Pyrrhic victories – anticipating the closedown effect

Abstract

Previous studies with empirical evidence on social responsible driven closedowns have identified a productivity increase effect that occurs during the process of organizational closedowns, known as the closedown effect. Our proposition is that this effect can be anticipated as a consequence of a closedown decision. Encountering four different non social responsible closedown cases, of various durations, we statistically test this proposition. Further, we identify a need for an analytical distinction of the phases of the closedown process, in terms of the primary ‘advanced notice period’ and the secondary ‘countdown period’. Based on the analysis, and with this distinction, we are able to conclude that the productivity increase effect can be anticipated during the countdown period. The comparably longer time frame in the Studding case provides the strongest support for our proposition. From the analysis we suggest hypotheses for further research.

Keywords:

• Decline
• closedown
• closedown effect
• productivity
• social responsibility