Organizational Slack Research Articles

Exploring whether digital technologies ameliorate firms’ servitization: the moderating role of organizational slack and research and development intensity

PurposeDigital technologies are essential for improving efficiency and unlocking new opportunities in various domains. The purpose of this study is to assess whether digital technologies can ameliorate servitization among manufacturing firms via the interaction of organizational slack and research and development (R&D) intensity.Design/methodology/approachDrawing on resource-based and service-dominant logic, the study employs a deductive approach and gathers empirical evidence from 1,929 listed A-shares manufacturing firms in the top-seven China mainland industrial provinces spanning the period 2012–2021. It used fixed-effect logistic regression techniques while controlling for various factors to analyze the relationship between digital technologies and manufacturing firm servitization.FindingsThe findings revealed that digital technologies significantly ameliorate manufacturing firms' servitization. Moreover, the study uncovers the contingent nature of this relationship, demonstrating that high levels of both internal and external slack, which provide flexibility and support, intensify the direction of digital technologies towards servitization. Additionally, R&D intensity reflects the firm's commitment to innovation, thereby enhancing synergistic effects in the relationship.Originality/valueThis study contributes robust and comprehensive empirical evidence that validates and establishes a clear baseline relationship reflecting the most current digital technology landscape and its implications for manufacturing firms servitization. Moreover, it provides a more patterned understanding of how internal and external slack typologies and R&D intensity contextualize our study’s findings. Additionally, it demonstrates how our theoretical synthesis advances firms’ strategic shifts towards service-oriented business models through digital technologies.

Organizational slack and firm performance: do supply chain resilience and organizational ambidexterity matter?

PurposeThis study aims to distinguish how unabsorbed and absorbed slack affects market and financial performance via proactive and reactive supply chain resilience (SCRES), particularly under varying conditions of organizational ambidexterity.Design/methodology/approachBy collecting survey data from 277 Chinese manufacturers, we verify the conceptual model applying structural equation modeling.FindingsProactive SCRES mediates the positive impacts of both unabsorbed and absorbed slack on market and financial performance, whereas reactive SCRES mediates only their positive effects on financial performance. High levels of organizational ambidexterity strengthen the indirect effects of both types of slack on market and financial performance via proactive SCRES, but not when mediated by reactive SCRES.Originality/valueWe introduce a new theoretical perspective to view fits (as mediation) between the use of unabsorbed/absorbed slack in different ways when switching attentions to proactive or reactive SCRES, both of which can be improved through organizational ambidexterity. This study offers novel insights into how managers can switch attentions between proactive and reactive SCRES knowing when to appropriately use unabsorbed/absorbed slack for which purposes, and the use of different learning modes (explorative vs exploitative).

Exploring the relationships between digital transformation, organizational slack and business performance: a configurational approach

PurposeThe survival of companies today hinges on their adaptability and flexibility, with digital transformation (DT) and organizational slack (OS) playing crucial roles. Despite their recognized importance, these factors are often studied separately. This study aims to explore how OS facilitates DT and evaluate their synergies and trade-offs to improve performance.Design/methodology/approachUsing data from the European Manufacturing Survey, structural equation modeling (PLS-SEM) and fuzzy set qualitative comparative analysis (fsQCA), we investigate causal relationships and possible combinations between different dimensions of OS and DT that contribute to business performance.FindingsWe confirmed the positive effect of OS and DT on business performance, highlighting the importance of organizational over technological factors. While not definitively establishing OS as a precursor to DT, our findings underscore the need for human and operational slack to improve performance, especially in less technology-intensive contexts.Research limitations/implicationsOur findings evidence that decision-makers should integrate OS with DT initiatives to improve the firm’s competitiveness. However, it is worth noting that while OS seems essential in low-tech shopfloors, its importance is lower in high-tech environments. Furthermore, within the possible combinations, managers should promote operational slack and digitalization, as it seems fundamental to improve business performance.Originality/valueThis article contributes to the management field in three ways. First, it clarifies controversies by providing evidence of the positive roles of DT and OS as drivers of competitiveness for manufacturing firms. Second, we verify that OS is not directly linked to DT, challenging existing assumptions. Third, it investigates the combinations of OS and DT that drive business performance improvement, emphasizing their synergies and trade-offs.

