Received: 17 February 2023 Revised: 22 November 2023 Accepted: 4 December 2023

DOI: 10.1111/1748-8583.12543

RESEARCH ARTICLE

Are layoffs an industry norm? Exploring how

industry-level job decline or growth impacts firm-
level layoff implementation

Nita Chhinzer

Department of Management, University of

Guelph, Guelph, Ontario, Canada Abstract
Corporate layoffs are a globally prolific organisational activ-
Correspondence
Nita Chhinzer, Department of Management,
ity, but little is known about how industry-level employ-
University of Guelph, 50 Stone Road East, ment loss or gain impacts firm-level layoff implementation.
Guelph, ON N1G 2W1, Canada.
Email: chhinzer@uoguelph.ca
Grounded in institutional theory, this study posits that firms
in industries experiencing employment decline align with a
cost-containment approach, while firms in industries experi-
encing employment growth focus on social exchange theory
when executing employee layoffs. Analysis of 573 mass
layoffs from March 2013 to May 2019 compared downsizing
scope (layoff severity and frequency), explanations, alterna-
tives, advance notice, and firm characteristics (unionisation
and firm size) in employment gain versus loss industries. The
findings indicate that meaningful differences exist. Firms
operating in employment loss industries implement layoffs
focused on cost-containment, including less severe layoffs,
less extensive but more demand-decline focused explana-
tions, and use more cost-reduction layoff alternatives, when
compared to layoffs in employment gaining industries. Firms
operating in industries experiencing growth execute layoffs
in a manner that maintains the social exchange expectations

Abbreviations: BDI, Business Data Intelligence; CEO, Chief Executive Officer; DandB, Dun & Bradstreet; HR, human resources; HRM, human resource
management; MNC, Multinational Corporation; NAICS, North American Industry Classification System; OECD, Organization for Economic Cooperation
and Development; OMLITSD, Ontario Ministry of Labour, Immigration, Training and Skills Development; ROA, return on assets; UK, United Kingdom; US,
United States; VP, Vice-President.

This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits
use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or
adaptations are made.
© 2023 The Authors. Human Resource Management Journal published by John Wiley & Sons Ltd.

Hum Resour Manag J. 2023;1–21. wileyonlinelibrary.com/journal/hrmj 1

 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
2 CHHINZER

between employee-employer. In addition, firms in declining

industries are more likely to be unionised and larger than
firms in growing industries. This research helps reconcile
divergent layoff perspectives by considering how variations
in external factors impact corporate layoffs.

KEYWORDS
cost-containment approach, downsizing, institutional theory,
layoff, social exchange theory

Practitioner Notes
What is currently known?
• Corporate layoffs are a prolific management activity to adjust the workforce to internal and external
uncertainty.
• Some researchers suggest that layoff risk is implicit in work agreements, while others suggest that layoffs
violate employee work expectations.
• Institutional pressures influence the firm-level use of layoffs, but research remains focused on the
presence or absence of layoffs rather than layoff strategy.

What this paper adds?

• Five hundred and seventy three employer provided mass layoff announcements were analysed to
compare how firms implement layoffs in job gain versus loss industries.
• Firms in employment decline industries implement layoffs in a way focused on minimising costs.
• Firm in employment growth industries implement layoffs focused on maintaining the employee-employer
relationship.
• Layoffs in job-losing industries occur in larger and more unionised firms than in job-gaining industries.

The implications for practitioners

• Employers are influenced by industry specific job loss or gain when making employment changes in their
firm.
• Firm-level layoff strategies vary based on whether layoffs are a foreseeable risk in the employment
relationship.
• Layoff execution should align with firm strategy rather than as a knee-jerk reaction to mimic industry
practices.
• 
Other stakeholders (e.g., employees, shareholders) might also consider exogenous factors in their
reactions to firm layoffs.

1 | INTRODUCTION

In 2023, prominent international employers like Goldman Sachs, Disney, and Walmart executed successive waves
of mass layoffs that affected their worldwide staff, demonstrating the prevalence of layoffs globally (Cavale, 2023;
Reuters, 2023; Ulaby, 2023). Layoffs, also known as workforce reductions or employee downsizing, involve delib-
erately reducing an organisation's workforce via the simultaneous or swift termination of multiple employees
(Asante et al., 2022; Datta et al., 2010). Layoffs are omnipresent across industries in current times. For example, the
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 3

technology industry recently experienced job decline, with unprecedented layoffs at Meta, Google, Amazon, Zoom,
Salesforce, Twitter, Yahoo and other firms (Stringer, 2023). Meanwhile, education and healthcare industries also
experienced layoffs and job growth simultaneously (Steemers et al., 2023). Essentially, in some situations, decline
and layoff activity are decoupled, with some firms experiencing growth that execute layoffs to further improve organ-
isational efficiency, organisational competitiveness, or workforce composition, proactively (Chhinzer & Currie, 2014;
Datta et al., 2010; Zdaniuk & Chhinzer, 2019). Variations in industry-level employment dynamics can influence an
employer's approach to layoffs, reigniting the discourse on the contemporary relationship between industry-level
employment trends and firm-level layoff activity.
Institutional theory posits that organisations are subject to pressures within an institutional field and acquire
legitimacy through conforming to institutional norms and adopting prevalent practices of referent firms (Cascio, 2014;
McKinley et al., 2000). Existing research supports institutional isomorphism of industry-level employment changes
on the presence or absence of firm-level layoffs (Johnson & Watt, 2022; Muñoz-Bullón & Sánchez-Bueno, 2014),
but fails to explore the impact of institutional pressures on how and why layoffs are implemented at the firm-level
(Datta et al., 2010). Fundamentally, firms face an inherent paradox during layoff implementation: balancing long-
term employment relationships based on principles of social exchange theory (e.g., cooperative employee relations,
employee support) with the employers' need for cost-containment (e.g., operating a profit-seeking organisation)
(Cascio, 2014; Chhinzer, 2021). Social exchange theory (Blau, 2017) and cost-containment strategies (Campion
et al., 2011) may be in conflict during layoff implementation, resulting in firm-level layoff differences.
Addressing the call for a nuanced understanding of the contemporary layoff phenomena (Budros, 2000; Carmeli
& Sheaffer, 2009; Muñoz-Bullón & Sánchez-Bueno, 2014), this study proposes that firms in industries with employ-
ment decline prioritise cost-containment when implementing layoffs due to institutional isomorphism and mimetic
processes (Johnson & Watt, 2022; McKinley et al., 2000). Conversely, firms in industries with employment growth
likely adopt social exchange theory approaches in layoff implementation, preserving reciprocal relationships with
employees. Analyses of 573 employer-provided mass layoff notices in Ontario, Canada, from March 2013 to May
2019 inform this inquiry. Specifically, differences in downsizing scope (layoff severity and frequency), explanations
and alternatives (count and categories), advance notice, and firm characteristics (unionisation and firm size) are
explored, differentiating between industries experiencing employment losses versus gains.
This research makes three noteworthy contributions. First, it provides a comprehensive assessment of layoffs in
contemporary times. Second, it provides detailed insights into organisational practices during layoffs, addressing a
research gap on firm-level layoff implementation practices (Datta et al., 2010; Johnson & Watt, 2022). Third, it exam-
ines firm-level layoff implementation considering industry-level institutional pressures from exogenous employment
changes, bridging labour economic and human resource management (HRM) perspectives (Lamberg et al., 2018).

2 | RELEVANT LITERATURE AND HYPOTHESES DEVELOPMENT

Corporate layoffs are a dynamic organisational phenomenon, possessing four key features: intentionality, employee
headcount reduction, organisational efficiency objectives, and impacting work processes (Datta et al., 2010). As an
employer-initiated change, firms have significant discretion about if and how layoffs are implemented (Chhinzer, 2021).
Historically, layoffs were primarily observed in North American firms experiencing organisational failure, particularly
amidst declining profits (Guthrie, 2001; Hallock et al., 2012). However, contemporary global organisations employ
layoffs as a common practice, both proactively and reactively (Datta et al., 2010). This shifted some managerial mind-
sets regarding layoffs, potentially reducing its associated stigma (Asante et al., 2022; Cascio, 2014).
As layoffs increased in practice, research perspectives diverged. Some view layoffs adversely, emphasising the
significance of employment security and stability for long-term organisational success (Carmeli & Sheaffer, 2009;
Guthrie & Datta, 2008). Conversely, others posit that dynamic environments require dynamic employment rela-
tionships, and reducing labour costs via corporate layoffs is within the parameters of acceptable workforce
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
4 CHHINZER

adjustment options available to employers, essentially decoupling layoffs from organisational decline (Brauer &
Zimmermann, 2019; Tsai et al., 2006; Zdaniuk & Chhinzer, 2019). This research helps reconcile these competing
perspectives by considering the role of industry-level employment decline or growth on firm-level layoff practices.

