsizing was perceived as a breach of the implied employment contract, was measured by including a vignette in the questionnaire describing the 20% workforce reduction announced by the Coca-Cola Company and reported in the Wall Street Journal on January 26, 2000. We chose the Coca-Cola Company as the source of the workforce reduction vignette because the company has long been acknowledged as an employee-supportive corporation and the workforce reduction seemed to be a significant change in the company's policy regarding the treatment of employees. The vignette has been used to measure contract breach in other studies (e.g., Edwards et al., 2003), allowing for a comparison and continuation of that research.

The vignette included details of the workforce reduction and its impact on CocaCola's employees, as well as on its marketing, customer support, and income. After reading the vignette, our respondents were asked, based on the downsizing story they had just read, to evaluate how well they thought Coca-Cola had fulfilled its obligations to employees. The respondents were asked about three different types of obligations: obligations concerning job security, obligations concerning employee promotion and advancement, and obligations concerning career development. The respondents scored Coca-Cola's fulfillment of each of these obligations on a 5-point scale where 1 = complete fulfillment of obligation; 2 = approximately 75% fulfillment of obligation; 3 = approximately 50% fulfillment of obligation; 4 = approximately 25% fulfillment of obligation; and 5 = no fulfillment of obligation. The three obligation items were drawn from Robinson's (1996) scale of psychological contract breach, in which high perceived fulfillment of obligations was interpreted as low contract breach and low perceived fulfillment of obligations was interpreted as high contract breach. Following Robinson (1996), we averaged respondent scores for the three obligation items and labeled high average scores (low perceived fulfillment of obligations) as high perceived breach of the implied employment contract between CocaCola and its employees, and low average scores (high perceived fulfillment of obligations) as low perceived breach of the implied employment contract between Coca-Cola and its employees. The overall scale, whose alpha coefficient was .90, was used as a measure of the degree to which respondents perceived downsizing as involving breach of the implied employment contract.

Independent Variable

The independent variable was a dichotomous measure indicating whether the respondent had ever been a layoff agent. Each respondent was asked whether (s)he had ever had to dismiss an employee as a result of a permanent layoff or downsizing. "Yes" answers were scored 1 and "no" answers were scored zero. The phrasing of the item and the guarantee of anonymity to the respondents helped reduce the possibility of social desirability response bias that would lead to an under-representation of "yes" responses to this question. Thus we believe that the item validly measures the number of individuals with layoff agency experience, neither under-counting nor overcounting these individuals. Also, since the measure was based on respondent recall of a factual event, the likelihood of percept-percept inflation (Crampton & Wagner, 1994) in relationships between the layoff agency measure and the dependent variables is reduced. A dichotomous variable that compares respondents with and without layoff agency experience was used because our hypotheses posit differences in perception of downsizing between respondents with and without layoff agency experience.

Control Variables

In addition to the dependent variables and the independent variable, a number of control variables were included to factor out unexplained variance. These control variables allowed us to test our hypotheses by assessing the effects of layoff agency on perceptions of organizational downsizing independent of a number of possible confounds. First, we controlled for whether the respondent had ever been a layoff victim (1 = yes; O = no). Respondents were asked: "Have you ever lost a job as a result of a permanent layoff or downsizing?" second, we controlled for the respondent's age and educational level (14 = some college; 16 = bachelors degree; 18 = master's degree; 22 = doctoral degree; codes reflect approximate years of education). Third, we controlled for the respondent's gender (1 = female; O = male) and managerial rank (1 = top management; 2 = middle management; 3 = lower management; 4 = non-management). Fourth, we controlled for the respondent's score on each of four ideological belief measures that were used in previous studies on different data sets (Edwards et al., 2003; Rust, McKinley, Moon, & Edwards, 2005). These measures tap each respondent's degree of belief in the four business ideologies introduced above: the ideology of market competition, the ideology of shareholder wealth, the ideology of employee worth, and the ideology of employee self-reliance. The items used to measure these four ideological beliefs are shown in Table 2, along with factor analysis results for the current data set and the alpha coefficients of each of the ideological belief scales.

As noted above, the ideology of market competition is the belief that market competition is beneficial for industries, customers, and organizations (Rust, McKinley, Moon, & Edwards, 2005). In this study we measured respondent adherence to this ideology by asking each respondent to what extent (s)he felt that: 1) promotion of open competition should be the goal of all societies; 2) open-market competition is important for a properly functioning economy; and 3) open competition is a good thing for societies, companies, and citizens. Each respondent answered these items with a five-point response format where 1 = strongly disagree, 2 = moderately disagree, 3 = neutral or uncertain, 4 = moderately agree, and 5 = strongly agree.