Organizational slack, ambidextrous search and high-tech SMEs’ performance: do strategic orientations matter?

Ambidextrous search behaviors that jointly looking for technological and market knowledge gain attention in the innovation management literature. This study treats the ambidextrous search behaviors as a technology-market search paradox and examines the effect of organizational slack on the paradox and further explore whether this paradox has synergistic effects on performance in high-tech small medium-sized enterprises (SMEs). Besides, by integrating the literature of ambidextrous search and strategic management, we seek to understand the roles of strategic orientations, including growth-oriented and profit-oriented, in SMEs’ technology-market search paradox. Based on panel data of 547 high-tech SMEs, we find that organizational slack promotes both technology and market search, and ambidextrous search separately enhance high-tech SMEs’ performance, while the interaction of technology search and market search is negatively related to performance. Further, a growth-oriented strategy positively moderates the link between organizational slack and ambidextrous search and a profit-oriented strategy reinforces the relationship between organizational slack and technology search. We further enrich search-related and strategic literature.

In the Eyes of Managers: Organizational Slack, Sensemaking, and Entreprneurial Orientation

In the Eyes of Managers: Organizational Slack, Sensemaking, and Entreprneurial Orientation

Can digitalisation balance the dual pressures of global integration and local response?

ABSTRACT As technological turbulence intensifies, multinational enterprises are facing dual pressures of global integration and local response (GI-LR) in terms of innovation and collaborative governance. However, the strategies and conditions for multinationals to cope with this situation are still uncertain. Through the outward foreign direct investment events of Chinese manufacturing listed companies in 2009–2019, the relationship between the digitalisation of multinational enterprises and balancing GI-LR pressure is empirically examined. Results show: (1) digitalisation has a positive impact on balancing GI-LR pressure through technology innovation and collaborative governance; (2) this relationship is moderated by organisational slack, industrial pressure attribute and the host country’s data policy restrictions; (3) digitalisation supports multinational enterprises to balance GI-LR pressure in a distant and unfamiliar institutional environment, and overcomes obstacles caused by lack of international experience. These findings enrich the understanding of the inner link between digital based business strategies and GI-LR based internationalisation strategies.

What affects parent companies’ innovation more in joint venture relationships?

Forming joint ventures with potential partners in acquiring the needed resources and technology provides benefits and creates competitive advantage and innovation for multinational enterprises. While cooperative partners can provide JVs with various resources and technologies, allocation of the position of organizational resources remains unclear and needs to be further addressed. The main purpose of the current paper is to emphasize organizational slack resources (e.g., available slack and potential slack) to illuminate the settings that facilitate the effects of investment attractiveness and employee involvement on JV innovation performance. To demonstrate the real industry of JVs and examine the research purpose, we used various databases, including the National Bureau of Economic Research U.S. patent data file, Harvard DVN patent database, Compustat database and SDC global joint ventures databank to examine the hypotheses. The results show the positive and significant direct effects of investment attractiveness and employee involvement on JV innovation performance. Additionally, the findings demonstrated that the above direct effects are more pronounced when there is higher available slack and potential slack. The current study contributes by offering new viewpoints on JV, offering new understandings of organizational slack and developing an uncharted bridge between the types of slack and JV innovation studies.