2.1 | Industry-level employment changes as isomorphic pressures

Organisations facing comparable exogenous circumstances may share a common response influenced by percep-
tions of external threats or risks, competitive pressures, and available resources (Carmeli & Sheaffer, 2009; Lamberg
et al., 2018). Aligned with institutional theory, this research asserts that employment changes within an industry
prompt organisations to reconsider their operational strategies for competitiveness, influencing firm-level layoff
implementation. Although industry job loss is a multifaceted phenomenon characterised by demand decline, tech-
nological obsolescence, heightened competition, or evolving consumer preferences, it is often measured through
industry-level employment changes (Lamberg et al., 2018; Le et al., 2023; Muñoz-Bullón & Sánchez-Bueno, 2014).
According to institutional theory, three social forces influence the adoption of firm-specific institutional rules:
constraining, cloning, and learning (McKinley et al., 2000). Constraining forces pressure firms to conform to manage-
ment practices deemed legitimate among referent firms. Cloning forces encourage firms to emulate actions of other
firms for legitimacy (McKinley et al., 2000). Learning forces disseminate management practices across firms through
stakeholders (e.g., executive groups and educational institutions), promoting downsizing through discussions and
learning processes.
Firms in industries with employment decline may implement layoffs with a cost-containment focus (finan-
cially motivated), given the institutionalisation of job loss in the referent industry. Within the layoff literature, the
cost-containment approach posits a short-term, employer-dominant employment relationship, where human
resources (HR) are principally viewed as a cost burden (Johnson & Watt, 2022). Traditionally, organisations employed
layoffs to achieve cost reduction, operational efficiency, financial stability, and enhanced competitiveness (Campion
et al., 2011). Layoffs offer a quicker and more cost-effective option to adjust the labour force composition than
training or internal mobility options (Cascio et al., 2021; Datta et al., 2010). Additionally, industries experiencing
employment loss may have greater access to skilled labour due to heightened unemployment (Lamberg et al., 2018),
potentially suppressing wages by replacing high earners with lower-wage counterparts. This shift underscores the
cost-containment focus of layoffs (Kahn, 2012). Job loss in referent firms can prompt re-evaluation of operational
strategies, positioning layoffs as a viable response to industry-wide changes (Brauer & Zimmermann, 2019; Ji
et al., 2014).
In contrast, firms in industries experiencing employment growth may implement layoffs grounded in social
exchange considerations (HR focused), particularly when job loss is not a normative practice among referent firms.
Some scholars emphasise the mutual implicit social exchange relationship between employees and employers, founded
on the principle of reciprocity (Blau, 2017), and suggest that layoffs violate this exchange agreement. According to
social exchange theory, organisations are intrinsically responsible for ensuring job security and sustained employ-
ment, contingent upon employees meeting their obligations, such as attendance, loyalty, and productivity (Cregan
et al., 2021). When an organisation executes layoffs, it introduces uncertainty and reduces job security, contravening
the social contract. Such violations precipitate both psychological (e.g., organisational citizenship behaviours, trust in
management) and physical (e.g., absenteeism, turnover) withdrawal among employees (Harney et al., 2018).
Existing research demonstrates that industry-level downsizing is positively associated with firm-level layoff activ-
ity (the presence or absence of layoffs) and layoff severity (Budros, 2000; Muñoz-Bullón & Sánchez-Bueno, 2014;
Wagar, 1997) but fails to explore how isomorphic pressure manifests in firm-specific layoff implementation practices
comprehensively (as summarised in Table 1).
Research on the role of industry on firm-level layoff activity consistently reports that manufacturing industries
exhibit a higher layoff propensity than services or non-manufacturing (Budros, 1999; Coucke et al., 2007). A limited
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 5

TA B L E 1 Literature review summary: Industry-level employment change as an antecedent of firm-level

downsizing.

Study Sample Variables Relevant findings

Budros (1997) Fortune 100 firms with Outcome: Firm-level Firm-level downsizing
media-based layoff downsizing adoption adoption rate
announcements (Wall rate (employment losses positively correlated
Street Journal) from 1979 year-over-year) with industry
to 1994 Explanatory: Industry-level downsizing adoption,
downsizing adoption industry deregulation,
(cumulative percent of industry culture
firms that downsized), (retail/industrial), and
industry deregulation economic peaks
(yes/no), industry
culture (retail/industrial
firms assumed
competitor-oriented;
financial, insurance,
utility assumed service
oriented), industry
economic period (peak/
trough)
Wagar (1997) Survey of 1140 medium/ Outcome: Firm-level Firm-level employment
large sized firms in employment reductions reductions varied
Canada that reported (job loss percent: Mild/ by industry:
employment losses from medium/severe) Communications and
1990 to 1992 Explanatory: Market demand healthcare engaged
(survey of perceptions), in mild job loss,
industry type (only avoiding severe and
retail, communication, moderate reductions
transportation, (respectively). Finance
healthcare, finance and and insurance
insurance, education, and engaged in mild
other) reductions. Remaining
industries showed no
layoff propensity
Budros (2000) Fortune 100 firms with Outcome: Firm-level Utility and manufacturing
media-based layoff downsizing adoption firms downsized
announcements (Wall rate (employment losses during economic
Street Journal) from 1979 year-over-year) peaks. Utility
to 1995 Explanatory: Firm-based and financial
mimicry (percent of firms downsized
Fortune 100 firms that in response to
downsized during study firm-based and
period), press-based press-based mimicry
mimicry (number of
relevant Harvard Business
Review articles), industry
economic period (peak/
trough)
Moderating: Industry type
(utility, financial and
manufacturing)

(Continues)
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
6 CHHINZER

TA B L E 1 (Continued)

Study Sample Variables Relevant findings

Budros (2002) Fortune 100 firms with Outcome: Change in Economic downturn
media-based layoff firm-level employment and firm-based
announcements (Wall (decrease/increase) mimicry unrelated to
Street Journal) from 1979 through involuntary firm-level employee
to 1995 downsizing downsizing. Industry
Explanatory: Industry deregulation more
deregulation (yes/no), likely to result in
economic downturn firm-level downsizing
(GNP), firm-based in manufacturing
mimicry (percent of industry
Fortune 100 firms that
downsized during study
period)
Moderating: Industry type
(utility, financial and
manufacturing)
Baumol et al. (2003) 267 firms in 20 Outcome: Firm-level Industry employment
manufacturing employment change changes positively
sub-industries (census (positive or negative, correlated
of manufacturing) from year-over-year) with firm-level
1967 to 1997 Explanatory: Industry employment changes
employment change
(total full-time
employee equivalent
year-over-year), foreign
competition (change in
input to gross output
ratio), R&D intensity
(R&D employees to total
employee ratio), technical
progress (productivity
growth), degree of
computerisation
(technical equipment
per employee), foreign
competition
Tsai et al. (2006) 18 interviews with VP's, Outcome: Firm-level Firm-level layoffs
managers and union redundancy rate (percent motivated by layoff
leaders from 18 of job loss via layoffs) activity of leading
Taiwanese MNCs in Explanatory: Institutional and benchmarked
2003 factors (mimicry of companies, and
superior organisations, acceptance of
downsizing as a downsizing (mimicry
commonly recognised and learning based)
strategy, and learning
from benchmarked
companies)