As stated above, the ideology of shareholder wealth is the belief that shareholder value should be the dominant criterion for management decision-making (Rust, McKinley, Moon, & Edwards, 2005). In this study we measured adherence to this ideology by asking each respondent to what extent (s)he agreed with the following statements: 1) management strategies designed to increase shareholder value are desirable; 2) shareholders' interests should be the main factor in all management decisions; and 3) increasing shareholder value is crucial to the success of companies. Respondents used the same response format as that described in the previous paragraph.

As pointed out above, the ideology of employee worth is the belief that employees are the most valuable corporate resource because they provide critical inputs to business processes (Rust, McKinley, Moon, & Edwards, 2005). In this study belief in the ideology of employee worth was measured by asking our respondents to what extent they agreed that: 1) investing in employees should be a high priority for the firm; 2) management strategies should be formulated based upon employees' interests; and 3) investment in employees is a good thing for societies, companies, and citizens. The response format was the same as that described in the previous paragraphs.

Finally, as we noted earlier, the ideology of employee self-reliance is the belief that employees should be as independent of employers as possible, particularly regarding their own employability (Edwards et al., 2003; McKinley et al., 1998). In this study we measured belief in the ideology of employee self-reliance by asking respondents to what extent they agreed that: 1) employees should not depend on their employer for job training; 2) employees should be responsible for their own employability; and 3) employees should not depend on their employer for job security.

The response format for these items was the same as that for the other ideological belief items discussed above.

We factor analyzed the twelve items used to compile the four ideological belief scales (see Table 2). As expected, the items clustered on four distinct factors, and none of the items clustering on a given factor loaded heavily on any other factor. This indicates that the twelve items are tapping four different underlying constructs, corresponding to the four ideological beliefs described in this section. Given these results, we averaged each respondent's scores for the three items measuring each ideology. The result was four scores indicating the respondent's degree of belief in the ideology of market competition, the respondent's degree of belief in the ideology of shareholder wealth, the respondent's degree of belief in the ideology of employee worth, and the respondent's degree of belief in the ideology of employee self-reliance. As shown in Table 2, the alpha coefficients for the four scales are: ideology of market competition, .80; ideology of shareholder wealth, .78; ideology of employee worth, .58; and ideology of employee self-reliance, .67.

Analysis Procedure

To test each of the four hypotheses specified earlier, the relevant perception of downsizing measure was regressed on layoff agency, layoff victimhood, respondent age, respondent educational level, respondent gender, respondent's managerial rank, and the four measures of respondents' ideological beliefs. There were four regression equations, one for each of the four perception of downsizing dimensions defined in this study, and each equation had the same set of ten explanatory variables. As noted above, the inclusion of nine control variables removes many possible confounds and therefore permits hypothesis tests that assess the independent effects of layoff agency (over and above the effects of the control variables) on each of the four perception of downsizing dimensions. Two-tailed tests of statistical significance were used to evaluate all the regression coefficients, resulting in a more conservative test of our hypotheses.

Results

Means, standard deviations, and correlations for all the variables used in this study are presented in Table 3. The relatively small correlations between the ideological belief measures and the perception of downsizing measures (see the lower left quadrant of Table 3) support the conclusion that ideological beliefs and perceptions of downsizing are separate constructs, and that the relationships between them are not subject to appreciable perceptpercept inflation (Crampton & Wagner, 1994).

The results of the four regressions are presented in Table 4. The results show support for Hypothesis 2: layoff agents perceived downsizing as more inevitable than their counterparts with no layoff agency experience (B = .057, p < .05, row 1). Hypothesis 4 was also supported: layoff agents perceived less contract breach in connection with a downsizing than non-layoff agents did (ß = -.116, p <.01, row 1). On the other hand, Hypotheses 1 and 3 were not supported: there were no significant differences between layoff agents and non-layoff agents in their perceptions about the degree to which organizational downsizing is financially effective and the degree to which organizational downsizing is liberating for layoff victims. In summary, layoff agency appears to influence perceptions of organizational downsizing along some dimensions but not others.

