Firms traditionally claim that they downsize (i.e., make per

[Vardhaman lodha]

Firms traditionally claim that they downsize (i.e., make permanent personnel cuts) for economic reasons, laying off supposedly unnecessary staff in an attempt to become more efficient and competitive. Organization theory would explain this reasoning as an example of the “economic rationality” that it assumes underlies all organizational activities. There is evidence that firms believe they are behaving rationally whenever they downsize; yet recent research has shown that the actual economic effects of downsizing are often negative for firms. Thus, organization theory cannot adequately explain downsizing; non-economic factors must also be considered. One such factor is the evolution of downsizing into a powerful business myth: managers simply believe that downsizing is efficacious. Moreover, downsizing nowadays is greeted favorably by the business press; the press often refers to soaring stock prices of downsizing firms (even though research shows that stocks usually rise only briefly after downsizing and then suffer a prolonged decline). Once viewed as a sign of desperation, downsizing is now viewed as a signal that firms are serious about competing in the global marketplace; such signals are received positively by key actors— financial analysts, consultants, shareholders—who supply firms with vital organizing resources. Thus, even if downsizers do not become economically more efficient, downsizing’s mythic properties give them added prestige in the business community, enhancing their survival prospects.


The primary purpose of the passage is to

(A)criticize firms for engaging in the practice of downsizing
(B)analyze the negative economic impact of downsizing on firms
(C)offer an alternative to a traditional explanation for the occurrence of downsizing
(D)chronicle how perceptions of downsizing have changed over time
(E)provide evidence disputing the prevalence of downsizing

Dear experts,OA for this one is C.I rejected it because i couldnt see anything related to occurence of downsizing and selected E as last best option instead.Please hwlp me out with this.Thanks.

[RonPurewal]

the entire passage is about the occurrence of downsizing. "why does it occur?"

the "traditional explanation" is right there at the beginning, and then the author goes on to give a different hypothesis.

[RonPurewal]

choice E is wrong because there's nothing about the "prevalence" (= frequency) of downsizing. the author never says anything explicitly about how often it happens.

moreover, if anything, the passage seems to suggest that downsizing is a regular occurrence (it's a major business strategy). so, "disputing the prevalence..." not only is unsupported by the text, but in fact contradicts the spirit in which the text is written.

[750plus]

The passage suggests which of the following about the claim that a firm will become more efficient and competitive by downsizing?

A. Few firms actually believe this claim to be true.
B. Fewer firms have been making this claim in recent years.
C. This claim contradicts the basic assumption of organization theory.
D. This claim is called into question by certain recent research.
E. This claim is often treated with skepticism by the business press.

a) Can you please explain the rationale behind eliminating choice (A)
b) Are the claims (1) and (2) equivalent?
(1) Firms believe they are behaving rationally when they downsize
(2) A firm will become more efficient and competitive by downsizing

Recent research is explicitly questioning claim (1) per passage. However, option (D) (the official answer) recent research is questioning claim (2). Please if you can clarify.

[RonPurewal]

choice A is wrong because it's clearly false!
the passage says -- quite clearly, and in fact more than once -- that firms THINK they actually ARE being rational/efficient by downsizing.

from the first few lines:
• "Firms traditionally CLAIM that they downsize ... in an attempt to become more efficient and competitive."
• "There is evidence that firms BELIEVE they are behaving rationally WHENEVER they downsize."

so, choice A is definitely wrong. according to the passage, essentially ALL firms think that this is true.

[RonPurewal]

Are the claims (1) and (2) equivalent?
(1) Firms believe they are behaving rationally when they downsize
(2) A firm will become more efficient and competitive by downsizing

hm?
most certainly not equivalent -- #1 is about what the firms THINK is true, whereas #2 is about what IS, objectively, true.

Recent research is explicitly questioning claim (1) per passage.

^^ no.
the research isn't saying anything about what firms believe or don't believe. the research says that the ACTUAL EFFECTS of downsizing are bad for firms.