Organizational Slack Research Articles

CEOs’ Resource-Scarcity Experience and Firm Innovation

This study examines how CEOs’ resource-scarcity experience affects resource allocation toward innovation. Drawing on imprinting theory, we theorize that CEOs with resource-scarcity experience in childhood develop cognitive frames characterized by uncertainty aversion and short-term orientation, which decrease resource allocation toward innovation activities and further negatively affect innovation performance. We examine our rationale in the context of the Great Famine in China. Results show that (1) CEOs’ resource-scarcity experience in childhood negatively affect resource allocation toward innovation. More specifically, these CEOs tend to allocate less financial capital (i.e., R&D expenditure) and human capital (i.e., recruiting fewer top managers with R&D background or with academic experience). (2) CEOs’ resource-scarcity experience has a negative indirect effect on innovation performance via resource allocation, indicating that such patterns of resource allocation finally influence innovation performance. (3) the moderating effect of organizational slack on the indirect relationship is not significant, indicating that the imprinting effect on CEOs’ resource-scarcity experience cannot be weakened even if CEOs currently control abundant organizational resources. We contribute to the innovation and imprinting literature by demonstrating how resource-scarcity experience imprints on managerial strategic choices of innovation.

Environmental complexity, slack, and firm performance

Firms hold excess resources, known as slack, that could be valuable as the environment becomes more complex. This article provides evidence on how higher environmental complexity alters the slack-performance relationship in the long run by introducing three types of effects: the efficiency effect, the profitability effect, and the incentives effect. After measuring those effects on a panel of Colombian firms, we show that firms implement multiple and simultaneous purposeful actions on organizational slack to compete in more complex environments. Depending on the slack type, complexity can encourage the efficient use of slack, it can alter the incentives to hold slack, and it can change the profitability of slack. Those results could be used to answer how efficient or profitable are firms’ levels of slack, and if they have higher incentives to accumulate more slack.

Multiple performance pressure inconsistency, resource slack, and the firm’s R&D investment: A behavioral agency theory perspective

In the process of operation, firms will face different types of performance pressure. The inconsistency among multiple performance pressure signals has an important impact on resource allocation and R&D investment. However, at present, studies on the impact of multiple performance pressures on the firm’s resource allocation and R&D investment are very limited, and few studies have analyzed the impact of inconsistencies among multiple performance pressure signals on the firm’s R&D investment. Given this research gap, this article empirically tested a model from the perspective of behavioral agency theory, in which inconsistency in long- and short-term performance pressure facilitates the accumulation of organizational slack. We further test the impact of an increase in organizational slack on the firms’ R&D investment intensity and find that this effect is stronger when the level of managerial ownership is comparatively low. These results together indicate that high inconsistency in performance pressure and low managerial ownership jointly facilitate the accumulation of organizational slack, enabling firms to go beyond local search and have more slack searches in the face of multiple performance pressure, which is conducive to an increase in R&D investment. JEL CLASSIFICATION: M10.

Differential effects of voluntary environmental programs and mandatory regulations on corporate green innovation

There is a long-lasting debate on whether environmental regulation fosters or hinders corporate green innovation. To address this debate, this study differentiates two types of regulations: mandatory environmental regulations (MERs) and voluntary environmental programs (VEPs), and explores whether MERs and VEPs, separately and jointly, affects corporate green innovation. This study also investigates the moderating effect of organizational slack on the focal relationship. With the data of top 100 listed companies in China, the results show that MERs significantly negatively affect green innovation, while VEPs significantly positively influence green innovation, and VEPs mitigate the negative impact of MERs on green innovation. Moreover, organizational slack strengthens the positive relationship between VEPs and green innovation, while no significant moderating effect on the MER–green innovation relationship. These findings provide guidance for corporate green innovation under mandatory regulations and voluntary programs.

The Role of Organizational Slack and Human Capital in Managing Performance Shocks: How US Nursing Homes Buffered Hurricane Katrina

Public service organizations employ buffers to ward off disruptive performance shocks such as natural disasters, budget cuts, and uncertain events. Existing applications on buffering focus on how slack human resources are reallocated to high-risk areas during times of uncertainty to dampen the impact these events have on core organizational processes. Besides slack, the quality of human capital is also important. Skilled personnel have the technical acumen and expertise to help managers navigate through treacherous times and still deliver public services. Yet, existing work does not test the impact of these two buffers simultaneously. Using a panel dataset of nursing homes in Louisiana and Mississippi, I explore how personnel slack and human capital helped absorb the devastation of Hurricane Katrina. The findings suggest that human capital buffers the impact of Hurricane Katrina on health deficiencies and physical dependency. In contrast, slack capacity amplifies the impact of Katrina on health deficiencies.