CEO overseas experience, dynamic capabilities and corporate digital transformation: An imprinting theory perspective

The drivers of corporate digital transformation have been the focus of industry and academic attention. To deeply explore the driving factors and influencing mechanisms of corporate digital transformation (CDT), this paper takes Chinese listed manufacturing companies from 2007–2021 as the research object, based on imprinting theory, adopts the Driscoll-Kraay standard error method, examines the impact of CEO overseas experience on CDT, analyzes the moderating mechanisms of market competition and organizational resources, as well as the mediating effect of dynamic capabilities. The study shows that CEO overseas experience significantly promotes CDT, while market competition intensity and organizational slack resources strengthen the above relationship. Dynamic capabilities play a mediating role in the relationship between CEO overseas experience and CDT. The above findings still hold after considering robustness tests and endogeneity treatments. Further research finds that the overseas working experience of a CEO outweighs the learning experience when it comes to CDT; a CEO with overseas experience has a more significant influence on CDT in the company with a low growth rate; when the CEO is also the chair of the board in the executive team of a company, the overseas experience matters more to CDT; the overseas experience of CEOs with deep academic backgrounds has a more significant impact on CDT. This paper states the driving mechanism of corporate digital transformation from the imprinting theory perspective, and the findings are proven to be substantial and offer practical value for the in-depth development of corporate digital transformation.

Investment horizon, slack resources, and firm performance: Evidence from privately held european firms

Short-termism in investment decisions often results in poor firm performance, though excessively long investments can also harm performance by reducing internal flexibility. This study investigated a quadratic, inverted U-shaped relationship between investment horizon and performance. Building on agency theory and resource-constraint arguments, we proposed that organizational slack moderates the relationship between investment horizon and firm performance. For short investment horizons, slack represented unused resources that could have been invested, thus leading to lower performance. For long investment horizons, slack helped cover unanticipated expenses and increased firm performance. We found empirical support for our theory in a large sample of privately held European firms in the utilities and retail trade industries.

The operationalization of antifragility through organizational slack and the moderating effect of firms reliance on collaborative networks

PurposeThe present article draws from the behavioral theory of the firm, and it explores whether various dimensions of organization slack can be employed as variables to measure organizations’ antifragility during times of uncertainty such as the Covid-19 pandemic. Furthermore, considering the limitations and regulations put into place during the most recent pandemic, the present study seeks to explore the moderating effect that collaborative networks might have on the relationship between various dimensions of organizational slack and firms performance.Design/methodology/approachThe present study retrieves data from Thomson Reuters Data Stream, and it gathers observations from manufacturing companies located in Europe. The dataset is composed of observations spanning from the fiscal year 2019–2022. Consequently, through the use of a balanced panel data, the authors conduct multiple regression analysis.FindingsThe obtained empirical findings reveal that high discretion slack has a positive effect on companies performance whereas low discretion slack has a negative effect on their performance. Additionally, the obtained findings indicate that low levels of reliance on collaborative networks positively moderates the relationship between organizational slack and firms’ performance. On the other hand, high levels of reliance on collaborative networks negatively moderate the relationship between organizational slack and firms performance.Originality/valueThis manuscript carries several original contributions. It expands the literature stream concerning antifragility and collaborative networks. Additionally, it postulates an operational measure which can be used to indicate firms’ antifragility.

Three-way interaction effect of entrepreneurial orientation, CEO power, and organizational slack on Indonesian firms’ performance