CHHINZER
TA B L E 1 (Continued)
Study Sample
Coucke et al. (2007) 339 Belgian companies
reporting layoffs to the
Federal Planning Bureau
from 1992 to 1994
Carmeli and Sheaffer (2009) Matched surveys of CEO
and senior executives in
85 firms listed in DandB
and BDI databases
Muñoz-Bullón and 2021 Spanish manufacturing
Sánchez-Bueno (2014) firms (extracted from
the Spanish survey of
business strategies) from
1994 to 2008
Brauer and 687 media-based layoff
Zimmermann (2019) announcements of the
top 250 US firms by
revenue (according to
Fortune Magazine) from
2001 to 2012
17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
7
Variables Relevant findings
Outcome: Collective layoffs Firms in manufacturing
(restructuring through industries more likely
layoffs vs. exit or to engage in layoffs
relocation) than those in service
Explanatory: Industry industries
(manufacturing, services)
Outcome: Firm-level Industry decline as
downsizing (change in perceived by
employment from 2000 organisational
to 2002) leaders is positively
Explanatory: Industry decline correlated to both
(4 items), leadership organisational
change aversion and downsizing and
self-centeredness (2 organisational decline
items each)
Partial-mediating:
Organisational decline (9
items)
Outcome: Firm-level layoff Firm-level layoff events
event (employee change are positively
>5%) correlated with
Explanatory: downsizing
Frequency-based frequency-based and
imitation (cumulative trait-based imitation
number of downsizing
events in all firms in
industry year prior),
trait-based imitation
(number of top 5 industry
leaders who downsized in
previous year), workforce
adjustment cost (average
ratio of layoff costs over
total labour costs in
previous 3 year)
Outcome: Short-term Moderating influence of
investor responses to industry downsizing
layoffs (change in stock wave on the
price) relationship between
Explanatory: Downsizing firm-level downsizing
magnitude (firm-level magnitude and
job loss), industry-level investor responses
downsizing wave
(high/low), change in
macro-economic outlook
(consumer sentiment
survey data)
(Continues)
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
8 CHHINZER

TA B L E 1 (Continued)

Study Sample Variables Relevant findings

Shi et al. (2023)
2424 firms in the Thompson Outcome: Firm-level
Reuters StreetEvents downsizing actions
database from 2002 (reducing headcount,
to 2013 and 3977 closing facilities or
CEO specific earnings phasing out product lines)
conference calls Explanatory: Performance
transcripts shortfalls (e.g., ROA),
CEO internal attribution
tendency
Firm-level downsizing
actions positively
related to industry
downsizing
actions and other
restructuring actions,
but unrelated to
unfavourable market
conditions

Moderating: Analyst
coverage, unfavourable
market conditions
Controls: Industry downsizing
actions (average
number of downsizing
actions in industry
in dataset), firm size
(number of employees),
ROA-aspirations, product
diversification, slack
resources, institutional
ownership concentration,
CEO characteristics
(age, option pay ratio,
overconfidence, power)
Abbreviations: BDI, Business Data Intelligence; CEO, Chief Executive Officer; DandB, Dun & Bradstreet; MNCs,
Multinational Corporation; ROA, return on assets; US, United States; VP, Vice-President.

number of studies explore beyond the manufacturing industry, considering the impact of selective industries (e.g.,
Wagar, 1997) or industry-level deregulation (Muñoz-Bullón & Sánchez-Bueno, 2014). These suggest that firms adopt
layoffs with enhanced legitimacy when the practice is externally institutionalised. More recently, researchers delved
into the moderating role of industry-level layoff activity concerning firm-level layoff severity and investor reactions
(Brauer & Zimmermann, 2019), but this research is limited to assessing the presence or absence of layoff activ-
ity rather than developing a comprehensive understanding of how and why layoffs are implemented. Johnson and
Watt (2022) offer a more nuanced strategic understanding of layoffs, conducting 45 interviews from 2014 to 2019
in three United Kingdom-based local authorities to assess the perceived importance of institutional standards on
firm-level restructuring processes. Variations from ‘hard’ or ‘soft’ approaches to layoffs adopted by these three firms
were based on common normative, regulatory and cultural-cognitive pressures.
While existing literature provides key insights into the influence of institutional theory on downsizing, there
are four noteworthy challenges. First, existing research focuses on layoff antecedents (pre-downsizing activ-
ity) or outcomes (post-downsizing activity) (Datta et al., 2010) with minimal research on layoff implementation
(while-downsizing phase), although implementation affects firm and employee outcomes (Datta et al., 2010). Second,
sample selection issues challenge the validity and generalisability of the existing results given the reliance on frag-
mented data samples limited to select industries (e.g. Munoz-Bullon & Sanchez-Beuno, 2014), data from media
announcements of layoffs (Brauer & Zimmermann, 2019; Budros, 2002), or large publicly traded companies (Brauer
& Zimmermann, 2019; Budros, 2002; Carmeli & Sheaffer, 2009). Thus, our understanding of layoffs is limited to
how large, high-revenue firms with significant investments in HR departments, legal teams, and strategy experts
approach layoffs. Moreover, publicly traded firms prioritise shareholder concerns and may manipulate messages in
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 9

media-based layoff announcements to influence shareholder reactions (Shi et al., 2023; Zdaniuk & Chhinzer, 2019).
Third, while layoffs are dynamic, research on the institutional impact of layoffs is dated, with nascent studies examining
industry-level influences on firm-level practices in contemporary times (Brauer & Zimmermann, 2019; Muñoz-Bullón
& Sánchez-Bueno, 2014; Shi et al., 2023). Fourth, an in-depth examination of how financial and human resource
perspectives converge to shape diverse layoff implementation approaches is absent. These challenges warrant a
comprehensive, empirical study exploring the impact of isomorphic pressures on firm-level layoff implementation,
considering variables such as layoff scope, alternatives, explanations, advance notice, and firm characteristics.

2.2 | Hypotheses

2.2.1 | Downsizing scope

Firms have discretion regarding the severity and frequency of layoff events (Asante et al., 2022). Frequent down-
sizing events alter the parameters of the social exchange such that downsizing events within a particular firm or
multiple downsizings in the relevant external marketplace (e.g., industry) may prove less deleterious across time
(Cappelli, 1999). Without external legitimisation for layoffs, firms in industries experiencing employment growth
likely use layoffs as a last resort for workforce modification (Hallock et al., 2012), given the higher levels of social
exchange agreement violation. Aligned with cost-containment considerations, severance payments increase as layoff
severity increases, as mandated in employment legislation (Chhinzer, 2014). Thus, to maintain social exchange expec-
tations, firms in industries with employment gains may minimise layoff frequency or avoid layoffs until the required
headcount reductions are large enough that they can be implemented infrequently. Conversely, in industries with
employment decline, downsizing may be perceived as a legitimate strategy for workforce adjustments; therefore,
smaller or more frequent layoffs may occur.

Hypothesis 1. Firms in employment decline industries have less severe layoffs than firms in employment growth
industries.

Hypothesis 2. Firms in employment decline industries have more frequent layoffs than firms in employment growth
industries.

2.2.2 | Downsizing alternatives

An organisation can engage in layoffs as a knee-jerk reaction to perceived or actual uncertainty or after considering layoff
alternatives, including natural attrition, work-term changes, and internal labour mobility initiatives (Cascio et al., 2021;
Dessler & Chhinzer, 2019; Johnstone, 2023). Natural attrition allows vacancies to remain unfilled, reducing headcount
without additional severance or layoff notice costs, albeit relinquishing control over which employees exit (Dessler &
Chhinzer, 2019). Work-term changes, including reduced hours and work-sharing, offer temporary solutions but are
legally complex (Cascio, 2014; Dessler & Chhinzer, 2019). Internal labour mobility enables resource reallocation within
the organisation but requires skill realignment and potentially incurs training costs (Chhinzer, 2021). Such mobility can
also trigger legal considerations if terms of employment are adversely affected. Firms in declining industries may prioritise
layoffs over alternatives due to the prevalence of job loss among referent firms. Conversely, firms in growing industries
may perceive layoffs as violating social exchange norms, thus use more layoff alternatives to mitigate unemployment risk.

