Character, Conformity, or the Bottom Line? How and Why Downsizing Affected Corporate Reputation

This study aims to illuminate processes of reputational change and to identify the theoretical mechanisms underlying it. We draw upon extant literature to develop three distinct explanations for reputational change, which emphasize criteria of organizational “character,” symbolic conformity, and technical efficacy, respectively. We evaluate these explanations by examining the reputational consequences of corporate downsizing. Our results show that downsizing exerted a strong negative effect on reputation, consistent with the character mechanism. However, this negative effect was significantly moderated by other factors including stock market reactions and downsizing‟s overall prevalence, indicating the need for a multi-theoretical approach to understanding reputational change.