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Article
Publication date: 31 May 2021

Renhuai Liu, Chao Li and Mengjun Huo

The purpose of this paper is to empirically analyze the impact of chief executive officer (CEO) turnover on strategic change and explore the mediating role of…

Abstract

Purpose

The purpose of this paper is to empirically analyze the impact of chief executive officer (CEO) turnover on strategic change and explore the mediating role of organizational slack between them, as well as the moderating role and joint moderating role of top management team (TMT) external social network, ownership nature and industry type.

Design/methodology/approach

Based on the upper echelons theory, resource allocation theory and structuration theory, this paper takes the unbalanced panel data of A-share listed companies in Shanghai and Shenzhen Stock Exchanges of China from 2001 to 2018 as the research sample, uses ordinary least squares (OLS) regression method and fixed effect model to study the relationship between CEO turnover and strategic change, and focuses on the mediating mechanism and moderating mechanism between them.

Findings

The authors find that CEO turnover is positively related to strategic change. When a CEO turns over, a new CEO will initiate strategic change. Precipitation organizational slack plays a mediating role between CEO turnover and strategic change. Non-precipitation organizational slack has no mediating effect between CEO turnover and strategic change, which is embodied as “suppressing effects.” When the non-precipitation organizational slack variable is controlled, the impact of CEO turnover on strategic change will be enhanced. TMT external social network, ownership nature and industry type all negatively moderate the relationship between CEO turnover and strategic change. TMT external social network and ownership nature have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive effect on strategic change in both state-owned enterprises and non-state-owned enterprises, but the promotion effect is stronger in non-state-owned enterprises. When TMT external social network is large, the positive effect of CEO turnover on strategic change in state-owned enterprises is from strong to weak, but in the non-state-owned enterprises is from weak to strong. TMT external social network and industry type have a joint moderating effect between CEO turnover and strategic change. When TMT external social network is small, CEO turnover has a positive impact on strategic change in high-tech enterprises and non-high-tech enterprises, but the promotion effect is stronger in non-high-tech enterprises. When TMT external social network is large, the positive impact of CEO turnover on strategic change in high-tech enterprises is from strong to weak, but in the non-high-tech enterprises is from weak to strong.

Originality/value

On the basis of previous studies, this paper further expands the research scope of the mechanism of CEO turnover on strategic change, echoing the research arguments of relevant scholars. At the same time, the research results reveal the mechanism of organizational slack, TMT external social network, ownership nature and industry type in the relationship between CEO turnover and strategic change, and further deepen the application of upper echelons theory, resources allocation theory and structuration theory in China. In addition, the research conclusions of this paper also provide reference value for Chinese enterprises in carrying out strategic change, promoting enterprise transformation and improving the level of corporate governance, and help to enhance the understanding and attention of Chinese enterprises to CEO turnover, organizational slack, TMT external social network, strategic change and corporate governance under the background of high-quality economic development.

Details

China Finance Review International, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 22 May 2009

Yi‐Chia Chiu and Yi‐Ching Liaw

The purpose of this paper is to attempt to reconcile previous views of the relationship between organizational slack and performance by examining the influences of…

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2616

Abstract

Purpose

The purpose of this paper is to attempt to reconcile previous views of the relationship between organizational slack and performance by examining the influences of heterogeneous corporate strategy and different slack resources. Differences in performance resulting from variations in slack can also be moderated by strategy.

Design/methodology/approach

The proposed model was tested by examining operating and financial information from 529 Taiwan high‐tech companies during the period 1997‐2005. Owing to the study, data were both cross‐sectional (across firms) and time series (over years), a panel data approach were applied for hypothesis testing.

Findings

The results broadly demonstrate that relationships differ based on strategy and organizational slack. Additionally, this study is the first to empirically identify a U‐shaped relationship between slack and performance, indicating that, in certain circumstances, either more or less slack is better for performance.

Originality/value

The results support a dynamic perspective regarding the slack‐performance relationship was proposed for different strategy and different types of slack resources. Moreover, the authors argue that not only resource heterogeneity, but also firm strategic orientation, should be considered when performing change activities. Restated, the authors believe the best interest for a firm aspiring to conduct organizational change behaviors is to maintain the “fitness” among the environment, strategy orientation, and slack resources will induce higher performance. This study, thus demonstrates how organizational change behaviors are influenced by slack resources and strategy heterogeneity.

Details

Journal of Organizational Change Management, vol. 22 no. 3
Type: Research Article
ISSN: 0953-4814

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Article
Publication date: 1 August 2008

Antonia Ruiz‐Moreno, Víctor J. García‐Morales and Francisco Javier Llorens‐Montes

The goal of this paper is to examine how firms employ slack resources to enhance the relationship between organizational climate and perceptions of support for innovation…

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2603

Abstract

Purpose

The goal of this paper is to examine how firms employ slack resources to enhance the relationship between organizational climate and perceptions of support for innovation to obtain sustainable competitive advantages.