Hypothesis 3. Firms in employment decline industries use fewer layoff alternatives than firms in employment
growth industries.
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
10 CHHINZER

2.2.3 | Downsizing explanations

Two crucial factors merit consideration when evaluating downsizing explanations: adequacy and underlying ration-
ale. The quantity of information provided is an objective metric for explanation adequacy, positively affecting recipi-
ents' perceptions (Bies, 2013). Firms in declining industries may offer less detailed justifications, viewing layoffs as a
normative practice. Conversely, firms in growing industries might focus on mitigating reputational damage, thus likely
disseminate more comprehensive information about events that violate employee expectations (Bies, 2013; Zdaniuk
& Chhinzer, 2019).
Comparative analysis of layoff reasons offers additional evaluative insight. Hallock et al. (2012) identify five
primary layoff reasons: reorganisation, cost issues, plant closing, slump-in-demand, and ‘other’ (residual reasons cate-
gory). Firms in job growth industries may cite reorganisation and cost issues more frequently, framing layoffs as
efficiency-enhancement improving firm competitiveness during growth. Alternatively, demand-deficiency reasons
(plant closing, slump-in-demand, or other) may be more common in job decline industries, as these reasons legitima-
tise layoffs by signalling exogenous or shared challenges.

Hypothesis 4. Firms in employment decline industries provide less explanation than firms in employment growth
industries.

Hypothesis 5a. Firms in employment decline industries provide more efficiency-enhancement reasons than firms in
employment growth industries.

Hypothesis 5b. Firms in employment decline industries provide less demand-decline reasons than firms in employ-
ment growth industries.

2.2.4 | Advance notice

Two pivotal dates—the downsizing notice and employment termination—demarcate the ‘while-downsizing’ phase,
with the intervening period constituting advance notice. For firms in employment decline industries, the finan-
cial burden of extended notice—approximately 0.5% of an employee's loaded labour rate per additional day—may
outweigh its benefits, especially given the institutionalisation of job loss at the industry-level. Conversely, firms in
employment growth industries may provide extended advance notice to uphold social exchange norms, emphasising
their commitment to employee wellbeing.

Hypothesis 6. Firms in employment decline industries provide less advance notice than firms in employment growth
industries.

2.2.5 | Firm characteristics

Unionised workers generally benefit from collective bargaining agreements, which often include details about when
layoffs are permissible. These agreements also incorporate wage contracts that constrain an organisation's ability
to enact wage reductions or freezes (Kahn, 2012). However, the impact of such protections may vary depending on
external labour market conditions. Specifically, during periods of industry decline, layoffs may be externally legiti-
mised, prompting unionised firms to adopt layoffs as a strategy for cost-containment in response to external volatility.
Conversely, in industries experiencing employment growth, firms may encounter greater restrictions on their ability to
implement layoffs, constrained by the terms of the collective agreement and prevailing union-employer expectations.
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 11

Aligned with institutional theory, larger firms may execute layoffs more quickly as a cost-cutting measure, view-
ing layoffs as a way to appease shareholders through demonstrating decisive action, essentially mimicking referent
firms (McKinley et al., 2014). In contrast, smaller firms have less public scrutiny and visibility but more informal or
personalised relationships than larger firms.

Hypothesis 7. Firms in employment decline industries are more unionised than firms in employment growth
industries.

Hypothesis 8. Firms in employment decline industries are larger than firms in employment growth industries.

3 | METHOD

3.1 | Sample

Data for this study, obtained through a Memorandum of Understanding with the Ontario Ministry of Labour, Immi-
gration, Training and Skills Development (OMLITSD), span from March 2013 to May 2019. The dataset reflects 573
mass layoff events among 352 unique companies with coverage across all 18 North American Industry Classification
System industries (NAICS).
Organisations operating in Ontario, Canada executing mass layoffs (defined as 50 employees laid off in 4 weeks)
must provide a mass layoff notice to the OMLITSD pre-layoff through a Form 1 (Employment Standards Act, 2000).
Legally, notice of mass termination is not considered effective until the employer submits this 2-page fillable pdf
document (publicly available online). 1 As mandated by the Employment Standards Act (2000), the completed Form 1
must be posted where it is expected to come to the employees' attention, thus serving as the formal layoff announce-
ment to employees. Page 1 contains key information such as the number of employees (current and targeted for
layoff), company details, address, and specified layoff dates. Open-ended sections inquire about economic circum-
stances and layoff alternative descriptions. The name, title, and contact information of the employer representative
to contact about the form is also required. There are no sections for additional information, and no sections are
mandatory.
Three raters (two graduate research assistants and a professor) coded open-ended text information regarding
explanations and alternatives. When multiple reasons or alternatives were provided, all were coded. Explanations
had 98% interrater agreement, and alternatives had 100% interrater agreement. Discrepancies were discussed until
a consensus was reached.
Industry affiliation was ascertained using a 2-digit NAICS code (2017, version 3), drawing from Datastream,
Compustat, the Canadian Company Capability Database, and company websites (in descending priority).
The dataset includes layoff events affecting 86,288 employees, approximately 1.46% of Ontario's full-time work-
force (Statistics Canada, 2022). Firm size ranges from 50 to 7441 employees (m = 372.57, s = 811.96), and layoff size
ranges from 50 to 3911 employees (m = 150.85, s = 263.68). Table 2 provides descriptive statistics at three levels:
pooled sample, employment decline versus growth industries, and the 2-digit NAICS industry level. Overall, Ontar-
io's employment increased by an average of 1.80% annually (industry average range −7.04% to 6.69%). The average
year-over-year employee change was −2.45% for declining industries and 2.47% for growing industries. Notably,
76.27% of layoffs occurred in growing industries and 23.73% in declining ones. Nearly half of these layoffs were in
the manufacturing and retail trade industries, reflecting Ontario's two largest industries (in terms of employment)
(Statistics Canada, 2022).
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
12 CHHINZER

TA B L E 2 Descriptive statistics: Annual employment change, frequency, and layoff size based on industry.

Average annual Frequency in Total layoff size c

Industry affiliation a
employment change (%) b sample c (employees)
Aggregated total 1.80 (0.92 to 2.33) 573 150.85 (50–3911)
Employment decline industries −2.45 (−7.04 to −0.01) 136 (23.73) 169.54 (50–1762)
Employment growth industries 2.47 (0.13 to 6.69) 437 (76.27) 145.02 (50–3911)
Agriculture, forestry, fishing and hunting (11) −1.46 (−7.04 to 3.85) 1 (0.17) 55.00
Mining, quarrying, and oil and gas extraction (21) 0.76 (−3.48 to 4.96) 9 (1.57) 87.78 (50–165)
Utilities (22) 0.27 (−4.00 to 6.69) 1 (0.17) 70.00
Construction (23) 3.31 (1.83 to 4.37) 15 (2.62) 149.33 (58–314)
Manufacturing (31) 0.70 (−0.64 to 2.56) 179 (31.24) 153.91 (50–1810)
Wholesale trade (41) 1.32 (−0.64 to 2.35) 25 (4.36) 105.80 (50–334)
Retail trade (44–45) 2.49 (1.18 to 5.55) 106 (18.50) 187.88 (50–3911)
Transportation and warehousing (48) 1.36 (−6.50 to 3.68) 38 (6.63) 216.92 (51–1762)
Information and cultural industries (51) 1.77 (0.87 to 2.72) 42 (7.33) 104.81 (50–294)
Finance and insurance (52) 2.31 (−2.52 to 5.90) 9 (1.57) 81.33 (54–156)
Real estate and rental and leasing (53) 3.21 (1.77 to 5.32) 6 (1.05) 94.50 (65–139)
Professional, scientific and technical services (54) −2.59 (−6.00 to 1.76) 38 (6.63) 160.39 (52–1372)
Management of companies and enterprises (56) 1.83 (−0.01 to 5.36) 41 (7.16) 162.63 (52–544)
Educational services (61) 1.92 (0.95 to 2.90) 3 (0.52) 58.50 (50–67)
Health care and social assistance (62) 2.37 (0.87 to 4.41) 12 (2.09) 97.42 (62–291)
Accommodation and food services (72) 3.28 (1.10 to 5.42) 39 (6.81) 111.44 (50–377)
Other services (except public administration) (81) 0.53 (−2.08 to 2.34) 5 (0.87) 89.00 (59–117)
Public administration (91) 0.66 (−1.54 to 3.26) 4 (0.70) 60.25 (52–72)
Values in parentheses represent 2-digit NAICS affiliation.
a

b
Values in parentheses represent frequency as a percentage of the total sample.
Values in parentheses represent the range of annual employment change from 2013 to 2019, lagged 1-year.
c

3.2 | Independent variables

Industry Employment Decline/Growth indicates the year-over-year change in total industry employment in
Ontario, as reported by Statistics Canada (2022), lagged by 1 year (aligned with Le et al., 2023; Muñoz-Bullón &
Sánchez-Bueno, 2014). Positive and negative values denote gain/growth and loss/decline, respectively.

