Organizational Slack Research Articles

Comparing Government Support, Firm Heterogeneity, and Inter-Firm Spillovers for Productivity Enhancement: Evidence from Korean Solar Energy Technology Industry

Numerous issues, such as technological and market uncertainty, and financial role-players’ avoidance of long-run investment in renewable energy technologies, have deterred investments in innovation. Therefore, we investigate the direct and indirect (inter-firm spillover) effects of government support and firm heterogeneity on productivity. Using panel data concerning Korean solar energy technology manufacturers, the significance of firm heterogeneity in improving productivity is found. Specifically, the positive impact of physical capital and organizational slack on productivity in the short and long run, and the positive spillover effect of intellectual capital on productivity in the long run are established. Additionally, productivity increases only when government support interacts with firm heterogeneity. This increase relates to short- and long-run direct effects of the interaction between intellectual capital and non-R&D (Research and Development) subsidy, and organizational slack and R&D subsidy, and long-run spillover effect via the interaction between non-R&D subsidy and organizational slack. Lastly, for the solar energy technology industry, the policy and strategic repercussions for firm-level productivity enhancement are deliberated based on the findings of this study.

PRACTITIONER APPLICATION: The Role of Organizational Slack in Buffering Financially Distressed Hospitals From Market Exits.

PRACTITIONER APPLICATION: The Role of Organizational Slack in Buffering Financially Distressed Hospitals From Market Exits.

The Role of Organizational Slack in Buffering Financially Distressed Hospitals from Market Exits.

Financial distress is a persistent problem in U.S. hospitals, leading them to close at an alarming rate over the past two decades. Given the potential adverse effects of hospital closures on healthcare access and public health, interest is growing in understanding more about the financial health of U.S. hospitals. In this study, we set out to explore the extent to which relevant organizational and environmental factors potentially buffer financially distressed hospitals from closure, and even at the brink of closure, enable some to merge with other hospitals. We tested our hypotheses by first examining how factors such as slack resources, environmental munificence, and environmental complexity affect the likelihood of survival versus closing or merging with other organizations. We then tested how the same factors affect the likelihood of merging relative to closing for financially distressed hospitals that undergo one of these two events. We found that different types of slack resources and environmental forces impact different outcomes. In this article, we discuss the implications of our findings for hospital stakeholders.

The Mediation Role of Organizational Slack And Innovation Climate on The Effect of Perceived Organizational Support in Academic Performance

The main objective of this research is to examine the mediation role of both organizational slack and innovation climate on the effect of perceived organizational support on academic performance at the colleges of Duhok University by using path analysis. The research reviews the contributions of researchers on the subjects of perceived organizational support (POS), organizational slack (OS), innovation climate (IC), and academic performance (AP). Constructing on previous studies, a set of hypotheses are formulated to express the effect of the POS, OS, IC variables on AP variable. A sample of 181 lecturers were selected to verify research hypotheses which have been proposed. Finally, the main conclusions of the research are presented. The results of the investigation reveal that the organizational slack and innovation climate variables mediates the influence between the perceived organizational support and the academic performance and that the indirect effect between the perceived organizational support and the academic performance was stronger than the direct influence between them.

Managing through a crisis: Effects of nCovid 19 and the significance of organisational slack resources in strategic agility. A case of Zimbabwe Tourism and Hospitality Industry

Managing through a crisis: Effects of nCovid 19 and the significance of organisational slack resources in strategic agility. A case of Zimbabwe Tourism and Hospitality Industry

Saving for the bad times: slack resources during an economic downturn

PurposeThis paper aims to examine what firms in Spanish industrial sectors redeployed their resources, depending on their organisational slack (resource excess), when faced with the global economic crisis of 2008.Design/methodology/approachVarious financial measures for slack resources and performance have been analysed from more than 400 Spanish firms from 2006 (pre-crisis) to 2017 (recovery).FindingsThe first finding is that every slack is useful against an economic downturn. The results show how industrial companies use their slack resources when faced with a generalised crisis according to the level of slack possessed. The key role of the available slack against this environmental threatens is remarked.Research limitations/implicationsNot every resource is useful against an economic downturn. The results show how industrial companies use their slack resources when faced with a generalised crisis in accordance with the types and levels of slack. The key role of the liquid resources, in particular cash, against this environmental threat is discussed. However, we also observe the behaviour of firms with only a few excess resources and find very similar resource consumption patterns.Originality/valueAlthough organisational slack is a well-known concept in management, few studies deal with how companies consume or use other types of resources when confronting a crisis. This paper not only addresses this question but also offers insights for a detailed evaluation of various types of slack during and after a crisis.