Design/methodology/approach

The paper reviews the different contributions to the study of the relation between dimensions of the organizational climate, perceptions of support for innovation and organizational slack. Building on previous research, a series of hypotheses are formulated on the influence of the dimensions of organizational climate on perceptions of support for innovation and on how organizational slack moderates these relations. In contrast to earlier studies, the paper's work is based on managers' perceptions. A sample of 202 quality managers is then used to verify empirically the hypotheses which have been proposed. Finally, the main conclusions of the research are presented.

Findings

The results of the investigation reveal first, that the relation between the dimensions of organizational climate, perceptions of support for innovation and performance is moderated by organizational slack. Second, that a strong connection exists between the different dimensions of organizational climate. Finally, the results of the research also show that a strong connection exists between the different dimensions of organizational climate and perceptions of support for innovation.

Research limitations/implications

The conclusions of this study may be subject to several limitations that suggest further possibilities for empirical research. First, survey data based on self‐reports may be subject to social desirability bias. Second, the cross‐sectional nature of the research allows us to analyze only a specific situation in time of the organizations studied, not their overall conduct through time. Future research should place more emphasis on longitudinal studies.

Practical implications

This paper maintains that the relation between the different dimensions of organizational climate, perceptions of support for innovation and performance are determined and limited by the nature and variety of resources that the organization can bundle and apply to the maintenance and development of competitive advantages, according to the availability of organizational slack to be applied directly to organizational climate and perceptions of support for innovation.

Originality/value

The paper has provided evidence of how managers, depending on the presence or absence of slack, combine the dimensions of organizational climate differently to create the perception of support for innovation necessary to implement innovations, which in both cases means improvement in the organization's performance.

Details

Personnel Review, vol. 37 no. 5
Type: Research Article
ISSN: 0048-3486

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Article
Publication date: 15 June 2015

Yasir Fadol, Belal Barhem and Said Elbanna

The purpose of this paper is to improve the understanding of the mediating role of the extensiveness of strategic planning on the relationship between slack resources and…

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1688

Abstract

Purpose

The purpose of this paper is to improve the understanding of the mediating role of the extensiveness of strategic planning on the relationship between slack resources and organizational performance.

Design/methodology/approach

The study uses empirical data gathered from 102 usable replies from private and also public hospitals in the United Arab Emirates (UAE).

Findings

The findings indicate the existence of a positive relationship between slack resources and organizational performance and show that the extensiveness of strategic planning plays a mediating role in this relationship.

Research limitations/implications

The authors highlight the exploratory nature of the study considering its unusual setting, namely, the UAE’s health care sector.

Practical implications

Several implications of the findings for managerial and policy practices in the UAE health care sector are discussed.

Originality/value

This study contributes to the existing literature on management, health care, and developing countries by examining the role of the extensiveness of strategic planning in mediating the relationship between slack resources and organizational performance in the health care industry of a developing country.

Details

Management Decision, vol. 53 no. 5
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 25 January 2019

Wan Li and Liang Wang

The purpose of this paper is to provide a better understanding of what drives firms’ choice between exploration alliances and exploitation alliances by examining the role…

Abstract

Purpose

The purpose of this paper is to provide a better understanding of what drives firms’ choice between exploration alliances and exploitation alliances by examining the role of organizational slack and its interaction with market uncertainty.

Design/methodology/approach

An empirical study is conducted based on 1,614 alliances formed by 581 US biotechnology firms, and the hypotheses are tested using a zero-inflated multilevel Poisson model.

Findings

The results indicate that firms’ strategic choice to pursue exploration or exploitation alliances is a reflection of organizational intention and adaptation to environmental turbulence. More specifically, firms with more financial slack tend to form more exploration alliances and fewer exploitation alliances. However, under high market uncertainty, firms with financial slack tend to establish more exploitative partnerships and avoid exploration collaborations.

Originality/value

This paper contributes to the literature on exploration–exploitation alliances, which tends to fall short of providing an understanding of why organizations pursue such alliances. By identifying the impact of organizational slack and its interaction with market uncertainty, this study shows that organizations are able to respond to environmental change, and those with capabilities are likely to craft their strategic choice configurations based on their own characteristics.

Details

Management Decision, vol. 57 no. 11
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 15 February 2016

Mahua Guha

There is a preponderance of evidence in the established literature that declining firms have lower levels of organizational slack when compared with surviving firms. To…

Abstract

Purpose

There is a preponderance of evidence in the established literature that declining firms have lower levels of organizational slack when compared with surviving firms. To further advance the current literature, the purpose of this paper is to examine whether or not organizational slack in its various forms differ in declining firms and in surviving firms. Additionally, this study examines whether there is a change in the extent of slack in the declining firms in the years immediately preceding bankruptcy filing.

