Downsizing strategies and institutional environments

This article addresses practices and strategies relating to downsizing from an institutional perspective. Our research question is: What is the impact of regulative and normative elements in the societal environment on downsizing strategies in Norwegian firms? We use data from 23 Norwegian firms in 1990 and 1995. The analysis shows (1) that the use of different downsizing strategies is influenced by statutory law, collective agreements and the National Insurance Act; and (2) that firms act proactively with regard to societal norms against layoffs in order to protect their reputations. On the basis of an empirical analysis, some implications for the study of downsizing and relevance of our argument for institutional theory are discussed.