Abstract
This paper aims to clarify types of slack resources and mechanisms through which these resources are translatedinto the growth of transition economy firms. It compares human resource slack and financial slack in terms oftheir ‘proactivity’ to unveil their differing effects on firm growth. This paper further highlights firm-levelentrepreneurial activities as a mechanism through which these resources are translated into firm growth. Datawas collected from senior managers through a questionnaire survey from manufacturing firms in China’sZhejiang province. This paper demonstrates that not all slack resources are readily turned into firm growth asargued in most of prior studies. In particular, only proactive HR slack is directly related to firm growth, whilefinancial slack fuels firm growth via HR slack. Besides, HR slack also propels firm growth partially throughvarious corporate entrepreneurial activities. This paper proposes and demonstrates that ‘proactivitity’ is a crucialdimension that explains the differing effects of slack resources on firm growth. In addition, corporateentrepreneurial activities are an underlying mechanism through which HR slack is translated into firm growth.
Highlights
Growth in terms of firm size is a desirable objective for both owners and managers in most firms (Brush, Bromiley, & Hendrickx, 2000)
These four factors are named as management innovation (MI), product innovation (PI), foreign corporate venturing (FCV), and domestic corporate venturing (DCV)
Building upon the notion that the slack resources of firms, instead of the total amount of resources, drive firm growth, this study unveils the distinction between human resource slack and financial slack along a crucial dimension of proactivitiy, and highlights the differing effects of human resource and financial slack on firm growth and corporate entrepreneurship
Summary
Growth in terms of firm size is a desirable objective for both owners and managers in most firms (Brush, Bromiley, & Hendrickx, 2000). Some scholars have argued that the combination of resources with particular business strategies influences expansion (e.g., Bamford et al, 1997), others have observed either inconsistent results associated with such interactions (e.g., Chandler & Hanks, 1994) or even no growth implications being derived from such contingencies (e.g., Brush & Chaganti, 1999). These mixed findings may be resulted from different conceptions of resources related to the expansion. It is meaningful to investigate the relationships between slack resources and firm growth instead of ‘total amount of resources’ and firm growth (Penrose, 1959; Thompson, 1967)
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