Layoff Characteristics and Layoff Agents' Cognitions: An Experimental Study

Author

Chia-Jung Lin, Southern Illinois University CarbondaleFollow

Date of Award

5-2009

Degree Name

Doctor of Philosophy

Department

Business Administration

First Advisor

McKinley, William

Abstract

Organizational downsizing is a prevalent, cost-reduction corporate strategy that executives often use to deal with dynamic competitive environments. Several studies have examined the financial implications of downsizing by evaluating the relationship between downsizing strategies and organizational performance and/or profitability. Other researchers have focused upon the responses and behaviors of layoff victims, survivors, and managers as a result of downsizing. Relatively few studies however, have investigated the impacts of layoff characteristics on the cognitions of the managers who plan and implement organizational downsizing. It has been argued that the process of layoff implementation potentially generates dissonance for the layoff agents as a result of the requirement to perform actions that are inconsistent with their cognitions and beliefs concerning workplace norms and behaviors (Margolis & Molinsky, 2008; Parker & McKinley, 2008; Sronce & McKinley, 2006). This study builds upon Festinger's (1957) cognitive dissonance theory that individuals experiencing cognitive dissonance have motivation to adopt dissonance reduction strategies, such as changing their behaviors or their cognitions, in order to balance the conflict between their beliefs in managerial role and actions of implementing layoffs. Four hypotheses are proposed to compare responses among participants facing different layoff characteristics. More specifically, drawing upon the free-choice paradigm (Brehm, 1956) of cognitive dissonance theory (Festinger, 1957), I anticipate that the subjects who make a more difficult layoff decision under certain layoff circumstances will experience more cognitive dissonance and will be motivated to adopt more positive perceptions of downsizing as a dissonance-reduction method than those who make an easier layoff decision. To evaluate the above relationships, a two-by-two factorial between-subjects experiment with various layoff conditions was carried out to investigate the impacts of layoff attributes on layoff agency-induced cognitive dissonance and layoff agents' perceptions of downsizing. Multivariate Analysis of Covariance (MANCOVA) methods were performed with gender and family layoff victimhood as control variables. The analyses found supports for hypothesis 1 and 3. Namely, individuals who make more difficult layoff decisions tend to experience more cognitive dissonance. The results of this study draw attention to how different layoff attributes affect layoff agents' responses especially in terms of their cognitions.