Financial slack as driver of brazilian firms’ growth

Purpose – To determine the influence of the financial availabilities, as a component of organizational slack, on firms’ growth. Researchers’ discussions concerning organizational slack reveal instances of heterogeneity and divergence in literature on both from theoretical and empirical perspectives.Design/methodology/approach – We developed an embracing theoretical framework drew on confirmatory factor analysis and structural equation modeling techniques, we refined and tested indicators for financial slack. We restored just financial availabilities data about Brazilian corporations listed on the B3 market.Findings – We cannot confirm that all of the states of the financial slack affects organizational growth.Research limitations/implications – We make further research directions to deepen financial slack knowledge on corporate growth.Practical implications – For practitioners, we provide new methodological and indicator directions to scale slack and impact on organizational growth.Originality/value – Research and discussion on organizational choices about generating and taking advantage of slack are essential when considering risk, fund raising and liquidity positions to support organizational growth.

Parent-subsidiary linkage: How resource commitment and resource similarity influence firm performance

Drawing on the resource-based view, this study examines how parent-subsidiary resource linkages in terms of resource commitment and resource similarity affect the performance of the parent firm. By using the data from 199 Taiwanese firms investing in China, the results of this study show that resource commitment has an inverted U-shaped relationship with the parent firm performance, whereas the relationship between resource similarity and the parent firm performance is U-shaped. In addition, this study also finds that organizational slack and parent involvement moderate these relationships. This study provides important theoretical and managerial implications for international business management.

Are they worth it? Warmth and competence perceptions influence the investment of slack resources in and the efficacy of HPWS

AbstractUtilizing research on organizational slack and the stereotype content model, the antecedents and consequences of high‐performance work system (HPWS) utilization are assessed in a sample of 108 small and medium‐sized enterprises in South Korea. The paper advances theory to demonstrate that organizational slack drives HPWS adoption, but only when the chief executive officer (CEO) views employees as worth the investment. A social psychology lens is used to illustrate the significance of CEO perceptions of employee warmth and competence as moderators of the relationship between slack resources and HPWS adoption in small firms. CEOs with available financial resources who also hold a high view of employee trustworthiness (i.e., warmth) and ability (i.e., competence) are likely to utilize higher levels of HPWS. Further, employee perceptions of CEO warmth and competence moderate the relationship between HPWS utilization and firm performance, such that high levels of perceived CEO warmth and competence enhance the efficacy of HPWS. The results serve to highlight the significance of perceptual factors in both the antecedents and outcomes of HPWS adoption, particularly in smaller firms.

Does TMT composition matter to environmental policy and firm performance? The role of organizational slack

AbstractThis study examines the relationship between the heterogeneity of top management team (TMT) composition and firm performance by focusing on the mediating role of environmental policy: a greenhouse gas (GHG) emission strategy. Organizational slack is viewed as a moderating variable that influences the above mediated relationship. Based on data from Taiwanese public firms with CSR reports, it is found that TMT educational background heterogeneity and tenure heterogeneity negatively influence firm performance, and the GHG emission strategy mediates this relationship. Moreover, this study finds that unabsorbed slack significantly strengthens the influence of TMT educational background heterogeneity on the GHG emission strategy, and unabsorbed slack also moderates the mediation effect of the GHG emission strategy on the relationship between TMT educational background heterogeneity and firm performance. The theoretical and managerial implications of the results are discussed in the discussion section and conclusions of the study.

High‐performance work systems with internal and external contingencies: The moderating roles of organizational slack and industry instability

AbstractWhen high‐performance work systems (HPWS) positively affect firm performance, both internal and external contingencies play potentially salient roles in its influence. Our study pays attention to organizational (unabsorbed) slack and industry instability as important boundary conditions in the relationship between HPWS and firm performance. Based on 307 Korean firms in 39 industries, our research found moderating effects of unabsorbed slack and industry instability in the relationship between HPWS and firm performance. We found that HPWS's positive effect on firm performance is strongest when a firm possesses more slack resources in an unstable industry.

Are R&D-Intensive firms also corporate social responsibility specialists? A multicountry study

Seeking to obtain efficiency in the development and integration of knowledge about R&D and corporate social responsibility (CSR), firms face hard choices about their resource allocation to these two areas because of the specialized nature of knowledge and related barriers to integration. We address this organizational resource allocation dilemma by relaxing the common assumption that firms are either responsible or irresponsible and examining financial slack as a possible moderator. Using a multicountry sample of 1,957 firms over a 16-year timespan, we find strong empirical support for the positive association between firms' R&D intensity and CSR specialization, a novel concept that—distinct from CSR as such—gauges the extent to which firms specialize in specific environmental, social, or governance aspects of CSR. However, there is insufficient support for financial slack as a moderator in general (except for one noteworthy industry pattern and an alternative operationalization of slack). The exceptions suggest that the nature of organizational slack may influence the relationship between R&D and CSR specialization.

