Ethical Leadership In Workforce Downsizing: Implications For Sustainable Growth, Innovation, And Economic Development In An Asian Context
DOI:
https://doi.org/10.69980/vq440190Keywords:
Ethical Leadership, Workforce Downsizing, Sustainable Entrepreneurship, Innovation, Economic Development, SMEs, Sustainable GrowthAbstract
Purpose: Downsizing is a challenging strategic decision that affects organizational performance, employee wellbeing, and long-term sustainability. This study examines ethical leadership during workforce downsizing through an autoethnographic case study, highlighting its influence on employee experience, sustainable growth, CSR practices, and innovation. It further explores how ethical downsizing contributes to wider economic development, including SME engagement and entrepreneurial opportunities in the Asian context.
Design/methodology/approach: Drawing on Organizational Justice Theory and Stakeholder Theory, the study analyzes how fairness, transparency, empathy, and responsible communication shape employee responses. The research also incorporates perspectives from digital and sustainable leadership to understand how ethical decision-making can stimulate innovation, strengthen organizational resilience, and support community-level economic outcomes.
Findings: The results demonstrate that ethical leadership characterized by honesty, care, and procedural fairness reduces emotional stress, maintains trust, and protects organizational reputation during downsizing. Beyond internal outcomes, ethically managed downsizing encourages knowledge-sharing, supports workforce transitions that benefit SMEs, and creates conditions that may foster entrepreneurial activity and adaptive business models. The first-hand case evidence highlights how ethical leadership choices can promote organizational sustainability and regional economic stability.
Originality/value: This paper offers a rare autoethnographic perspective from an emerging Asian market, bridging theory and lived experience. By connecting ethical leadership to sustainable growth, innovation, CSR, and economic development, the study expands current downsizing literature.
Practical implications: Findings offer actionable guidance for leaders seeking to manage downsizing ethically through transparent communication, fair processes, and empathetic support while also contributing to sustainable practices, SME ecosystems, and community well-being.
Research limitations/implications: The study calls for further empirical research to examine how ethical downsizing influences entrepreneurship, SME development, and long-term economic outcomes across varied contexts.
References
1.Ali, S. (2023). The impact of ethical leadership on employee well-being with the moderating role of leadership mindfulness. Dinkum Journal of Economics and Managerial Innovations. https://www.dinkumpublishers.com/djemi/d-0051/
2.Appelbaum, S. H. (1997). Socio-economic impacts of downsizing: A review and synthesis of the literature. Journal of Management organizational change. Development, 16(7), 395–409. https://doi.org/10.1108/13620439710178639
3.Audretsch, D. B., & Link, A. N. (2018). Entrepreneurship and local economic development. Oxford University Press.
4.Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in analysis in psychology. Qualitative Research in Psychology, 3(2), 77–10. https://doi.org/10.1191/1478088706qp063oa
5.Brown, M. E., & Treviño, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly,17(6), 595–616. https://doi.org/10.1016/j.leaqua.2006.10.004
6.Cascio, W. F. (2016). Managing human resources: Productivity, quality of work life, profits (10th ed.). McGraw-Hill Education
7.Choi, I. (2025). The influence of ethical leadership on turnover intention and actual turnover in U.S. federal agencies. Public Personnel Management, 54(2). https://doi.org/10.1177/00910260251314543
8.Critchley, A. J. (2024). Digital leadership dynamics: Exploring the relationship of transformational leadership on employee engagement in hybrid work environments with an emphasis on digital competency. SSRN https://dx.doi.org/10.2139/ssrn.4943150
9.De Cremer, D., & Tenbrunsel, A. E. (2012). Behavioral ethics: A new approach to understanding ethical behavior in organizations. Journal of Management, 38(1), 93–117.
10.Foss, N. J., & Saebi, T. (2017). Fifteen years of 10.Foss, N. J., & Saebi, T. (2017). Fifteen years of research on business model innovation: How far have we come, and where should we go? Journal of Management, 43(1), 200–227. https://doi.org/10.1177/0149206316675927
11.Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston, MA: Pitman.
12.Hahn, T., Pinkse, J., Preuss, L., & Figge, F. (2014). Tensions in corporate sustainability. Journal of Business Ethics, 127(2), 297–316. https://doi.org/10.1007/s10551-014-2047-5
13.Johnson, R. (2022). Managing employee morale after organizational downsizing (Doctoral dissertation). ProQuest Dissertations Publishing.
14.Kaur, G., & Sharma, R. (2023). Downsizing or layoffs and its impact on the human resources of the organization. International Journal of Novel Research and Development, 2(3), 45–52.
15.Kniffin, K. M., et al. (2020). Downsizing and surviving employees’ engagement and strain: The role of job resources and job demands. Human Resource Management, 59(4), 365–378. https://doi.org/10.1002/hrm.22032
16.Miller, T. (2021). Strategies to support survivors of corporate downsizing (Doctoral dissertation). ProQuest Dissertations Publishing.
17.Parida, V., Sjödin, D., & Reim, W. (2019). 17.Parida, V., Sjödin, D., & Reim, W. (2019). Reviewing literature on digitalization, business model innovation, and sustainable industry: Past achievements and future promises. Sustainability,11(2),391. https://doi.org/10.3390/su11020391
18.Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review,89(1–2),62–77. https://hbr.org/2011/01/the-big-idea-creating-shared-value
19.Robinson, T. (2023). Leadership strategies for sustaining business success in the post- pandemic era. Journal of Applied Business Studies. https://ualresearchonline.arts.ac.uk/id/eprint/22386/
20.Singh, R., & Tarkar, P. (2023). Impact of ethical leadership in HRM on employee’s turnover intention post Covid-19. Brazilian Journal of Operations & Production Management, 20(4), 1680. https://doi.org/10.14488/BJOPM.1680.2023
21.Saxena, V., & Srivastava, R. (2021). Impact of ethical leadership in HRM on employee turnover intention post- COVID-19. Brazilian Journal of Operations & Production Management, 18(3), 1–12.
22.Shepherd, D. A., & Patzelt, H. (2011). The new field of sustainable entrepreneurship. Entrepreneurship Theory & Practice, 35(1), 137–163. https://doi.org/10.1111/j.1540-6520.2010.00426.x
23. Singh, A., & Gupta, R. (2023). Workforce downsizing: Alternatives and sustainable strategies for survivors. IOSR Journal of Business and Management, 21(4), 32–37.
24. Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1),40–49. https://doi.org/10.1016/j.lrp.2017.06.007