The results shown in Table 4 include a number of other interesting findings that go beyond the specific predictions of our theoretical framework. First, layoff victimhood influenced perceptions of downsizing along three dimensions. Respondents who had past experience as a layoff victim perceived downsizing as less financially effective (ß = .062, p < .01, row 2), as more liberating for victims (ß = .080, p < .01, row 2), and as more of a breach of the implied employment contract (ß = .071, p < .01, row 2) than did non-layoff victims. The finding that layoff victims perceived organizational downsizing as more liberating is particularly interesting because it suggests an attempt by the layoff victims in this study to resolve cognitive dissonance. Layoff victims may experience cognitive dissonance because the fact that they have lost at least one job as a result of a layoff or downsizing implies to them that they are not fully competent at managing their own careers. The fact that this attribution may not be valid will not necessarily reduce its power. If layoff victims adopt the cognition that downsizing is liberating for those who have been laid off, that cognition might balance their self-attribution of incompetence at career management and thus reduce their feelings of dissonance. The victims could rationalize their past laid-off status by reasoning that at least downsizing results in the liberation of laid-off employees from the restrictions of corporate life. While our current data offer no direct evidence that such reasoning is part of the thought processes of layoff victims, future researchers might interview laid-off employees to see whether this type of rationalization characterizes their attempts to make sense of their job loss.

In addition to these findings, age increased the perception that downsizing is financially effective (ß = .059, p < .05, row 3) and reduced the perception that downsizing is inevitable (ß = -.068, p < .01, row 3). Also, higher levels of education reduced the perception that downsizing is financially effective (ß = -.066, p < .01, row 4) and increased the perception that downsizing constitutes a breach of the implied employment contract (ß = .048, p < .05, row 4). With the exception of the effect of age on downsizing's perceived financial effectiveness, these results are consistent with the notion that older, better educated respondents are more skeptical about downsizing. In particular, older respondents may remember a time when mass corporate downsizings were not as institutionalized as they are today (McKinley et al., 1995), and so they are more doubtful about downsizing's inevitability.

Finally, the results for the effects of the ideological belief measures are interesting. Table 4 shows that respondents who believed strongly in the ideology of market competition perceived downsizing as more financially effective than weak believers did (ß = .063, p < .01, row 7). Strong believers in the ideology of market competition also saw downsizing as involving less contract breach than weak believers did (ß = -.072, p < .01, row 7). Correspondingly, strong believers in the ideology of shareholder wealth perceived downsizing as more financially effective (ß = .124, p < .01, row 8), more inevitable (ß = .117, p < .01, row 8), more liberating for laid-off employees (ß = .117, p < .01, row 8), and less of a contract breach (ß = -.117, p < .01, row 8) than weak believers did.

In a partially contradictory pattern, strong believers in the ideology of employee worth perceived downsizing as less inevitable (ß = .047, p < .05, row 9) and as more of a contract breach (ß = .113, p < .01, row 9) than weak believers did. Finally, reproducing exactly the same pattern created by belief in the ideology of shareholder wealth, strong believers in the ideology of employee self-reliance perceived downsizing as more financially effective (ß = .072, p < .01, row 10), more inevitable (ß = .101, p < .01, row 10), more liberating for laid-off employees (ß = .178, p < .01, row 10), and as less of a contract breach (ß = -.169, p < .01, row 10). It is particularly intriguing that belief in the ideology of shareholder wealth and belief in the ideology of employee self-reliance have the same pattern of effects on the perception of downsizing measures examined here, because the ideology of shareholder wealth is related to financial and corporate governance issues while the ideology of employee self-reliance has to do with the employee's relationship with her employer. Perhaps belief in each of these ideologies incorporates an underlying ethic that focuses the believer away from the rights of employees and toward enhancement of the rights of other corporate stakeholders, particularly shareholders. Strong believers in these ideologies may therefore have similar perceptions about downsizing's financial effectiveness, its liberation value for laid-off employees, its inevitability, and the level of implied contract breach it represents. In any case, these results indicate that in addition to layoff agency, layoff victimhood, age, and education, ideological beliefs about business, particularly the belief in the ideology of shareholder wealth and the belief in the ideology of employee self-reliance, have pervasive effects on the ways that respondents perceive the phenomenon of organizational downsizing.

