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Exploring the role of organizational slack in the COVID-19 pandemic: an empirical study of the manufacturing industry

Zonghui Li (Davis College of Business, Jacksonville University, Jacksonville, Florida, USA)

Corporate Governance

ISSN: 1472-0701

Article publication date: 6 May 2021

Issue publication date: 22 September 2021

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Abstract

Purpose

Drawing on the behavioral theory of the firm (BTF), this study aims to understand the role of organizational slack in the manufacturing industry during the COVID-19 pandemic.

Design/methodology/approach

Using panel data of publicly traded manufacturing firms in the USA over a 12-quarter time period, this study uses generalized least squares modeling to test the hypothesized relationships.

Findings

Results show that the COVID-19 pandemic has a negative impact on manufacturing firms’ performance and organizational slack weakens the negative relationship between the COVID-19 pandemic and firm performance. In addition, when a positive performance aspirational gap (PAG) exists, the negative relationship between COVID-19 pandemic and firm performance in firms with high levels of organizational slack is further weakened.

Originality/value

This study contributes to organizational studies by investigating the contingent impact of organizational slack in the setting of COVID-19 pandemic. This study also contributes to the BTF by investigating how firm PAG, combined with the abundance of organizational slack, moderates the impact of COVID-19 pandemic on firm performance.

Keywords

Citation

Li, Z. (2021), "Exploring the role of organizational slack in the COVID-19 pandemic: an empirical study of the manufacturing industry", Corporate Governance, Vol. 21 No. 6, pp. 996-1010. https://doi.org/10.1108/CG-09-2020-0401

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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