Relationship between slack resources and performance: temporal symmetry and duration of effects

Maria Agusti-Perez,Francisco J Acedo,Jose Luis Galan

doi:10.1108/ejmbe-10-2019-0177

Maria Agusti-Perez, Francisco J Acedo + Show 1 more

Open Access

https://doi.org/10.1108/ejmbe-10-2019-0177

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Abstract

PurposeAlthough slack resources and their relationship to performance have been widely studied in the literature, the temporal symmetry of this relationship, and the duration of its effects, are still unknown aspects and are the objective of this paper.Design/methodology/approachTo evaluate this effect, an exploratory study has been designed on a sample of 449 Spanish industrial companies over a period of 12 years, assessing the impact of idle resources on economic and financial profitability. By means of hierarchical regressions, the short- term, medium- term and long-term effects of slack resources have been evaluated.FindingsThe results show that the impact on performance depends on the type of resource considered. Available slack has a consistent and positive effect on economic profitability in the short term. Other types of slack show persistent effects on performance, but, in the case of the recoverable slack, with a negative sign that contradicts the benefits provided by these resources. Finally, potential slack only has a permanent effect on financial profitability, but the sign changes depending on the economic context under consideration. There are also differences in the duration of the effects according to the type of resources.Originality/valueThis paper advances the knowledge about the slack-performance relationship over time that has been scarcely studied.

Highlights

Penrose (1959) established that those companies that had slack resources would obtain superior results to those competitors that did not have access to them
The interpretation of the results requires a differentiated analysis according to the dependent variable used, as well as the time horizon and the measurement of the slack
Regarding the period of time, the short term was considered as the immediate effect that the slack has on profitability; this is the approach followed by most of the literature, which has considered the effect of the slack on the profitability of the same year (Carnes et al, 2019)

Summary

Introduction

Penrose (1959) established that those companies that had slack resources would obtain superior results to those competitors that did not have access to them. The study has an exploratory character, because starting from a positive, linear or curvilinear (quadratic) relationship between slack and performance, it tries to determine the permanence in time (temporal symmetry) of this relationship, as well as the duration of the effect of the looseness of resources on the result of the company.

Results

Conclusion