How Leadership Characteristics Affect Organizational Decline and Downsizing |
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Authors: | Abraham Carmeli Zachary Sheaffer |
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Institution: | (1) Graduate School of Business Administration, Bar-Ilan University, Ramat-Gan, Israel;(2) Department of Economics and Management, The Open University of Israel, P. O. Box 808, 108 Ravutski Street, Raanana, 43107, Israel |
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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. |
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Keywords: | organizational decline industry decline organizational downsizing leadership |
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