Understanding the Impact of Organisational Downsizing on Knowledge Sharing

Careful consideration by managers of the potential impact of the popular strategy of economic restructuring (downsizing) on organisational structure and culture could improve the quality of organisational knowledge sharing, however this influence has not yet been addressed in the knowledge management literature. This paper explores how a strategy of downsizing may reshape organisational structure and culture and inhibit organisational knowledge sharing, drawing on an interpretive case study of knowledge sharing in an information technology services function at a large Australian education service provider. Key findings indicate that when specialised teams are downsized, subcultures may develop where teams become mistrustful and insular, and knowledge sharing is constrained across teams. Further, when a hierarchical structure is present and downsizing occurs, managers may become more cautious about sharing knowledge with subordinates. The study also suggests that Internet technologies may play a key role in helping to compensate for the shortfall in knowledge stock resulting from downsizing. In conclusion, this paper highlights an important need for companies to consider the potential negative influences of downsizing on organisational knowledge sharing.