Should the smiling curve frown during an economic downturn to enhance firm performance?

Chin Jung Luan, Chengli Tien*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


This study examines the efficacy of the smiling curve, and clarifies the relationship between downsizing strategies (advertising, marketing, and research and development, respectively) and firm performance specifically in an economic downturn. This study tests hypotheses using 1996-2010 data from the Taiwan Economic Journal on 436 listed Taiwanese companies. The results indicate that the benefits for firms to follow the smiling curve may not occur in the short term and that downsizing strategies may not always be the appropriate strategy to improve firm performance. During an economic downturn, downsizing strategies do not appear to enhance firm performance, that is, the smiling curve should not frown during an economic downturn to enhance firm performance.

Original languageEnglish
Pages (from-to)573-593
Number of pages21
JournalJournal of Management and Organization
Issue number5
Publication statusPublished - 2015 Mar 11


  • competitive advantage
  • downsizing
  • economic downturn
  • firm performance
  • smiling curve

ASJC Scopus subject areas

  • Business and International Management
  • Organizational Behavior and Human Resource Management


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