Exploring the relationship between entrepreneurial failure and conflict between work and family from the conservation of resources perspective

PurposeConflict between work and family is a significant issue for entrepreneurs. The purpose of this study is to explore the effect of entrepreneurial failure on both family–work conflict (FWC) and work–family conflict (WFC) and the moderating role of perceived control of time and organizational slack based on conservation of resources (COR) theory.Design/methodology/approachThis study used a questionnaire to explore the relationship between entrepreneurial failure, FWC/WFC, perceived control of time and organizational slack. Data were collected from the Chinese context in 2018 and as a result received 318 valid questionnaires, obtaining a response rate of 63.6 per cent.FindingsThe study finds that entrepreneurial failure has a significant relationship with FWC but a nonsignificant relationship with WFC and that perceived control of time and organizational slack moderate the relationship between entrepreneurial failure and FWC/WFC.Originality/valueThis study aligns the field of family–work (work–family) conflict and entrepreneurial failure. It addresses a research gap in the conflict literature by introducing one form of resource loss: entrepreneurial failure as a source of conflict between work and family based on COR theory and the work–home resources model. The study also enriches the literature on the social cost of entrepreneurial failure by exploring the crossover effect of entrepreneurial failure on conflicts in the family domain. Furthermore, the study advances the understanding of managing conflict between work and family after entrepreneurial failure.

Is organizational slack honey or poison? Experimental research based on external investors' perception

Organizational slack is an important topic in the organization literature. The extant research has documented both the positive and the negative attributes of slack. However, regarding the effect of organizational slack on external investors' investment decisions, little is known. Based on insights drawn from the signaling and cognitive bias literature, this study proposed that organizational slack provides a signaling effect for external stakeholders and positively affects their subsequent decision making. We further proposed that external stakeholders are subject to the influence of cognitive bias and that the strength of the positive effect of slack is contingent on the context of the organization being a state-owned or a private firm. An experimental research design was used to test these hypotheses. Consistent with our predictions, we found that organizational slack has a positive signaling effect on external investors' investment decisions and that this positive effect is weaker in state-owned firms than in private firms. The contributions and implications of this study are also discussed.

Heterogeneity in industry–university R&D collaboration and firm innovative performance

University–industry R&D collaboration is a key driver of participating firms’ technological capability. However, there is still debate on the determinants of a firm’s innovation performance, especially in relation to the characteristics of collaboration and organizational slack. We lay the foundation for our theoretical framework by establishing testable hypotheses on the effects of the characteristics of university–industry collaboration and organizational slack on the innovation performance of participating firms. Based on a panel data of 2914 firm-year cases for the top 200 U.S. R&D firms, estimates obtained from quantitative techniques produce consistent results and support our predictions. Collaboration breadth, network centrality, unabsorbed slack, collaboration experience and collaboration proactiveness are associated with innovation performance. Moreover, a firm’s higher absorbed slack exerts a negative influence on innovation performance. The managerial implications and future research directions are discussed.

The multiple mediation effect of absorptive capacity on the organizational slack and innovation performance of high-tech manufacturing firms: Evidence from Chinese firms

Previous studies have been conducted on how organizational slack impact on the firms' innovation performance. However, there are few researches on how slack availability impact on the firms' innovation performance. In addition, absorptive capacity is also an important factor affecting innovation performance, but there is no literature focusing on the important role of absorptive capacity on organizational slack and firms' innovation performance. Therefore, it is necessary to combine organizational slack, absorptive capacity and innovation performance to analyze. In addition, high-tech manufacturing firms are the pillars of the country's economic development, and its development affects the country's international competitiveness. Therefore, it is very important to analyze the promotion mechanism of innovation performance for promoting national competitive advantage. Based on this, we classify organizational slack from the perspective of slack availability, and analyze the effects of different dimensions of organizational slack and absorptive capacity on innovation performance in high-tech manufacturing firms. Additionally, we compare and analyze the multiple mediation effects of two absorptive capacities on organizational slack and innovation performance. Using the data from Chinese high-tech manufacturing firms from 2016 to 2018, we construct a panel data model to conduct empirical analysis and obtain the following research findings: with the increase of available slack and potential slack, the innovation performance of high-tech manufacturing firms exhibits an initial increasing trend and then a decreasing trend. In contrast, with the increase of recoverable slack, the innovation performance of high-tech manufacturing firms exhibits an initial decreasing trend and then an increasing trend. In addition, we use the bias-corrected bootstrap method to test the multiple mediation effects of the two absorptive capacities, and find that available slack can influence the innovation performance of high-tech manufacturing firms through realized absorptive capacity. In addition, potential slack can influence the innovation performance of high-tech manufacturing firms through potential absorptive capacity and realized absorptive capacity.

