The Dynamics of Downsizing: The Swedish Tobacco Monopoly in the 1920s

Abstract

The aim of this article is to clarify and discuss the various ways firms can make workforce reductions. How do managers perceive the options for downsizing and why do they implement a particular mix of measures before another? These questions are addressed in relation to the downsizing process undertaken in the 1920s by the Swedish Tobacco Monopoly, a state-owned company that had to balance between rational business conduct and social responsibility. The study makes use of rich primary sources, such as board minutes and memos, from the company and from the Tobacco Workers’ Union. Its main contribution is to move beyond the simple characterization of reductions as being either smooth or harsh and instead emphasize the multitude of choices involved in reducing head count. The article also emphasizes the active roles of managers and union officials in shaping reductions and the overall characteristics of the organization.