Necessary and sufficient factors in employee downsizing? A qualitative comparative analysis of lay‐offs in France and the UK, 2008–2013

• Published date: 01 July 2016
• Date: 01 July 2016
• Author: Michel Goyer,Ian Clark,Shabneez Bhankaraully
• DOI: http://doi.org/10.1111/1748-8583.12101

Necessary and sufficient factors in employee

downsizing? A qualitative comparative analysis of

lay-offs in France and the UK, 2008–2013

Michel Goyer,Organisation, Work and Employment, Birmingham Business School

Ian Clark, Centre for Sustainable Work and Employment Futures and Department of

Management, University of Leicester

ShabneezBhankaraully,Organization, Work andEmployment, BirminghamBusiness

School

Human Resource Management Journal, Vol 26,no 3, 2016, pages 252–268

Embeddedin the literature on financialization and institutionalapproaches, thisstudy is an examination of the

causal factorsof employee downsizing in two institutionally dissimilarsettings, France andthe UK, using the

fuzzy sets variant of QualitativeComparative Analysis. The findings show that the roughly equivalentuse of

large-scale lay-offs in the two countries is coupled with strikingly different causal factors. Our argument

suggests the importance of complex causation whereby employee downsizing reflects the growing influence

of financial considerations in the governance of companies, but its diffusion across countries is shaped by

different configurations of institutional arrangements.

Contact: MichelGoyer, Organisation, Work and Employment, Birmingham Business School.Email:

m.goyer@bham.ac.uk

Keywords:complex causation; employeedownsizing; financialization;fuzzy sets QCA; institutional

investors; institutions; leverage; ownershipstructures

INTRODUCTION

This article examines causal factors behind large-scale employee downsizing in two

different settings, France and the UK, from 2008 to 2013. Our theoretically informed

comparative study contributes to important debates in two literature sets: those on

financialization and comparative institutionalism. Financialization refers to the

increased importance of financial considerations in the governance of companies, which

prioritizes the in terests of investo r-owners, which is s hareholder value (van der Z wan,

2014). This grea ter prominence o f finance is made possible by important structural

developments in t he global economy, mostnotablyremovalofcontrolsoncapital

movements across borders and the growth in the financial assets of shareholder value

driven funds. These developments have resulted in unprecedented amounts of capital

chasing profita ble investment opp ortunities (Engelen and Konings, 2010; see also

Krippner, 2005). At firm level, financialization highlights how the ascendancy of

shareholder value entails an important reorganization of resource allocation aimed at

keeping stock prices high and returning cash flows to shareholders. In the context of

investor and shareholder value, recourse to employee downsizing constitutes a popular

strategy used by companies to generate resources that are then distributed to

shareholders (Jacoby, 2005; Clark, 2013; Appelbaum and Batt, 2014).

Our second contribution is to the literature on comparative institutional analysis.

Institutional approaches constitute mid-range theory that aims to illustrate how conflict over

resources and strategic choices are mediated by the institutional setting in which they take

Pleasecite this articlein press as:Goyer, M., Clark,I. and Bhankaraully,S. (2016) ‘Necessaryand sufficientfactorsin employee downsizing?A qualitative

comparativeanalysisof lay-offs in Franceand the UK, 2008–2013’.HumanResourceManagement Journal26: 3, 252–268

252 HUMAN RESOURCEMANAGEMENT JOURNAL, VOL26, NO 3, 2016

©2016 John Wiley& Sons Ltd.

doi: 10.1111/1748-8583.12101

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place (Hall, 1986; Thelen and Steinmo, 1992). Institutional arrangements matter because they

enable, and constrain, different firm-level actors (managers, shareholdersand workers) in their

competing claims over the allocation of resources and, more broadly, over the governance of

the firm (Whitley, 1999; Campbell, 2004). That is, institutions structure power relations inside

companies that, in turn, strengthen the ability of different actors to advance their interests

against others with different preferences (Hall, 1986; Gourevitch and Shinn, 2005; see also

Goergen et al., 2013 for downsizing). Incorporating institutional analyses into the study of

employment relations is insightful in order to account for the diffusion of financialization, a

highly redistributive phenomenon, across different countries.

Our argument, in respect of employee downsizing, centres on the necessity of situating

HR strategies within a corporate context that incorporates both the priorities of

financialization within firms and the importance of institutional diversity across national

business systems. To effectively address this challenge, we incorpo rate into our analys is

theoretical insights developed across the social sciences that highlight the importance of

complex causation in understanding outcomes, such as the implementation of large-scale

employee lay-offs (Ragin, 1987; Mahoney, 2004). From an ontological standpoint, our

argument illus trates how the imple mentation of empl oyee downsizing acr oss national

settings is not gene rated by the presenc e of one single cause app licable to all nation al

business systems. Rather, downsizing occurs as the result of configurations of specific

conditions tha t differ across national setting s. The presence of institutional d iversity, while

not constituting an obstacle to the diffusion of shareholder value practices as correctly

asserted by financialization approaches, provides revealing insights enabling us to assess

which sets of conditions will be necessary and/or sufficient to generate a similar outcome,

namely, employee downsizing, across institutionally different economies (Braumoeller,

2003; Goyer, 2011: 106–128).

The diffusion of financial considerations across national settings is shaped by the extent

to which institu tional arrangeme nts enable actors t o implement, or resi st, employee

downsizing. In the institutionally constrained context of the French economy, the presence

of several ‘conducive’factors is required for large-scale lay-offs to take place. In the

institutional ly permissive conte xt of the UK economy, in contrast, t he implementatio n of

employee downsizing schemes will be easier as reflected by the presence of less

demanding configurations of specific factors. Drawing from the literature on comparative

corporate governance (Roe, 2000; Gourevitch and Shinn, 2005; Atanassov and Kim, 2009;

Gospel and Pendleton, 2014), we develop our theoretical framework by examining the

impact of three fir m-level financial ized variables on the im plementation of la rge-scale

downsizing sche mes: financial leve rage; categories o f institutional in vestor; and

ownership structures of companies.

This article is structured as follows. The first part looks at two theoretical perspectives that

provide important contextual insights for the study of employee downsizing: financialization

and institutionalapproaches. Part two integrates financialization and institutional approaches

into our framework of complex causation. This integration leads to a complex and

comprehensive understanding of the increased prominence of financial considerations in the

governance of companies across different institutional settings. We also outline how

Qualitative Comparative Analysis (QCA) as a research method best captures notions of

complex causation. Part three presents the foundations of the QCA methodology. Part four

reports on our data sample. Part five reveals our empirical findings and part six contains a

discussion and conclusion on our findings and the contribution of our research to theory

building.

Michel Goyer,Ian Clark and Shabneez Bhankaraully

HUMAN RESOURCEMANAGEMENT JOURNAL, VOL26, NO 3, 2016 253

©2016 John Wiley& Sons Ltd.