Is the restructuring-performance relationship moderated by the economic cycle and the institutional environment for corporate governance?

This study analyses the effect that the institutional environment for corporate governance and the economic cycle have on the relationship between the business portfolio restructuring (BPR) strategy and corporate performance. For this purpose, we use institutional theory, incorporating the notion of organizational slack to highlight the differences in firm performance between institutional settings along the different phases of economic cycle. We found that market-oriented corporate governance systems generate, during a period of economic growth, a smaller positive effect of each particular BPR movement on company performance, compared to network-oriented systems. Additionally, market-oriented corporate governance systems contribute to counteract part of the negative effect of the economic crisis. In contrast, network-oriented corporate governance systems are not able to avoid the potentially negative effect of an economic crisis on this relationship, amplifying the negative effect of the economic crisis on performance. We use data from 15 European countries for the period 1998–2015.

The implications of CEO power on the relationship between firm resources and innovation

AbstractWe examine the link between firm resources and firm innovation intensity, especially the drivers of innovation and organizational slack. We extend the organizational slack and innovation literature by examining its interplay with CEO power and industry level constraints on that power. We examine the influence of human resource slack, CEO power, and industry concentration on R&D intensity. Our study examines all publicly traded US firms over a 10-year period, giving us over 13,400 firm years to look at. Our results indicate that organizations with excess human capacity do on average show higher investments in R&D. However, we also find that in concentrated industries, where CEOs are less constrained by competitive pressure, powerful CEOs do interfere in this strategic choice and weaken the slack–innovation relationship. Even though CEO's in these situations may have sufficient slack resources, they appear inclined to reallocate such resources to purposes other than innovation.

The interface of organisational slack with innovation: a study of a textile company

The interface of organisational slack with innovation: a study of a textile company

The influence mechanism of organizational slack on CSR from the perspective of property heterogeneity: Evidence from China’s intelligent manufacturing

It has become an important strategy for Chinese manufacturing companies to actively fulfill social responsibility. However, it is subject to the profitability of economic organizations and resource specificity, slack resources are the main source of

Buyer-Side Institution-Based Trust-Building Mechanisms: A 3S Framework with Evidence from Online Labor Markets

ABSTRACTBuyer-side, institution-based trust-building mechanisms, which usually appear in the form of guarantee-required schemes, are prevalently provided by the online labor marketplace for buyers to voluntarily adopt. We integrate signaling theory and organization theories of organizational slack and contractual incompleteness to propose a 3S (screening, signaling, and slack) effect framework to explain how the adoption of buyer-side trust-building mechanisms (i.e., guarantee-required schemes) affects freelancers’ participation and bidding behavior. Based on a data set from one of the leading online labor markets in China, this study finds that guarantee-required tasks attract fewer but higher-quality freelancers. Furthermore, freelancers bid shorter durations but less-detailed proposals in guarantee-required tasks. This research also examines and finds support for the moderating role of task complexity in weakening screening and slack effects. Our research complements literature on trust-building mechanisms and online labor markets by providing a new framework (i.e., 3S effect framework) and empirical evidence with large-scale observational real-life data. Our study suggests that buyers should take both the advantages (e.g., bidders with higher-quality features, bids with shorter bidding durations) and disadvantages (e.g., fewer bids, bids with less-detailed proposals) into consideration and make appropriate trade-offs when making decisions on the adoption of buyer-side trust-building mechanisms.