Discussion

These results suggest that perceptions about downsizing are influenced by the past layoff agency experience of respondents, as well as their layoff victim experience and their ideological beliefs. Future research should replicate these results using different methodologies and different measures of the constructs involved. For example, it might be possible to construct experimental designs that simulate the experience of layoff agency or layoff victimhood for subjects. The goal would be to see whether these experiences change subjects' perceptions of the phenomenon of organizational downsizing in the ways our findings suggest they should. While such experiments would need to be well designed and sensitive to ethical concerns, the findings would have the potential to extend our knowledge of the micro-level factors that drive people's perceptions of organizational downsizing.

Our theory focused on differences in perceptions of downsizing between layoff agents and non-layoff agents, but future studies could concentrate on layoff agents alone, and assess the effects of different dimensions of the layoff agent's experience on perceptions of downsizing. For example, what is the effect of the number of layoff agent experiences on a respondent's perceptions of organizational downsizing? Do layoff agents who have been involved in more downsizings have more cognitive dissonance, so that they have more incentive to adopt perceptions of downsizing that reduce that dissonance? Or does involvement in more downsizings lead to dissociation of layoff agents from those laid off (Kets de Vries & Balazs, 1997), a condition that might actually reduce cognitive dissonance and thus the pressure to relieve it by altering perceptions of organizational downsizing? Research designed to address such questions could provide a finer-grained understanding of the important construct of layoff agency.

Theoretical Implications

Perceptions that downsizing is financially effective, inevitable, liberating for laid-off employees, and not a source of implied contract breach may make downsizing seem acceptable, and even natural, to the perceiver. If this reasoning is correct, any variable that pushes perceptions of downsizing toward lower values on implied contract breach and higher values on the other dimensions we have identified has the potential to enhance the acceptability of organizational downsizing. For instance, as more employees acquire the experience of layoff agency by being thrust into that role at their workplaces, we would expect them to perceive downsizing as more inevitable and less of a breach of the implied employment contract, both perceptions potentially serving to increase the acceptance of downsizing by the agent. Thus the growth of layoff agency may help explain the increasing acceptance of organizational downsizing in the corporate world. Of course, acceptance of downsizing also suggests increased diffusion of downsizing, so the perceptions that accompany layoff agency may actually feed back to encourage more layoff agency. While the existence of this selfreinforcing loop (Masuch, 1985) is speculative, it would be interesting to design studies to explore the causal effect of layoff agency on perceptions of downsizing, the impact of those perceptions on the acceptability of the practice to agents, and potential feedback effects on the incidence of downsizing and therefore the number of layoff agents.

The spread of downsizing, which is particularly prominent in the manufacturing sector (Baumol et al., 2003), not only produces layoff agents, but also layoff victims. Our study did not provide any hypotheses about layoff victims but we can't ignore the implications of our findings on that subject. Based on the results of this study, layoff victim experience would appear to reduce the perceived financial effectiveness of downsizing and increase the degree to which downsizing is perceived as a breach of the implied employer/employee contract. These two perceptual outcomes have the potential to undermine the acceptability of downsizing for the layoff victim. However, layoff victims also perceive downsizing as more liberating for laid-off employees than do people who have not had the experience of being laid off. This effect may enhance the acceptability of downsizing for the layoff victim, but we doubt such an effect will completely counteract any reduced acceptability generated by perceptions of lower financial effectiveness and higher contract breach. Thus layoff victimhood is unlikely to be conducive to the acceptance of downsizing in the same way that layoff agency arguably is. In fact, if layoff victims' perceptions of organizational downsizing do lead to reduced acceptance of this management practice by the victims, this could create a damper on the diffusion of downsizing, at least to the extent that individuals with layoff victim experience can offer resistance to the practice. This negative feedback effect might partially counteract the positive feedback loop that was hypothesized above in connection with layoff agency. In any case, further study of how layoff victim status affects the victims' perceptions of organizational downsizing, how those perceptions influence the acceptability of downsizing to the victims, and how that acceptability in turn impacts the diffusion of downsizing and the number of layoff victims would be extremely interesting.

In addition to the experiences of layoff agency and layoff victimhood, ideological beliefs about business appear to influence perceptions of downsizing in ways that may either enhance or reduce its acceptability. For example, belief in the ideology of market competition apparently enhances the perception that downsizing is financially effective and reduces the perception that downsizing constitutes a breach of the implied employer/employee contract. Thus strong belief in the ideology of market competition has the potential to increase the palatability of downsizing for the believer, and may make it easier for the believer to accept downsizing. Certainly the ideology of market competition has been strongly advocated in much of the business press, and with the globalization of the neo-liberal creed this ideology has diffused to many nations (see, for example, FourcadeGourinchas & Babb, 2002). If more and more individuals come to have faith in this ideology, we would predict that downsizing would become more acceptable in the world population.