This study aims to explore the complex interplay between entrepreneurial orientation, CEO power, and organizational slack, and their collective impact on firm performance within Indonesia’s manufacturing sector, providing actionable insights to optimize operations in a dynamic, resource-constrained environment. The paper employs a longitudinal approach, utilizing dynamic panel data from 127 publicly-traded manufacturing companies listed on the Indonesia Stock Exchange from 2014 to 2022, focusing on this sector due to its significant role in Indonesia’s economy and the unique challenges these firms face in adapting to market changes and competitive pressures. The study initially found that entrepreneurial orientation did not significantly influence firm performance. However, when CEO power was introduced into the analysis, it significantly, albeit negatively, moderated the effect of entrepreneurial orientation, suggesting that higher CEO power may actually diminish beneficial impacts of entrepreneurial orientation on performance (β = –48.041, p < 0.05). Importantly, the analysis revealed that organizational slack can positively interact with both entrepreneurial orientation and CEO power, mitigating this negative influence and enhancing firm performance (β = 15.261, p < 0.05). These findings illuminate the complex interdependencies within strategic management, underscoring the necessity of aligning upper echelon power dynamics with organizational resources. This alignment is crucial for leveraging the full potential of entrepreneurial orientation to enhance firm performance. AcknowledgmentsThis study received sponsorship from Beasiswa Pendidikan Indonesia and Lembaga Pengelola Dana Pendidikan (Indonesia Endowment Fund for Education). The support from these organizations has been invaluable in the completion of this work, enabling comprehensive data collection and analysis crucial to complete the study.

The Impact of Management Information System’s Organizational Slack to Syngenta Company

Management information systems (MIS) is the usage of information systems at the operational, tactical, and strategic levels so that businesses are aided in the achievement of goals. (Oprea, 2007) While the use of MIS is already quite common, its many benefits have lately piqued the interest of researchers particularly on the phenomenon of slack. Companies typically prefer to remove slack as it has suffered from a negative reputation. However, recent studies by Bae and Rhee (2014) as well as by Heng, Ding, Guo, and Luo (2014) have shown that slack actually leads to innovation. It is because of these interesting discoveries that pushed the proponent to conduct a study on the contribution of organizational slack towards the innovative performance of Syngenta company. Survey were gathered to provide the needed information. Key informants were likewise interviewed in order to generate additional insights about the variables under investigation. The results showed convincingly that slack affects the innovation of the company. However, some effects of the slacks were positive and some were negative. The recommendations put forward by this research is that JDI should maximize its innovation, they should reduce both absorbed and unabsorbed slack as much as possible since slack and innovation are inversely proportional in JDI’s case. As long as they cut back on excessive spending on equipment and make use of their spare resources like reserve funds, then the innovation the company will surely improve.

Research on the influence of digitalization on competitive advantage of manufacturing enterprises

AbstractIn the current era of rapid digital development, the digital transformation of manufacturing has gradually become an inevitable trend in industry development, and the in‐depth study of the relationship between digitalization and competitive advantage has become an important topic in the field of management science. Based on data from Chinese‐listed manufacturing companies from 2012 to 2021, this paper uses empirical analysis to show that digitalization can effectively enhance the low‐cost competitive advantage and differentiation competitive advantage of manufacturing companies, with organizational slack and environmental uncertainty playing a moderating role in this process. The study also delves into the heterogeneity among firms of different scales, ownership characteristics, and life cycles. This research helps to examine the actual effectiveness of manufacturing companies in the process of digital transformation, while also providing a theoretical basis for how manufacturing companies can better acquire and maintain competitive advantages in the process of digitalization.

Technological diversification and innovation performance: the moderating effects of organizational slack and ownership in Chinese listed firms

PurposeThe purpose of this study is to examine the impact of technological diversification (TD) on enterprise innovation performance, meanwhile focusing on the moderating effects of various organizational slack (i.e. absorbed and unabsorbed slack) and ownership types (i.e. state-owned or privately-owned) in the context of Chinese listed firms.Design/methodology/approachThis study formulates five hypotheses based on organization and agency theories. Our empirical analysis employs a fixed-effect regression estimator with a unique panel dataset of Chinese-listed manufacturing firms and 13,566 firm-year observations over 9 years from 2012 to 2020.FindingsOur findings show that an inverted U-shaped relationship exists between TD and innovation performance, varying with different types of organizational slack and ownership. In state-owned enterprises (SOEs), unabsorbed slack negatively moderates the inverted U-shaped relationship; however, in privately-owned enterprises (POEs), this relationship is positively moderated. Although absorbed slack has negative moderating effects in both SOEs and POEs, its impact is only significant for POEs.Practical implicationsOur results imply that organizational slack has a contrasting impact on the relationship between TD and innovation performance when the type of ownership varies. Therefore, the managers that intend to achieve optimal innovation performance through TD should understand how organizational slack can be leveraged.Originality/valueThis study contributes to the existing literature by applying the relationship between TD and innovative performance to the transition economy, as well as examining the double-edged sword impact of state ownership on firm innovation performance.