3.3 | Dependent variables

Layoff severity represents the number of employees laid off divided by the total employees pre-layoff (Chhinzer, 2021;
Cregan et al., 2021; Muñoz-Bullón & Sánchez-Bueno, 2014). It includes all hourly, salaried and other employees (as
identified by the employer).
Layoff frequency represents the number of layoff events per organisation over the study period (Budros, 1999;
Muñoz-Bullón & Sánchez-Bueno, 2014; Shi et al., 2023).
Advance notice denotes the number of calendar days between the layoff announcement and execution date
(Chhinzer, 2014).
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 13

Explanation word count indicates the number of words in the layoff explanation.
Total explanations reflects the total number of explanations in each layoff announcement.
Explanation type represents the coding of explanations as reorganisation, cost issues, plant closing,
slump-in-demand, and ‘other’ (residual reasons category) (Hallock et al., 2012).
Efficiency-enhancement reasons sum the occurrences of reorganisation and cost-issue reasons (Hallock
et al., 2012).
Demand-decline reasons sum the occurrences of slump-in-demand, plant closing and other reasons (Hallock
et al., 2012).
Alternative type categories were coded from the alternatives discussed, implemented or considered as attrition,
work-term changes and internal transfers (Chhinzer, 2021).
Total alternatives represents the number of layoff alternatives discussed, implemented or considered for each
event.
Unionisation is a dichotomous variable: 1 is unionised, and 0 is non-unionised jobs.
Firm size reflects the total number of employees pre-layoff (Shi et al., 2023). Preliminary data analysis indicated
potential skewness of the absolute value of firm size, thus logarithmic transformation was applied to this variable
(Lütkepohl & Xu, 2012).

3.4 | Analytical strategy

Data analysis was performed using IBM SPSS Statistics, version 29.0. The Mann–Whitney U test, also termed
the Wilcoxon rank-sum test, was judiciously selected as an appropriate data analysis tool to explore differences
in employment loss versus gain industries for the hypothesised nominal and continuous dependent variables
(layoff severity, frequency, advance notice, explanation word count, total explanations, demand-decline reasons,
efficiency-enhancement reasons, total alternatives, unionisation, and firm size). Four dataset conditions bolster the
case for employing this test: independent samples, unequal variance, unequal sample sizes, and non-normal distri-
bution (Conover, 1999; Mann & Whitney, 1947). Firstly, the Mann–Whitney U test is a non-parametric test used
to compare means between two categorical groups with independent observations and multiple dependent varia-
bles (Mann & Whitney, 1947; Siegel & Castellan, 1988), which aligns with this research design. Secondly, Levene's
test highlighted heterogeneity necessitating non-parametric tests (Levene, 1960). Thirdly, the data includes unequal
sample sizes in employment gain versus loss industries. The Mann–Whitney test does not mandate equal sample
sizes, only that each group surpasses 40 observations, facilitating 2-sided asymptotic p-values and z-scores for rigor-
ous inferential analysis (Mann & Whitney, 1947). Lastly, data visualisation confirmed non-normal distribution of the
data, and this test is robust enough for nonnormally distributed data (Conover, 1999).
Chi-squared independence tests evaluated between-group differences in the categorical classifications of expla-
nations and alternatives, contributing insights through the final contingency table featuring frequencies and row
percentages.

4 | RESULTS

Pearson correlation matrices, illustrating correlation coefficients of the study's variables, are shown in Tables 3 and 4,
categorised by industries experiencing job decline or growth. Missing data was systematically excluded via listwise
deletion. Zero-order correlation analysis reveals no multicollinearity concerns.
Table 5 delineates the means, standard deviations, z-scores, and p-values for variables related to downsizing
implementation for three amalgamations (the pooled sample, job loss vs. gain industries, and 2-digit NAICS code).
Regarding downsizing scope, firms in growing industries demonstrate greater layoff severity declining industries
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
14 CHHINZER

TA B L E 3 Correlation matrix of variables for employment decline industries.

Variable n 1 2 3 4 5 6 7 8 9
1. Layoff severity 136 —
2. Layoff frequency 136 −0.35** —
3. Advance notice 134 0.06 −0.08 —
4. Explanation word count 136 0.03 −0.09 −0.04 —
5. Total explanations 136 −0.01 −0.15 0.09 0.32** —
6. Efficiency-enhancement 136 −0.08 −0.20* 0.02 0.09 0.45** —
reasons
7. Demand-decline reason 136 0.07 0.07 0.07 0.19* 0.43** −0.62** —
8. Alternatives 136 −0.03 0.31** −0.08 0.12 0.02 0.09 −0.07 —
9. Unionisation 136 −0.01 0.44** −0.02 −0.14 −0.04 −0.09 0.05 0.10 —
10. Firm size 134 −0.39** −0.22 0.03 0.05 −0.01 0.05 −0.06 −0.13 0.10
*p < 0.05; **p < 0.01; two-tailed.

TA B L E 4 Correlation matrix of variables for employment growth industries.

Variable n 1 2 3 4 5 6 7 8 9
1. Layoff severity 437 —
2. Layoff frequency 437 −0.12* —
3. Advance notice 419 0.03 0.06 —
4. Explanation word count 434 −0.10* −0.08 −0.06 —
5. Total explanations 437 −0.04 0.10* −0.01 0.16** —
6. Efficiency-enhancement 437 −0.25** 0.09 −0.09* 0.19** 0.47** —
reasons
7. Demand-decline reason 437 0.24** −0.01 0.09 −0.07 0.33** −0.68** —
8. Alternatives 437 −0.14** 0.01 −0.07 0.21** 0.04 0.17** −0.15** —
9. Unionisation 437 −0.10* 0.09 0.02 0.00 0.00 −0.06 0.06 −0.10* —
10. Firm size 433 −0.51** 0.09 −0.02 0.10* 0.00 0.22* −0.23** 0.11* 0.05
*p < 0.05; **p < 0.01; two-tailed.

(m = 71.68%, s = 33.70; m = 64.45%, s = 32.19, respectively). Aligning with Hypothesis 1, the mean difference is
statistically significant, z = −2.85, p < 0.01. The majority (98.86%) of employers provided layoff severity information.
Although firms in declining industries exhibit higher layoff frequency, this difference lacks statistical significance,
rendering Hypothesis 2 unsupported. All forms contained company identification data.
Contrary to Hypothesis 3, firms in declining industries consider fewer layoff alternatives than those in growing
industries (m = 0.32, s = 0.57; m = 0.47, s = 0.62; z = −2.93, p < 0.01) (see Table 5). Only 31.06% of layoff events
(n = 196) contained data in one or more alternative options information boxes. Chi-squared analysis reveals no
variation in attrition and work term changes (Table 6). However, firms in declining industries utilise internal transfers
11.58% less than expected, whereas those in growing industries employ this option 33.33% more than expected
(p = 0.01).
The word count for layoff explanations approached statistical significance, with firms in growing industries
offering more detailed explanations than those in declining industries (m = 19.29, s = 25.62; m = 14.51, s = 19.24;
z = −1.86, p = 0.06), providing moderate support to Hypothesis 4. Most employers provided economic circumstances
information (93.89%).
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 15

TA B L E 5 Independent samples Mann–Whitney U tests: Employment decline versus growth industries.

