Resource Linkages, Organizational Slack and Restructuring Behaviour Decisions

Abstract

This study uses resource-based theory to examine the relationship among parent-subsidiary resource linkages, organizational slack and parent firms’ restructuring behaviours. By using data from 199 Taiwanese firms investing in Greater China and global markets. This study shows that their international strategy decision regarding resource allocation and similarity has no significant effects on the parent firm’s restructuring behaviours unless that firm has sufficient slack resources to support the restructuring. In addition, parent firms are more likely to acquire subsidiaries with dissimilar resources among their group members, than ones having similar resources same as the parent firm. Moreover, there is a U-shaped relationship between organizational slack and the parent firm’s restructuring behaviour decisions. This study constructs the research framework under the resource-based theory and examines the relationships between resource allocation, resource similarity and parent firms’ restructuring behaviour in conditions of organizational slack.