Risk Propensity and Knowledge Sharing Intentions of Individuals in a Downsized Organization

Downsizing can be a traumatic event for any organization. Using Affective Events Theory (AET), this study examined how the emotional reactions of employees to downsizing can impact organizational outcomes. It concludes that the use of downsizing activities decreases organizational commitment while increasing perceived psychological contract violation. Further, it shows that these constructs have a respective positive and negative relationship with knowledge sharing behavior. It also concludes that these relationships hold true not only for individuals most vulnerable to downsizing, but also for those who the organization would consider immune to such actions. These results suggest that organizational downsizing activities not only negatively impact the emotional state of employees, but that such feelings translate into negative organizational outcomes and undesirable employee behavior. More importantly it shows that the negative effect of a downsizing event can impact an entire organization despite attempts to insulate most employees from these effects