Pooled sample Employment decline Employment growth Mann–

(n = 573) industries (n = 136) industries (n = 437) Whitney U

Variable M SD M SD M SD z p
Downsizing scope
Layoff severity (H1) 69.99 33.14 64.45 32.19 71.68 33.70 −2.85 <0.01
Layoff frequency (H2) 3.14 3.30 3.07 3.40 3.16 3.27 −0.09 0.93
Layoff alternatives (H3) 0.36 0.58 0.47 0.62 0.32 0.57 −2.93 <0.01
Layoff explanation
Explanation word count (H4) 18.15 24.32 14.51 19.24 19.29 25.62 −1.86 0.06
Total explanations 1.07 0.44 1.04 0.44 1.08 0.45 −1.14 0.26
Demand-decline reasons (H5a) 0.69 0.52 0.78 0.47 0.67 0.53 −2.32 0.02
Efficiency-enhancement reasons (H5b) 0.38 0.55 0.26 0.47 0.42 0.57 −2.95 <0.01
Advance notice (H6) 77.24 94.35 85.33 86.41 74.66 96.71 −1.09 0.28
Firm conditions
Unionisation (H7) 0.35 0.48 0.45 0.50 0.32 0.47 −2.77 <0.01
Firm size (H8) 2.27 0.43 2.34 0.44 2.25 0.42 −2.40 0.02

TA B L E 6 Contingency table of alternatives used in layoff events.

Industry-level employment change

Layoff alternatives Decline Growth Row totals

Attrition 6 15 21
(28.6) (71.4) (10.7)
Work term changes 11 25 36
(30.6) (69.4) (18.4)
Internal transfers* 44 95 139
(31.7) (68.3) (70.9)
Column totals 61 135 196
(31.1) (68.9)
Note: Values in parentheses indicate percentage of group total.
*Indicates statistically significant differences (p < 0.05).

While the number of layoff explanations did not differ between industries, significant differences arose in expla-
nation types. Supporting Hypotheses 5a and 5b, firms in growth industries provide more efficiency-enhancement
reasons (m = 0.42, s = 0.57 and m = 0.26, s = 0.47, respectively; z = −2.95, p < 0.01) and fewer demand-decline
reasons (m = 0.67, s = 0.53 and m = 0.78, s = 0.47, respectively; z = −2.32, p = 0.02) than those in declining indus-
tries. The results bolstered support for Hypotheses 5a and 5b. Chi-squared analyses indicate significant associa-
tions between industry employment change and the provision or omission of layoff explanations (χ2(3) = 10.26,
p = 0.02), and their categorisations (χ2(1) = 7.46, p = 0.02), as detailed in Table 7. Firms in declining industries
underuse slump-in-demand reasons by 14.76% and overuse reorganisation and cost-control reasons by 8.16% and
15.61%, respectively (p < 0.05). Conversely, firms in growing industries overuse slump-in-demand reasons by 47.49%
and underuse reorganisation and cost-control reasons by 26.25% and 50.31%, respectively (p < 0.05).
The results reveal no significant difference in advance notice periods between industries undergoing growth or
decline, failing to support Hypothesis 6. Most firms (96.51%) provided data to calculate this variable.
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
16 CHHINZER

TA B L E 7 Contingency table of explanations provided for downsizing events.

Industry-level employment change

Category Reason Decline Growth Row totals

Demand decline Slump-in-demand* 50 93 143
(34.9) (65.1) (36.9)
Demand decline Plant closing 37 141 178
(20.8) (79.2) (45.9)
Demand decline Other 19 48 67
(28.4) (71.6) (17.3)
Demand decline total* 106 282 388
(27.3) (72.7) (64.8)
Efficiency enhancement Reorganization* 25 118 143
(17.5) (82.5) (66.3)
Efficiency enhancement Cost issues* 8 60 68
(11.8) (88.2) (33.7)
Efficiency enhancement total* 33 178 211
(15.6) (84.4) (35.2)
Column totals 139 460 599
(23.2) (76.8)
Note: Values in parentheses indicate percentage of group total.
*Indicates statistically significant differences (p < 0.05).

Regarding firm characteristics, layoffs in growth industries occur less in unionised firms (m = 0.32, s = 0.47 and
m = 0.45, s = 0.50, respectively; z = −2.77, p < 0.01) and tend to happen in smaller firms (m = 347.41, s = 742.79 and
m = 453.87, s = 1002.40, respectively; z = −2.40, p = 0.02) when compared with decline industries, corroborating
hypotheses 7 and 8.

5 | DISCUSSION AND CONCLUSION

Although corporate layoffs are one of the most popular radical management strategies to adapt to changing internal
and external environments, downsizing is an evolving phenomenon, changing in use, nature and legitimacy over
time (Asante et al., 2022; Johnstone, 2023; Shi et al., 2023). Recently, researcher and managerial mindsets regarding
the acceptability of layoffs as a business practice diverged (Asante et al., 2022; Cascio, 2014; Datta et al., 2010;
Johnstone, 2023; Shi et al., 2023). This study helps to reconcile these divergent views by providing a nuanced view of
layoffs as a complex strategic decision shaped by industry dynamics. This investigation into the contrasting practices
of layoffs in industries with varying employment trends provides five significant theoretical contributions to the fields
of labour economics and HRM.
First, the study challenges the traditional reactive understanding of layoffs, typically seen as a response to
organisational decline or failure, by introducing a strategic perspective, situating layoffs within a broader insti-
tutional framework. In doing so, the study offers a contemporary reevaluation of layoffs, positing them as stra-
tegic manoeuvres shaped by the interplay between industry norms and individual firm policies, rather than mere
reactions to financial distress. The results support the position of this research: that industry-level employment
fluctuations may partially explain diverse viewpoints regarding layoffs and associated job loss risk within organ-
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 17

isational parameters. This adds depth to the discourse on institutional pressures, showing how industry shifts
compel organisations to adapt their workforce strategies in alignment with these broader trends (Muñoz-Bullón &
Sánchez-Bueno, 2014).
Second, the paper enriches institutional theory by applying it to analyse layoffs, highlighting how firms in
declining industries are influenced by institutional isomorphism, leading to layoffs as a normative response, while
those in growing industries view layoffs through the lens of social exchange theory, focusing on maintaining recip-
rocal employee relationships. When industry-level job loss risk is high, firms opt for less severe layoffs to minimise
associated costs and favour internal transfers, thereby preserving financial resources and maintaining investments
in human capital (Chhinzer & Currie, 2014; Zdaniuk & Chhinzer, 2019). In contrast, firms in growing industries
focus on maintaining employer-employee relationships when implementing layoffs, but often at a higher cost. For
example, layoff explanations highlight efficiency-enhancement reasons, indicating a strategic necessity for layoffs
in these contexts. This dual perspective, contrasting cost-containment motivations with employee relationship
concerns, provides a more holistic understanding of the layoff process, acknowledging its complexity and strategic
underpinnings.
Third, this research contributes to calls for bridging human resource and economic or financial perspectives to
develop a deeper understanding of the complex downsizing process (De Meuse & Dai, 2013; McKinley et al., 2000).
By examining how layoffs are executed in different industry contexts, the study reveals the convergence of financial
considerations (cost-containment) and HR concerns (employee relations and morale). This blended perspective is
crucial in understanding the multifaceted nature of layoffs, where financial imperatives intersect with the human
element of organisational management.
Fourth, the paper addresses a critical research gap by focusing on the ‘while-downsizing’ phase, a less explored
aspect in layoff research (Zdaniuk & Chhinzer, 2019). Previous studies have primarily concentrated on the anteced-
ents and outcomes of layoffs, often overlooking the intricacies involved in the process of implementing layoffs (Datta
et al., 2010). By examining various elements like downsizing scope, explanations, alternatives, advance notice, and
firm characteristics, the research provides a detailed insight into the complexities of layoff execution. This approach
is particularly valuable in understanding how different firms navigate the layoff process, influenced by their industry
context.
Fifth, aligned with institutional theory, this research offers novel empirical insight into how industry-level
employment changes act as isomorphic pressures during periods of organisational change, directly influencing
organisational decisions regarding layoff strategies employed. It emphasises the need for future research to consider
industry-specific pressures when evaluating broader organisational change strategies, echoing the works of Brauer
and Zimmermann (2019) and Carmeli and Sheaffer (2009).
Methodologically, the study leverages a comprehensive and inclusive dataset, allowing for a detailed explora-
tion of layoff strategies and overcoming methodological challenges prevalent in previous literature (Muñoz-Bullón
& Sánchez-Bueno, 2014). By analszing layoffs based on direct employer-to-employee communications, the research
underscores the importance of examining layoffs holistically.

