Downsizing may not save company, but put it on a path to bankruptcy

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While downsizing may be capable of producing positive outcomes, such as saving money in the short term, it puts firms on a negative path that makes bankruptcy more likely, according to researchers from Auburn University, Baylor University, and the University of Tennessee, Chattanooga. In an article published in the Harvard Business Review, authors Michelle L Zorn, Patricia Norman, Frank C Butler and Manjot Bhussar pointed out that while downsizing is not always fatal, it does increase the chances of a firm declaring bankruptcy in future.
 
“We found that having plentiful financial and physical resources did not replace the downsized