Role of resource slack in rapid international expansion of restaurant companies
International Journal of Contemporary Hospitality Management
ISSN: 0959-6119
Article publication date: 30 January 2019
Issue publication date: 30 January 2019
Abstract
Purpose
The purpose of this study is to investigate the relationship between rapid internationalization and firm value in US restaurant companies. This study also identified the moderating role of available slack, potential slack and recoverable slack on the relationship of rapid internationalization and the firm’s value.
Design/methodology/approach
A hierarchical regression analysis with panel fixed effects was used in this study. Samples were drawn from publicly traded US restaurant companies, and span from 1993 to 2016 with 264 firm-year observations was used for the study’s analysis.
Findings
Drawing on Penrose’s seminal theory of firm-growth that a firm needs excess resources to grow and that the amount of slack resources directly influences a firm’s international growth, this study found that available slack alleviates the negative impact of rapid international expansion in achieving higher firm value.
Originality/value
This study is one of the few analyses that examined the speed of rapid international expansion in the service context. In addition, this study contributes to existing literature by examining three different slack resources with regards to the speed of international expansion. The findings of this study shed light on restaurant companies whose financial resources are critical for value-adding international expansion.
Keywords
Acknowledgements
The authors would like to thank University of Houston for their financial support through the New Faculty Research Program.
Citation
Vaughan, Y. and Koh, Y. (2019), "Role of resource slack in rapid international expansion of restaurant companies", International Journal of Contemporary Hospitality Management, Vol. 31 No. 1, pp. 2-20. https://doi.org/10.1108/IJCHM-07-2017-0415
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited