Firm downsizing and satisfaction among United States and European customers

Lewin, Jeffrey E.; Biemans, Wim G.; Ulaga, Wolfgang

doi:10.1016/j.jbusres.2009.05.005

Cited by 13 publications

(5 citation statements)

References 65 publications

(105 reference statements)

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“…As mentioned before, prior research has established that on average, customer satisfaction decreases after downsizing (e.g., Homburg et al 2012;Lewin et al 2010). Therefore, …”

Section: Hypothesesmentioning

confidence: 83%

“…Previous research on customer outcomes of downsizing has focused on B2B markets (e.g., Lewin 2009;Lewin and Johnston 2008;Lewin et al 2010). We extend the field by looking at B2C markets.…”

Section: Research Implicationsmentioning

confidence: 99%

“…By linking satisfaction to downsizing the year before, our setup alleviates these concerns. (2) Previous research has relied on single-source data from a customer's perspective (e.g., Lewin 2009;Lewin and Johnston 2008;Lewin et al 2010) or (Homburg et al 2012). Our research integrates the two perspectives.…”

Section: Research Implicationsmentioning

confidence: 99%

“…That being said, most evidence comes from B2B samples (Lewin 2009;Lewin and Johnston 2008;Lewin et al 2010;Williams et al 2011) or samples with a prominent B2B share (Homburg et al 2012;Wagar 1998). One is from the financial services sector (McElroy et al 2001).…”

Section: Introductionmentioning

confidence: 99%

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Customer reactions to downsizing: when and how is satisfaction affected?

Habel

Klarmann

2014

J. of the Acad. Mark. Sci.

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Organizational downsizing to cut costs frequently creates new, "hidden costs" that neutralize potential increases in productivity. Customer dissatisfaction is such an overlooked downsizing outcome. Using longitudinal data from the American Customer Satisfaction Index (ACSI), Compustat, and a consumer survey this study analyzes satisfaction outcomes of downsizing. It extends research in this domain to B2C markets and explicitly addresses environmental influences on the downsizing-satisfaction link. Results indicate that there is a negative effect of downsizing on customer satisfaction. It is particularly pronounced for companies (1) with little organizational slack, (2) with high labor productivity, or (3) in industries with high R&D intensity. Moreover, downsizing has a stronger negative impact on customer satisfaction in product categories with (4) high risk importance and (5) low probability for consumer errors as well as (6) low level of brand consciousness. Furthermore, customer satisfaction mediates the effect of downsizing on financial performance. The results provide an explanation for why so many downsizing projects fail and what managers can do to prevent adverse effects of downsizing on customer satisfaction and financial performance.

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“…As mentioned before, prior research has established that on average, customer satisfaction decreases after downsizing (e.g., Homburg et al 2012;Lewin et al 2010). Therefore, …”

Section: Hypothesesmentioning

confidence: 83%

“…Previous research on customer outcomes of downsizing has focused on B2B markets (e.g., Lewin 2009;Lewin and Johnston 2008;Lewin et al 2010). We extend the field by looking at B2C markets.…”

Section: Research Implicationsmentioning

confidence: 99%

Section: Research Implicationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Customer reactions to downsizing: when and how is satisfaction affected?

Habel

Klarmann

2014

J. of the Acad. Mark. Sci.

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“…Farber and Hallock, 2009;Guthrie and Datta, 2008). Furthermore, layoffs negatively affect customers' satisfaction and loyalty of a firm (Lewin, 2009;Lewin et al, 2010;Habel and Klarmann, 2015). However, there is scant understanding of the wealth effects of corporate layoffs on suppliers.…”

Section: Literature Reviewmentioning

confidence: 99%

Economic links and the wealth effects of layoff announcements along the supply chain

Qiu

Magnan

2021

IJPDLM

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PurposeThis paper investigates the effects of layoff announcement by customers on the valuation and operating performance of their supply chain partners.Design/methodology/approachThe authors collect corporate layoff announcements from 8-K filings submitted by US publicly-traded firms from 2004 to 2017. Using event study methodology, they examine the information externality of corporate layoffs on announcing firms' suppliers.FindingsResults show that suppliers, on average, experience a negative stock price reaction around their major customers' layoff announcements. The negative price effect is exacerbated when industry rivals of layoff-announcing customers also suffer from negative intra-industry contagion effects. Additionally, supply chain spillover effects are asymmetric, with only “bad news” layoff announcements causing significant value implications for suppliers, but not “good news” announcements. Supplier firms also reduce their investments in and sales dependence on layoff-announcing customers in subsequent years.Practical implicationsThis study shows that layoff decisions, often aimed at improving firms' efficiency and effectiveness, create uncertainty for the suppliers' operation and cause negative value implications on firms' upstream partners. Findings should be useful to corporate decision-makers in making layoff decisions.Originality/valueThis paper is one of the first to address the value implications of corporate layoffs on announcing firms' suppliers. It provides a more comprehensive picture of the economy-wide impact of achieving efficiency through employee layoffs.

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