Organizational Slack of Primary Schools Principals in Minia Governorate and its Relation to Teachers' Job Satisfaction

The current study aimed to identify the reality of organizational slack among primary school principals and job satisfaction among primary school teachers, Minia Governorate, Egypt; and to monitor the relationship between organizational slack among primary school principals and teachers' job satisfaction. The study utilized the descriptive research methodology relying on a questionnaire as a study tool prepared by the researcher, which was applied to a sample consisted of 531 teachers in the primary schools in Minia Governorate centers. Results of the study revealed that the level of organizational slack among primary school principals from teachers' points of view were moderate in all dimensions of this axis which were as follows: laws and regulations, administrative and technical tasks, the relationship with colleagues and the relationship with students and that the level of job satisfaction among primary school teachers in Minia Governorate centers from teachers' points of view were high in the dimension of the nature of work inside the school; while it was moderate in the dimensions of laws and regulations regulating work and the relationship with principals, in addition it was law in the dimension of salaries, rewards and promotions. Results also indicated that there was a statistically significant relationship at the level of (α ≥0.001) between the organizational slack and job satisfaction dimensions in primary schools in Minia Governorate centers at a moderate level from teachers' points of view.

In the driving seat: Executive’s perceived control over environment

This study investigates executives’ perceived control over their environment. Drawing on managerial cognition and upper echelons theory, we test a model that specifies perceived control over environment as made up of organizational routines (i.e. information processing capability and decision comprehensiveness) and executive understanding of performance (i.e. organizational effectiveness and organizational slack). Findings from a scenario study of 46 executives in 14 pharmaceutical firms show perceived control over the internal environment can be explained by information processing capability, and the interactions between organizational routines and resources. Perceived control over the external task environment can be explained by information processing. This difference accounts for the extent to which executives perceive that they can control their environment, adding to the more traditional view focused on the requirements for a strategic fit to environment. JEL Classification: M10, M12, L20

Organizational slack and innovativeness: the moderating role of institutional transition in the Asian financial crisis

Research has suggested that organizational slack can positively or negatively affect the innovativeness of a firm; however, the point at which such slack has a more salient impact remains unclear. This study adds to the literature by highlighting how the effects of organizational slack may differ depending on institutional environments, a market-oriented or a government-driven institutional environment. We posit an inverted U-shaped relationship between organizational slack and innovati`veness. We further hypothesize that institutional environments moderate this relationship. We find broad support for these arguments in a comprehensive data set representing South Korean manufacturing firms from 1992 to 2009.

Impacts of Exploration and Exploitation on Firm's Performance and the Moderating Effects of Slack: A Panel Data Analysis

The concept of exploration and exploitation has received increasing attention from researchers and managers. Yet, there are few empirical studies on the dynamic effects of exploration and exploitation based on panel data. In addition, the literature is divided in predicting the effects of organizational slack on exploration and exploitation. This study extends the current literature by examining the dynamic effects of exploration and exploitation on the firm's performance. This study further categorizes organizational slack into absorbed and unabsorbed slack, and reveals that each has its own unique moderating effect on exploration and exploitation. This resolves the conflicting view of how organization slack affects exploration and exploitation. Based on a panel data of 125 high technology firms collected using a text mining technique, our analysis reveals a three-stage “horizontal S” relationship between exploration and firm's performance. This study also identifies that absorbed slack facilitates exploitation but impairs exploration, while unabsorbed slack facilitates exploration.

Understanding market agility for new product success with big data analytics

The complexity that characterises the dynamic nature of the various environmental factors makes it very compelling for firms to be capable of addressing the changing customers' needs. The current study examines the role of big data in new product success. We develop a qualitative research with case study approach to look at this. Specifically, we look at multiple cases to get in-depth understanding of customer agility for new product success with big data analytics. The findings of the study provide insight into the role of customer agility in new product success. This study unpacks the interconnectedness of the effective use of data aggregation tools, the effectiveness of data analysis tools and customer agility. It also explores the link between all of these factors and new product success. The study is reasonably telling in that it shows that the effective use of data aggregation and data analysis tools results in customer agility which in itself explains how an organisation senses and responds speedily to opportunities for innovation in the competitive marketing environment. The current study provides significant theoretical contributions by providing evidence for the role of big data analytics, big data aggregation tools, customer agility, organisational slack and environmental turbulence in new product success.

Internationalization, Strategic Slack Resources, and Firm Performance: The Case Study of Vietnamese Enterprises

The study attempted to fill a gap in the research on international business by providing fresh evidence of the effect of the degree of internationalization on firm performance and the influence of organizational slack on this relationship. By applying a fixed-effects model to data from 569,767 Vietnamese enterprises from 2007 to 2015, a significant W-shaped linkage between internationalization and firm performance was revealed. Importantly, the results also emphasized the importance of three types of slack in the first stage of the internationalization process: absorbed slack human resources, other absorbed slack resources, and unabsorbed slack resources.