Folga organizacional: uma análise bibliométrica da produção científica na web of science (1983 - 2018)

Este artigo buscou identificar os elementos que descrevem o perfil das publicações científicas sobre folga organizacional nos periódicos indexados na base Web of Science no período de 1983 a 2018, contemplando os termos “folga organizacional”, "organizational slack" ou "holgura organizacional". Os principais resultados mostraram que a produção científica sobre a temática apresenta 44 trabalhos, com um destaque para o período mais recente, de 2014 a 2018, que com 45,4% das publicações levantadas. Em maioria, os artigos são classificados na área de Negócios (Business Economics) e são predominantemente produzidos por autores cujas instituições são sediadas nos Estados Unidos, Taiwan e China. Em complemento, identificou-se uma cooperação entre os clusters e que os trabalhos citados concentram, dentre as suas palavras-chave, os termos performance, management, organization slack e economy.

To See from Where You Stand: Supply Chain Network Positions and Merger and Acquisition Likelihood

Drawing on the proverb that says “where you stand determines what you see and how you do”, this study examines the effect of a firm’s supply chain network position on its M&As decisions and further examines the moderating effects of financial slack and innovational slack on the relationship between a firm’s supply chain network centrality and its M&As likelihood. Secondary data from different sources spanning from 2010 to 2017 are collected and analyzed to test our hypotheses. We find that there is U-shaped relationship between a firm’s supply chain network betweenness centrality and its M&As likelihood. Moreover, we also find significant evidence that the financial slack and innovational slack of a firm will positively moderate the effect of a firm’s supply chain network position on its M&As likelihood. This study advances extant literature on the antecedents of M&As by identifying supply chain network as a critical antecedent of a firm’s M&As. In addition, this study extends organizational slacks and M&As literature by identifying financial slack and innovational slack as contingencies to a firm’s M&As decision, which is different from conventional literature on slacks and M&As.

Facing Turbulences with Organizational Slacks in a Corporate Scandal: Firm Value and Risks

Corporate scandals happen not only when firms and managers deliberately commit fraud and harm the environment but also when firms have to recall malfunctioning products. Corporate scandals are more frequent than ever. Since information can be accessed easily and spread instantly, local issues quickly become global corporate scandals, which increases their strength and decreases the time for firms to implement a recovery plan. Corporate scandals bring uncertainty to the future of the firm’s financial health. Thus, they decrease expectations for returns and increase volatility of future cash-flows. Organizational slacks are resources detained by a firm to face an unexpected event. We believe they serve as a buffer in a situation of corporate scandal. Our study aims to determine the buffering role of organizational slacks can generate, when a corporate scandal hits a firm. To measure it, we use the event study methodology. We perform both short-term and long-term event study analyses. The former is based on a sample of 362 North American listed firms regarding 1,940 corporate scandals, from 2007 to 2018, and it measures the difference between the normal stock returns of the firms and the stock returns happening on the days surrounding the corporate scandal. The latter is based on 333 North American listed firms regarding 1,719 corporate scandals, from 2007 to 2018, and it determines the fluctuations of the idiosyncratic risk in a period of 252 days following the corporate scandal. Our findings reveal key insights into the role of organizational slacks in a corporate scandal situation. Moreover, we analyze the buffering effect of organizational slacks in an unstable environment by introducing the moderating role of market turbulence. Results show that: (1) a corporate scandal has a negative impact on the firm value and firm volatility; (2) organizational slacks have a positive impact on the scandal’s negative effect on the firm value and firm volatility; (3) and, detaining organizational slacks increases the negative effect of the corporate scandal on the firm value in a turbulent market environment, but mitigates firm volatility in the same environmental conditions. Our primary contribution is to the management-finance literature, in the way that we integrate research on organizational slacks and corporate scandal literature with frequent changes in fit between market and management decisions. Our second contribution is to managers, as we bring novel insights into the ways of mitigating the negative effect of a corporate scandal with organizational slacks.

How Do Firms Respond to Board Political Capital Loss?