5.1 | Implications and limitations

While organisational leaders and strategists generally recognise deleterious effects of layoffs on employees (Carmeli
& Sheaffer, 2009; Ji et al., 2014; Johnstone, 2023), the absence of layoff implementation protocols can create
management confusion and dissonance. This research informs managers that job loss or gain among referent firms
(industry-level) manifests in differences in firm-level layoff implementation, including layoff severity, the provision
of explanations, the types of alternatives used, and the reasons for the layoffs. These differences indicate varying
acceptance levels of employer-initiated employment instability (via layoffs) influenced by industry-level employment
changes.
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
18 CHHINZER

As an imperative caveat, leaders should ensure that human capital interventions align with immediate and
long-term organisational strategies and are not just mimetic responses to external volatility (Cascio et al., 2021). If
industry-level employment dynamics legitimise layoffs, managers should balance the preservation of investment in
human capital with cost-containment objectives. Absent industry-wide mimetic pressures (McKinley et al., 2000),
managers should consider extended compensation (notice periods or severance pay) to mitigate perceived social
exchange violations, particularly when exogenous circumstances precipitate layoffs.
This study has several limitations. First, the data timeline is confined to the pre-COVID-19 era, but it remains
uncertain which post-COVID-19 changes to layoff practices will be ephemeral or enduring. Future research
would benefit from longitudinal data to assess shifts in downsizing strategies pre- and post-COVID-19. Analysis
over longer time periods or case-based research can deepen our understanding of layoffs. Furthermore, this
research serves as an initial inquiry into this emergent line of research, thus only direct effects were analysed,
limited to the variables accessible via employer layoff notices. Downsizing is a complex research realm, and
macro-environmental, industry, and organisational factors impact employee downsizing decisions, processes and
survivor characteristics (Datta et al., 2010). Subsequent studies should explore the moderating influence of vari-
ables, specifically how firm-specific characteristics such as firm attributes (e.g., firm performance, reputation),
strategy (e.g., business strategy, diversification level), governance (e.g., Chief Executive Officer [CEO] or Board
characteristics), and HR policies (e.g., employee compensation, workforce composition) vary and if industry-level
differences exist (see Datta et al., 2010 for a detailed review). Additionally, macroeconomic factors such as unem-
ployment rates, legislative shifts, and technology adoption may also impact firm-level layoff decisions and require
further study.
Methodologically, industry-specific data analysis (2-digit NAICS codes) was not possible due to the small sample
size at the unique industry level. Moreover, multiple layoff events originated from the same organisation (captured
in the layoff frequency variable), possibly introducing dependencies such that layoff events within companies were
more similar than those between companies. Therefore, qualitative methodologies including interviews with employ-
ers or employees could validate and enrich the dataset. Lastly, Canada's metrics on employment rate, labour market
insecurity, and productivity growth align closely with the Organization for Economic Cooperation and Development
(OECD) average (OECD, 2018), suggesting that the study's findings offer broad applicability regarding layoff imple-
mentation. Nonetheless, additional research in diverse settings remains crucial to meaningfully contribute to this
ongoing discourse due to the complex and context-dependent nature of layoffs—encompassing factors such as
employment norms, legal frameworks, and economic conditions.

ACKNOWLE DG E ME NTS
This work was supported by Canada's Social Sciences and Humanities Research Council (SSHRC) Insight Develop-
ment Grant (#430650). The author thanks the editor, two anonymous reviewers and Akierah Binns for providing
insightful comments, meaningfully improving this manuscript.

DATA AVAI LABI LI TY STATE M E N T

The data that support the findings of this study are available from Ontario Ministry of Labour, Immigration, Training,
& Skills. Restrictions apply to the availability of these data, which were used under license for this study. Data are
available from the author(s) with the permission of Ontario Ministry of Labour, Immigration, Training, & Skills.

O RC ID
Nita Chhinzer https://orcid.org/0000-0003-1843-1143
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
CHHINZER 19

EN D NOTE
1
https://forms.mgcs.gov.on.ca/en/dataset/016-1552.

R EF ERE NCE S
Asante, E. A., Oduro, F., Danquah, B., Dei Mensah, R., Dartey-Baah, K., & Affum-Osei, E. (2022). From being sacked to being
unwell: A conservation of resources view on the effects of psychological contract violation on layoff victims’ wellbeing.
Human Resource Management Journal, 33(2), 362–383. https://doi.org/10.1111/1748-8583.12442
Baumol, W. J., Blinder, A. S., & Wolff, E. N. (2003). Downsizing in America: Reality, causes, and consequences. Russell Sage Foun-
dation. https://doi.org/10.7758/9781610440318
Bies, R. J. (2013). The delivery of bad news in organizations: A framework for analysis. Journal of Management, 39(1), 136–162.
https://doi.org/10.1177/0149206312461053
Blau, P. M. (2017). Exchange and power in social life. Routledge. https://doi.org/10.4324/9780203792643
Brauer, M., & Zimmermann, M. (2019). Investor response to workforce downsizing: The influence of industry
waves, macroeconomic outlook, and firm performance. Journal of Management, 45(5), 1775–1801. https://doi.
org/10.1177/0149206317734901
Budros, A. (1997). The new capitalism and organizational rationality: The adoption of downsizing programs, 1979–1994.
Social Forces, 76(1), 229–250. https://doi.org/10.1093/sf/76.1.229
Budros, A. (1999). A conceptual framework for analyzing why organizations downsize. Organization Science, 10(1), 69–82.
https://doi.org/10.1287/orsc.10.1.69
Budros, A. (2000). Organizational types and organizational innovation: Downsizing among industrial, financial, and utility
firms. Sociological Forum, 15(2), 273–306. https://doi.org/10.1023/A:1007521608402
Budros, A. (2002). The mean and lean firm and downsizing: Causes of involuntary and voluntary downsizing strategies. Soci-
ological Forum, 17(2), 307–342. https://doi.org/10.1023/A:1016093330881
Campion, M. A., Guerrero, L., & Posthuma, R. (2011). Reasonable human resource practices for making employee downsizing
decisions. Organizational Dynamics, 40(3), 174–180. https://doi.org/10.1016/j.orgdyn.2011.04.004
Cappelli, P. (1999). The new deal at work: Managing the market-driven workforce. Harvard Business School Press.
Carmeli, A., & Sheaffer, Z. (2009). How leadership characteristics affect organizational decline and downsizing. Journal of
Business Ethics, 86(3), 363–378. https://doi.org/10.1007/s10551-008-9852-7
Cascio, W. F. (2014). Alternatives to downsizing: Efforts in responsible restructuring. Labor and Employment Relations Associa-
tion. Cooperative employment relations to preserve jobs: Responsible restructuring practices and shared work, Port-
land, OR. http://www.lerachapters.org/OJS/ojs-2.4.4-1/index.php/EPRN/article/view/1853
Cascio, W. F., Chatrath, A., & Christie-David, R. A. (2021). Antecedents and consequences of employee and asset restructur-
ing. Academy of Management Journal, 64(2), 587–613. https://doi.org/10.5465/amj.2018.1013
Cavale, S. (2023, March 23). Exclusive: Walmart laying off hundreds of US workers at five e-commerce fulfillment centers. Reuters.
https://www.reuters.com/business/retail-consumer/walmart-laying-off-hundreds-us-workers-five-e-commerce-ful-
fillment-centers-2023-03-23/
Chhinzer, N. (2014). The role of reasonable notice legislation in organizational downsizing decisions in Canada. International
Journal of Law and Management, 56(5), 387–392. https://doi.org/10.1108/IJLMA-06-2011-0002
Chhinzer, N. (2021). Contrasting voluntary versus involuntary layoffs: Antecedents and outcomes. Canadian Journal of Admin-
istrative Sciences, 38(2), 177–192. https://doi.org/10.1002/cjas.1594
Chhinzer, N., & Currie, E. (2014). Assessing longitudinal relationships between financial performance and downsizing.
Management Decision, 52(8), 1474–1490. https://doi.org/10.1108/MD-05-2014-0280
Conover, W. J. (1999). Practical non-parametric statistics (3rd ed.). Wiley.
Coucke, K., Pennings, E., & Sleuwaegen, L. (2007). Employee layoff under different modes of restructuring exit, downsizing or
relocation. Industrial and Corporate Change, 16(2), 161–182. https://doi.org/10.1093/icc/dtm002
Cregan, C., Kulik, C. T., Johnston, S., & Bartram, T. (2021). The influence of calculative (“hard”) and collaborative (“soft”) HRM
on the layoff-performance relationship in high performance workplaces. Human Resource Management Journal, 31(1),
202–224. https://doi.org/10.1111/1748-8583.12291
Datta, D. K., Guthrie, J. P., Basuil, D., & Pandey, A. (2010). Causes and effects of employee downsizing: A review and synthesis.
Journal of Management, 36(1), 281–348. https://doi.org/10.1177/0149206309346735
De Meuse, K. P., & Dai, G. (2013). Organizational downsizing: Its effect on financial performance over time. Journal of Mana-
gerial Issues, 25(4), 324–344. http://www.jstor.org/stable/43489371
Dessler, G., & Chhinzer, N. (2019). Human resources management in Canada (14th ed.). Pearson Canada. https://www.pearson.
com/store/p/human-resources-management-in-canada-fourteenth-canadian-edition/P100002580566
Employment Standards Act, 2000, S.O. 2000, c. 41 (2000). https://www.ontario.ca/laws/view
Guthrie, J. P. (2001). High-involvement work practices, turnover, and productivity: Evidence from New Zealand. Academy of
Management Journal, 44(1), 180–190. https://doi.org/10.5465/3069345
 17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
20 CHHINZER