The double-edged sword effect of digital capability on green innovation: Evidence from Chinese listed industrial firms

This study investigates the impact of digital capability on green innovation and its moderating mechanism. The results show that a firm's digital capability has a significant inverted U-shaped effect on its green innovation, thereby confirming the existence of non-linear changes in the green innovation process. Moreover, organizational slack and executive education can moderate the relationship between digital capability and green innovation, with available slack, recoverable slack or executive education having a positive effect, and potential slack having a negative effect. Further study shows that digital capability of private firms, foreign firms or firms in the eastern region has a greater impact on green innovation than that of state-owned firms, local firms or firms in the central and western regions. Additionally, digital capability contributes to the economic value transformation of green innovation, but environmental performance improved by green innovation does not significantly depend on digital capability. Based on these findings, policy implications of improving green innovation are discussed.

Internationalization rhythm and innovation performance: The effects of internationalization speed, organizational slack, and competitive intensity

While studies show that different internationalization rhythms may result in differing financial performances or cost efficiencies, the relationship between internationalization rhythms and innovation performance remains underexplored. More importantly, the moderating role of speed on this relationship has not been examined, given the limits to how much expansion firms can absorb within a given period without jeopardizing operations and as time compression diseconomies may emerge with high-speed expansion. Here, we apply an absorptive capacity perspective to examine the moderating role of internationalization speed. Unbalanced panel data from Chinese multinational enterprises between 2008 and 2014 reveal a negative relationship between parent companies’ internationalization rhythm and innovation performance, with stronger effects under high internationalization speed. Meanwhile, this relationship weakens (strengthens) with increasing internal organizational slack (external competitive intensity).

Exploring the relationships between different dimensions of digital transformation and corporate greenization: evidence from listed companies in China

In recent years, there has been an increasing recognition of the importance of the coordinated development of digitalization and greenization. However, the existing research lacks a systematic framework for understanding the relationship between different dimensions of digital transformation and various strategies of green innovation. Furthermore, the role of different types of slack resources in this relationship has been largely overlooked. This paper aims to address these gaps by examining the impact of digital transformation on corporate greenization and the moderating role of organizational slack from a heterogeneity perspective. To achieve this, we differentiate digital transformation into two dimensions: breadth and depth. Similarly, corporate greenization is divided into input and output. Additionally, we distinguish between absorbed and unabsorbed slack resources. We empirically test our research hypotheses using data from Chinese A-share listed companies from 2011 to 2020. Our findings reveal the following insights: 1) The breadth and depth of digital transformation positively influence corporate greenization outputs, while negatively affecting greenization inputs. 2) The depth of digital transformation has a stronger impact on both greenization input and output compared to its breadth. 3) Absorbed slack resources and unabsorbed slack resources not only act as negative moderators in the relationship between digital transformation and greenization inputs but also weaken the positive impact of digital transformation on greenization outputs. 4) Absorbed slack resources exhibit a stronger moderating effect than unabsorbed slack resources. This paper contributes to the literature by shedding light on the differential effects of different dimensions of digital transformation on various types of greenization, considering the role of slack resources. Moreover, it provides practical implications for effectively advancing digitalization and greenization in Chinese enterprises.

