"Human Resource Slack, Financial Slack and Firm Performance Under Differing Contextual Factors."

Abstract

The study presented here offers a reconceptualization of how we theoretically view and empirically measure organizational resource slack. Human resource slack is introduced and suggested to serve as a type of slack that offers effects on performance that differ from the more traditional measure of financial resource slack. This study also examines how these two types of resource slack may influence firm performance differently under two contextual factors- strategic change and the economic environment. Using a longitudinal dataset of U.S. commercial and consumer banks over a twelve-year period, the results suggest that while human resource slack is positively associated with firm performance, the effects become more positive for banks seeking to change their strategy as well as during periods of economic growth. Conversely, financial resource slack is found to have a negative relationship with overall firm performance, but less negative for firms seeking to change their strategy, and positive for firms op...