The ideology of shareholder wealth has an even stronger effect on perceptions of organizational downsizing than the ideology of market competition, leading believers to perceive downsizing as more financially effective, more inevitable, more liberating, and less of a breach of the implied employment contract between employer and employee. This cluster of perceptions suggests that strong believers in the ideology of shareholder wealth will be advocates of organizational downsizing, and would certainly not dispute its taken-for-granted status as an accepted management practice (McKinley et al., 1995). This argument is consistent with the advocacy of downsizing and restructuring by Wall Street security analysts, who appear to be convinced that downsizing is an effective method for improving corporate financial performance (Cappelli, Bassi, Katz, Knoke, Osterman, & Useem, 1997; McKinley et al., 2000). As the ideology of shareholder wealth continues to diffuse among the general population of the industrialized nations (Margolis & Walsh, 2003; Sundaram & Inkpen, 2004), cognitions about organizational downsizing may be changed in ways that will further contribute to its broad acceptability.

The ideology of employee worth has perceptual effects that trend in a different direction from those of the ideology of market competition and the ideology of shareholder wealth. Specifically, strong believers in the ideology of employee worth perceive downsizing as less inevitable and as constituting more of a breach of the implied employment contract. Thus belief in the ideology of employee worth is unlikely to enhance either the construction of downsizing as an inevitable, natural process or as a contract breach-free event, both cognitions that would be consistent with the acceptance of downsizing. It is unclear whether the ideology of employee worth is as well diffused in the populations of capitalist countries as the ideologies of market competition and shareholder wealth appear to be, but our discussion implies that the future of downsizing as an accepted practice may depend partly on the relative strength and geographical dispersion of these three ideologies.

Finally, as noted above, the ideology of employee self-reliance has a pattern of perceptual effects that exactly mirrors the pattern associated with the ideology of shareholder wealth. Strong believers in the idea that employees should be self-reliant see downsizing as more financially effective, more inevitable, more liberating for laid-off employees, and as less of a breach of the implied employment contract. This pattern of cognitions is ideally suited to reinforce the acceptability of downsizing for the believer, and thus the ideology of employee self-reliance can be expected to support the diffusion of downsizing. This is consistent with the theoretical arguments of McKinley et al. (1998), who suggested that the ideology of employee self-reliance acts as a catalyst for the spread of organizational downsizing by creating an ideological context in which downsizing decisions are easier to make.

Practical Implications

In addition to the theoretical implications summarized above, our results have some implications for practice that are worth noting. If replications support the conclusion that past experiences like layoff agency and layoff victimhood influence employees' perceptions of downsizing, and those results become known to managers, managers may be tempted to use that information to hire employees with experiences that predispose them to favor downsizing. For example, managers could seek to hire employees with past layoff agency experience, in the expectation that such experience would make the employees more accepting of downsizing and more capable of assisting in the implementation of future downsizings. Layoff agency experience has sometimes been viewed as a valuable skill set in the hiring of top managers, as shown by the cases of "Chainsaw Al" Dunlap (Dunlap, 1996), Jack "The Ripper" Grundhofer (McKinley et al., 1995), and "Chainsaw Fritz" Henderson, the current vice chairman and chief financial officer of GM (Hawkins & White, 2005). Correspondingly, managers might seek to hire employees who believe strongly in the ideology of shareholder wealth or the ideology of employee self-reliance. Managers might also attempt to strengthen belief in these ideologies among their current employees, in the hope that the employees' perceptions of downsizing would shift in directions that are conducive to acceptance, and even advocacy, of the practice. Such ideological conditioning probably takes place already on an informal basis in some corporations, and is supported by books such as Noer's (1993) exposition of the ideology of employee self-reliance. However, future research on the relationship between business ideologies and perceptions of downsizing might permit some managers to extend that informal conditioning into formal ideological indoctrination programs.