Politically connected firms may rely primarily on political capital to compete, but a sudden, irrevocable loss of such capital poses a critical challenge for focal firms and prompts them to explore new strategies to compensate for this loss. Drawing upon resource dependence logic and nonmarket strategy literature, we examine how firms tackle this challenge by focusing on two types of strategic reactions: activities to nurture market-based capabilities – R&D investment, and activities to develop alternative channels with socio-political actors – bribery. We predict focal firms to substantially increase their R&D and bribery expenditures after a negative shock. This prediction in confirmed in a sample of Chinese public corporations in the 2010s, during which the focal companies experienced an exogenous shock from the central government requiring independent directors with recent government background to resign from their current board positions. These increases are found more salient in firms whose board chairs and CEOs lack political capital. Moreover, organizational slack and institutional environment lead to different patterns of strategic adjustments: While firms with more organizational slack and located in a better institutional environment prefer more R&D investment post shock, those with less slack and in a weaker environment opt for more bribery activities. Our study contributes to governance and strategy literatures by demonstrating how firms may react to unexpected weakening/loss of social and political capital at the board level and beyond.

Effectuation or Causation? Configurational Causes of Entrepreneurial Logic

More entrepreneurs are increasingly interested in such a way of “crossing the river by feeling the stones” to realize rapid iteration of enterprises. In this study, we explored simultaneously impacts of entrepreneurial experience, environmental uncertainty, organizational slack and centralization of desicion making on entrepreneurial logic. To do so, we then use clear-set approach to qualitative comparative analysis (csQCA) to compare the different configurations affecting effectuation and causation under an integrated perspective. Our findings suggest that entrepreneurs preferred to use causation logic for decision-making while the level of environmental uncertainty is low. Whereas, when the environmental uncertainty is higher, entrepreneurial experience, organizational slack and decision concentration become the decisive factors for entrepreneurial logic. As such, this study offers novel theoretical and empirical insights to scholars as well as implications for practitioners.

Organizational Response to Shortfalls: The Role of Decision Makers’ Self-Confidence and Time Slack

The behavioral theory of the firm (BTOF) states that performance shortfalls trigger organizational responses seeking to restore performance above the aspiration level. However, previous research has shown weak support for this proposition. One explanation for this lack of support is optimistic performance assessments: Performance shortfalls might not be perceived as problematic by decision makers, which leads them to underestimate the need for a response. In this paper, I argue that decision makers’ self-confidence promotes optimistic interpretations of performance assessments when performance is ambiguous enough. However, when performance shortfalls are unambiguous, I predict that decision makers’ self-confidence leads to the opposite consequence, strong organizational responses, due to risk-seeking behavior. In addition, in this paper I propose that organizational slack is a source of ambiguity in performance assessments allowing for favorable interpretations. Particularly, I propose that decision makers prone to make optimistic performance assessments overestimate the value they can extract from slack, which leads them to underestimate the need for a response to performance shortfalls. I find support for my hypotheses by analyzing 101,146 first down decisions from the National Football League (NFL) between seasons 2009 and 2016.

Historical Political Ideology and Firm Innovation: Worldwide Evidence of R&D Investments (1982-2016)

Dominant national political ideology during founding or initial public offering (IPO) shapes a firm’s structures and routines—leaving an organizational ideological imprint—and persistently affects firms’ innovation. I argue that the communist (capitalist) ideological imprint discourages (encourages) firms’ innovation enduringly. To triangulate the theoretical mechanism, I argue that the communist (capitalist) ideological imprint weakens (strengthens) the impact of two determinants of innovation, i.e. competitive aspirations and organizational slack. Meanwhile, I differentiate types of sensitive periods when imprinting processes take place and argue that founding imprint is more powerful than its IPO counterpart. Finally, I suggest that the subsequent IPO imprint modifies the influence of founding imprint, and therefore imprinting is a punctuated process. Empirical analysis of a longitudinal sample of worldwide firms’ research and development (R&D) investment supports my hypotheses. My study contributes to imprinting theory and strategy literature.

The Role of Organizational Slack in Buffering Financially Distressed Hospitals from Market Exits

Financial distress is a persistent problem in the US hospitals leading many hospitals to close at an alarming rate over the past two decades. Given the potential adverse effects of hospital closures on healthcare access and public health, interest is growing in understanding more about the financial health of US hospitals. In this study, we set out to explore the extent to which relevant organizational and environmental factors potentially buffer financially distressed hospitals (FDH’s) from closure, and then even at the brink of closure, enable some of them to merge into other hospitals instead of closing. We test our hypotheses by first examining how factors such as slack resources, environmental munificence and environmental complexity affect the likelihood of survival against closing or merging into other organizations. We then test how the same factors affect the likelihood of merging relative to closing for FDH’s that undergo one of these two events. We find that different types of slack resources and environmental forces impact different outcomes, and we discuss the implications of our findings regarding financial distress for hospital stakeholders.