Guthrie, J. P., & Datta, D. K. (2008). Dumb and dumber: The impact of downsizing on firm performance as moderated by
industry conditions. Organization Science, 19(1), 108–123. https://doi.org/10.1287/orsc.1070.0298
Hallock, K. F., Strain, M. R., & Webber, D. (2012). Job loss and effects on firms and workers. In C. Cooper, A. Pandey, & J. C.
Quick (Eds.), Downsizing: Is less still more? (pp. 3–50). Cambridge University Press.
Harney, B., Fu, N., & Freeney, Y. (2018). Balancing tensions: Buffering the impact of organisational restructur-
ing and downsizing on employee wellbeing. Human Resource Management Journal, 28(2), 235–254. https://doi.
org/10.1111/1748-8583.12175
Ji, Y.-Y., Guthrie, J. P., & Messersmith, J. G. (2014). The tortoise and the hare: The impact of employment instability on firm
performance. Human Resource Management Journal, 24(4), 355–373. https://doi.org/10.1111/1748-8583.12052
Johnson, M., & Watt, L. (2022). Doing the right thing? An institutional perspective on responsible restructuring in UK local
government. Human Resource Management Journal, 32(1), 76–91. https://doi.org/10.1111/1748-8583.12351
Johnstone, S. (2023). Human resource management in recession: Restructuring and alternatives to downsizing in times of
crisis. Human Resource Management Journal, 1–20. https://doi.org/10.1111/1748-8583.12512
Kahn, L. M. (2012). Labor market policy: A comparative view on the costs and benefits of labor market flexibility. Journal of
Policy Analysis and Management, 31(1), 94–110. https://doi.org/10.1002/pam.20602
Lamberg, J.-A., Ojala, J., & Peltoniemi, M. (2018). Thinking about industry decline: A qualitative meta-analysis and future
research directions. Business History, 60(2), 127–156. https://doi.org/10.1080/00076791.2017.1340943
Le, H., Kibria, I., & Jiang, K. (2023). Is Chief Executive Officer optimistic belief bad for workers? Evidence from corporate employ-
ment decisions. Human Resource Management Journal, 33(3), 748–762. https://doi.org/10.1111/1748-8583.12521
Levene, H. (1960). Robust tests for equality of variances. In I. Olkin (Ed.), Contributions to probability and statistics: Essays in
honor of Harold Hotelling (pp. 278–292). Stanford University Press.
Lütkepohl, H., & Xu, F. (2012). The role of the log transformation in forecasting economic variables. Empirical Economics, 42(3),
619–638. https://doi.org/10.1007/s00181-010-0440-1
Mann, H. B., & Whitney, D. R. (1947). On a test of whether one of two random variables is stochastically larger than the other.
The Annals of Mathematical Statistics, 18(1), 50–60. https://doi.org/10.1214/AOMS/1177730491
McKinley, W., Latham, S., & Braun, M. (2014). Organizational decline and innovation: Turnarounds and downward spirals.
Academy of Management Review, 39(1), 88–110. https://doi.org/10.5465/amr.2011.0356
McKinley, W., Zhao, J., & Rust, K. G. (2000). A sociocognitive interpretation of organizational downsizing. Academy of Manage-
ment Review, 25(1), 227–243. https://doi.org/10.5465/AMR.2000.2791612
Muñoz-Bullón, F., & Sánchez-Bueno, M. J. (2014). Institutional determinants of downsizing. Human Resource Management
Journal, 24(1), 111–128. https://doi.org/10.1111/1748-8583.12017
OECD. (2018). Compare countries—OECD jobs strategy. https://www.oecd.org/employment/jobs-strategy/country/
Reuters. (2023, May 30). Goldman Sachs plans to cut under 250 jobs in coming weeks. Reuters. https://www.reuters.com/
business/finance/goldman-sachs-prepares-another-round-layoffs-wsj-2023-05-30/
Shi, W., Chen, G., & Li, B. (2023). Problem solving or responsibility avoidance? The role of CEO internal attribution tendency in
shaping corporate downsizing in response to performance shortfalls. Journal of Management Studies, 60(5), 1273–1301.
https://doi.org/10.1111/joms.12896
Siegel, S., & Castellan, N. J. (1988). Non-parametric statistics for the behavioral sciences (2nd ed.). McGraw-Hill.
Statistics Canada. (2022). Labour force characteristics by industry, annual. https://www150.statcan.gc.ca/t1/
tbl1/en/tv.action?pid=1410002301&pickMembers%5B0%5D=1.7&pickMembers%5B1%5D=2.2&pick-
Members%5B2%5D=4.1&pickMembers%5B3%5D=5.1&cubeTimeFrame.startYear=2017&cubeTimeFrame.
endYear=2021&referencePeriods=20170101%2C20210101
Steemers, F., Baltrus, W., & Eren, S. (2023, April 5). Job loss risk index: Which industries will suffer the greatest layoffs this
recession? The Conference Board. www.conference-board.org/topics/recession/industries-that-will-have-most-layoffs-
in-recession
Stringer, A. (2023, June 5). A comprehensive list of 2023 tech layoffs. TechCrunch. https://techcrunch.com/2023/06/05/
tech-industry-layoffs-2023/
Tsai, P. C.-F., Wu, S. L., Wang, H. K., & Huang, I. C. (2006). An empirical research on the institutional theory of downsiz-
ing: Evidence from MNC’s subsidiary companies in Taiwan. Total Quality Management and Business Excellence, 17(5),
633–654. https://doi.org/10.1080/14783360600588216
Ulaby, N. (2023, February 8). Disney’s Bob Iger is swinging the ax as he plans to lay off 7,000 workers worldwide. NPR. https://
www.npr.org/2023/02/08/1155556003/disney-layoffs-stock
Wagar, T. H. (1997). Factors affecting permanent workforce reduction: Evidence from large Canadian organizations. Canadian
Journal of Administrative Sciences, 14(3), 303–314. https://doi.org/10.1111/j.1936-4490.1997.tb00137.x
Zdaniuk, A., & Chhinzer, N. (2019). The effect of explanations and CEO presence on stock market reactions to downsizing.
Journal of Organizational Change Management, 32(4), 441–456. https://doi.org/10.1108/JOCM-06-2018-0161
17488583, 0, Downloaded from https://onlinelibrary.wiley.com/doi/10.1111/1748-8583.12543 by INASP/HINARI - PAKISTAN, Wiley Online Library on [11/02/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
21

How to cite this article: Chhinzer, N. (2023). Are layoffs an industry norm? Exploring how industry-level job
decline or growth impacts firm-level layoff implementation. Human Resource Management Journal, 1–21.
https://doi.org/10.1111/1748-8583.12543
CHHINZER