The ethical implications of such a move are both disturbing and intriguing. Is it ethical for managers to intentionally manipulate the ideological beliefs of their employees in order to generate support for administrative practices that the managers believe to be effective? And what is the ethical position of the organizational researchers who might at some future date be producing the findings on which the conditioning programs were based? Should the researchers be considered responsible for the uses to which their research is put, or does their accountability end with the publication of research findings? At this point such questions have not arisen because of the dearth of workplace programs for formal ideological conditioning, but we raise them here to sensitize the reader to the complex ethical relationship between research and implementation in an area like employee perceptions of organizational downsizing. Research on such perceptions must move forward with attention to the robustness of theory and empirical findings, but also without forgetting the possible uses to which research results might eventually be put.

Organizational leaders may want to consider the implications spelled out above. Layoff agents may undergo a change in their perceptions of downsizing based on their layoff agency roles, and it is unclear whether the agents are even aware of this potential transformation. If putting employees into the position of layoff agency changes their perceptual frameworks, what responsibility do leaders, who may be the originators of the layoff agency assignment, bear for these alterations? Will such alterations cause the agents to treat employees less as valued assets and more as costs? It is up to leaders to understand the impact layoff agency may have on the agents and how it may affect development of future leaders. This is critical if we believe with Rosen (1998) that developing human assets is crucial to generating competitive advantage.

Limitations

One limitation of this study is its cross sectional nature, which renders firm empirical conclusions about causal order among the variables difficult. In the discussion above, for example, we have assumed that our findings reflect the causal influence of ideological beliefs on perceptions of downsizing, rather than the reverse. Our data cannot rule out the possibility that there are causal effects of perceptions of downsizing on respondents' ideological beliefs, but there is no compelling theoretical reason to assume this is the case. On the other hand, evidence such as the beliefs and statements of Wall Street security analysts and other advocates of the ideology of shareholder wealth and the ideology of market competition (Cappelli et al., 1997) support the inference that ideological beliefs about business affect perceptions of downsizing. Future researchers should collect longitudinal data that will allow them to conclusively address the empirical question of causal order in the relationship between ideological beliefs about business and perceptions of organizational downsizing. Theoretical models and statistical data analysis techniques such as those described by Monge (1990) could be very useful in this endeavor.

A second possible limitation is the selfreport character of our data. It is often argued that self-report data lead to percept-percept inflation that artificially increases the size of correlations between measures. However, in an analysis of 42,934 correlations from published studies, Crampton and Wagner (1994: 72) concluded that "[percept-percept] inflation is a less probable effect of self-report methods than are more neutral effects." This reduces our concern about the possibility of artificial inflation in the relationships between our independent and dependent variables due to the method we used to collect our data. Clearly researchers should attempt to supplement selfreport methods where possible, but it also seems reasonable to argue that constructs such as ideological beliefs about business and perceptions of organizational downsizing can only be measured by self-reports. Thus Crampton and Wagner's (1994) conclusion about the infrequency of percept-percept inflation due to self-report methods is reassuring.

Another limitation is the small effect sizes. We believe this can be partially explained by the diverse sample which draws respondents from a number of different organizations, industries, and age cohorts. Though small, the population effects are nevertheless important because they open up avenues for future theory and research on the influence of layoff agency on respondents' attitudes and values. Since this is the first study of which we are aware that tries to measure layoff agents' perceptions of downsizing, the study establishes a precedent for future researchers to try and refine methods to capture more of the variance in perceptions.

Conclusion

We began this paper by developing a theory about the effects of layoff agency on perceptions of organizational downsizing. Using a cognitive dissonance framework (Festinger, 1957; Harmon-Jones & Mills, 1999), we predicted that individuals with experience as a layoff agent would see downsizing as more financially effective, more inevitable, more liberating for laid-off employees, and less of a breach of the implied employment contract than individuals without such experience. A large-sample study of alumni of a college of business in a Midwestern state university partially confirmed our hypotheses, and also revealed interesting effects of some of our control variables ~ layoff victimhood and ideological beliefs about business ~ on perceptions of organizational downsizing. With the exception of studies like Edwards et al. (2003) and Skarlicki et al. (1998), research on organizational downsizing has not devoted much attention to third-party perceptions of the phenomenon. Yet such perceptions are critical for the acceptability of the phenomenon in the general population and ultimately for the degree of taken-for-grantedness that organizational downsizing achieves. Thus if we wish to understand how administrative practices like downsizing spread and become institutionalized in modern society, we may have to pay more attention to the past experiences and the cognitions of the managers, employees, and external observers who ultimately grant legitimacy to these practices and become agents of their diffusion.