Technology sourcing ambidexterity in corporate venture capital: limitations of learning from open innovation

AbstractIn the rapidly evolving landscape of open innovation, understanding the dynamics of learning is pivotal for corporate success. Yet, the constraints and thresholds inherent in the novel technology sourcing processes remain under-explored. We study 163 firms during the third wave of corporate venture capital activity characterized by the primary focus on innovation to investigate the effects of technology sourcing ambidexterity (the simultaneous pursuit of internal and external sources of innovative ideas) on corporate patenting and realized innovation. Acknowledging limitations of organizational learning, our results indicate the presence of the inverted U-shaped relationship between technology sourcing ambidexterity and innovation and suggest that beyond a certain threshold, increases in ambidexterity are detrimental to organizational learning and corporate innovation because boundary conditions to experimentation as a key element to learning arise. Such restrictions are alleviated by organizational slack, which enhances organizational abilities to orchestrate resources and take calculated risks to go beyond existing internal competencies.

NURSING HOME INVESTMENT IN HEALTH INFORMATION TECHNOLOGY – AN ORGANIZATIONAL SLACK PERSPECTIVE

Abstract Organizational slack refers to excess resources (e.g., financial, social capital, human capital) an organization accumulates to adapt to changing internal and external contexts. Nursing homes operate in a severely resource-constrained environment, and therefore have limited ability to accumulate organizational slack. However, nursing homes that do accumulate slack may be more likely to invest in health information technology (HIT). To test this, we examine associations between organizational slack and HIT maturity. HIT maturity is the level of IT capabilities, extent of use, and integration in resident care, clinical support, and administration. We linked 2018 data from a national nursing home HIT maturity survey (N=525) to nursing home characteristics from LTCfocus.org, CMS data, National Center for Health Statistics, Medicare cost reports, and other county-level statistics. We incorporated Simple Linear Regression, controlling for facility-level sex, race, case-mix, and urban/rural location. Average 3-year operating income for Stage 0 nursing homes was -$4,387 per bed (n=7) compared to $42,768 per bed in Stage 6 nursing homes (n=17). Higher HIT maturity was associated with greater percentages of Medicare patients and shorter distances to the closest hospital. Our regression model also demonstrated significant associations with operating income per bed, chain affiliation, total beds, occupancy percentage, moderately concentrated counties and case-mix adjusted staffing. In this sample, larger, more financially stable organizations (i.e., those with more slack) may be able to invest more in HIT. As HIT maturity has been shown to be associated with improved patient outcomes, disparities may widen in organizations with lower levels of slack.

AN UNEQUAL WORK ENVIRONMENT: NURSING HOME STAFF PERCEPTIONS OF UNIT ORGANIZATIONAL CONTEXT

Abstract The organizational context in nursing homes is associated with quality of care and residents’ quality of life. Our objective was to examine nursing home staff perceptions of unit organizational context. We conducted a secondary analysis of cross-sectional data. Participants were 3765 unregulated (health care aides (HCAs)) and 1130 regulated staff (managers, registered nurses, registered psychiatric nurses (RN/RPNs) and licensed practical nurses (LPNs)) from 91 nursing homes in Western Canada. We measured nursing home staff’s perceptions of organizational context via the Alberta Context Tool (ACT), comprised of ten concepts: leadership, culture, evaluation, social capital, formal interactions, informal interactions, organizational slack (staff, space, time). Differences between groups were examined via one-way ANOVA. Managers reported significantly higher organizational context scores compared to all other staff members in care homes, followed by RN/RPNs. LPNs and HCAs reported the lowest scores. Specifically, LPNs reported the lowest scores on all organizational context measures except for structural resources and organizational slack space, for which HCAs reported the lowest scores. HCAs reported higher scores than LPNs on unit leadership, culture, evaluation, social capital. When compared with managers and RN/RPNs in the nursing home, LPNs reported the lowest SF-8 mental health scores (49.30 (10.05)) and HCAs reported the lowest physical health scores (48.53 (8.16)). Our work demonstrates the need for improvement of staffing and time for staff in nursing homes. Specific attention is needed to focus on modifiable organizational unit context factors for LPNs and HCAs, who are responsible for providing the majority of the direct care for residents.