The role of mutual trust in effective downsizing strategies

Several factors that explain differences in the downsizing strategies utilized in organizations are examined in this study of 91 organizations in the automotive industry. Specifically, mutual trust within a top management team is positively associated with a strategy based on organization redesign. Mutual trust between members of an organization and its key customers and suppliers is positively associated with a strategy based on systemic change. Moreover, these two strategies are positively associated with performance outcomes in the areas of cost reduction and quality improvement.