The Interaction between Financial and Human Resource Slack and its Effect on Venture Performance

Abstract

We study how the interaction between financial and human resource slack affects venture performance. For this purpose, we use a large-scale longitudinal database comprising privately-held technology-based ventures located in six European countries. Results show that the effects of both financial slack and human resource slack on venture performance are inverse U-shaped. More significantly, the interaction between financial slack and human resource slack is negative. Our findings indicate that having both high levels of financial and human resource slack or low levels of financial and human resource slack are detrimental for venture performance. We discuss these findings from both academic and practical points of view.