Abstract

Drawing on the behavioral theory of the firm, in this paper we investigate the role that absorbed and unabsorbed slack play in improving the environmental performance (EP) of firms and the conditions under which this relationship is reinforced or moderated. In particular, we investigate how managerial discretion, regulatory pressures and industry-driven aspirations influence the effect that organizational slack resources have on EP. Our findings indicate that unabsorbed slack has a positive effect on EP, while absorbed slack has a negative effect. Both of these relationships are influenced by managerial discretion, regulatory pressures and industry aspirations.

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