Response to haar's comment— and the beat goes on: Corporate downsizing in the twenty‐first century

Corporate downsizing continues to be a major strategy used by organizations to cope with a dynamic and turbulent global marketplace. A fundamental assumption made by executives is that this strategy improves the financial health of the corporation. De Meuse, Vanderheiden, and Bergmann (1994) examined several indices of financial performance over a five‐year period and found that firms employing downsizing experienced a deterioration in financial performance rather than an improvement. Haar (1999) questioned the findings of this study, asserting that if a company's risk level would have been included in the analysis, their results could have been different. In the present investigation, risk was incorporated in the original analysis. Again, the findings strongly indicate that downsizing was not an effective corporate strategy for enhancing the financial performance of corporations. © 1999 John Wiley & Sons, Inc.