Design/methodology/approach

t-tests and panel regressions with random effects are performed.

Findings

Available slack, potential slack and total slack of bankrupts significantly differ from that of survivors in each year. However, recoverable slack levels do not differ in bankrupts and survivors. Available slack of bankrupts reduces significantly over the last five years before bankruptcy. Recoverable slack, potential slack and total slack conditions do not drastically deteriorate for the bankrupts over the last few years prior to bankruptcy.

Research limitations/implications

Not confirming to prior evidences, the results of this study suggest that not every type of organizational slack is in a worse condition within a declining firm than in a surviving firm.

Practical implications

Among all the slack types, what differentiates bankrupts from survivors is the amount of available slack. Decreasing available slack within declining firms should forewarn managers of further likely deteriorations.

Originality/value

The results of this study questions the prevailing wisdom that financial resource levels, especially the levels of organizational slack is in a significantly lower level in declining firms than in surviving firms.

Details

Journal of Strategy and Management, vol. 9 no. 1
Type: Research Article
ISSN: 1755-425X

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Article
Publication date: 6 June 2016

Chengyuan Wang, Biao Luo, Yong Liu and Zhengyun Wei

The paper aims to study the relationship between executives’ perceptions of environmental threats and innovation strategies and investigate the moderating effect of…

Abstract

Purpose

The paper aims to study the relationship between executives’ perceptions of environmental threats and innovation strategies and investigate the moderating effect of contextual factor (i.e. organizational slack) on such relations. It proposes a dualistic relationship between executives’ perceptions of environmental threats and innovation strategies, in which different perceptions of environmental threats will lead to corresponding innovation strategies, and dyadic organizational slack can promote such processes.

Design/methodology/approach

The paper is based on a survey with 163 valid questionnaires, which were all completed by executives. Hierarchical ordinary least-squares regression analysis is used to test the hypotheses proposed in this paper.

Findings

The paper provides empirical insights about that executives tend to choose exploratory innovation when they perceive environmental changes as likely loss threats, yet adopt exploitative innovation when perceiving control-reducing threats. Furthermore, unabsorbed slack (e.g. financial redundancy) positively moderates both relationships, while absorbed slack (e.g. operational redundancy) merely positively influences the relationship between the perception of control-reducing threats and exploitative innovation.

Originality/value

The paper bridges the gap between organizational innovation and cognitive theory by proposing a dualistic relationship between executives’ perceptions of environmental threats and innovation strategies. The paper further enriches innovation studies by jointly considering both subjective and objective influence factors of innovation and argues that organizational slack can moderate such dualistic relationship.

Details

Nankai Business Review International, vol. 7 no. 2
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 24 November 2020

Devaki Rau, Luis Flores and Aditya Simha

Planning is a perennially popular management tool with an ambiguous relationship to learning and performance. The purpose of this study attempts to resolve this ambiguity…

Abstract

Purpose

Planning is a perennially popular management tool with an ambiguous relationship to learning and performance. The purpose of this study attempts to resolve this ambiguity. The authors suggest that the critical question is not whether firms need learning for planning to influence performance, but when different firms experience different performance outcomes. The authors propose firms will benefit from strategic planning only when they learn from planning and have the resources to act on their learning.

Design/methodology/approach

The authors collected data from a survey of 293 individuals from 191 publicly listed US firms.

Findings

Organizational learning mediates the relations between strategic planning and organizational performance. This mediated relationship is positively moderated by high levels of human resource slack and moderate to high levels of financial slack.

Research limitations/implications

The study provides evidence for previous theoretical arguments on the planning–learning relationship while extending this research by finding a complicated moderating effect of slack. The study also adds to the existing debate on optimal slack levels by suggesting that having bundles of slack resources may matter more than having uniformly high or low levels of slack. A cross-sectional study means the authors cannot infer causation.

Practical implications

While strategic planning is a common practice, companies may vary in their planning methodologies, influencing the outcomes of planning. Firms seeking to benefit from planning need to have both the mechanisms to learn from planning and slack to deploy these mechanisms.

Originality/value

These findings clarify the planning–learning–performance relationship while challenging the assumption of an average effect of planning on performance across firms.

Details

Management Decision, vol. 59 no. 9
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 November 2019

Taghreed Abu Salim, Balan Sundarakani and Flevy Lasrado

The purpose of this paper is to study the role of slack (both moderating and mediating) to stimulate the relationship between total quality management (TQM) factors and…

Abstract

Purpose

The purpose of this paper is to study the role of slack (both moderating and mediating) to stimulate the relationship between total quality management (TQM) factors and innovation outcomes relative to gaining competitive industry advantages.

Design/methodology/approach

The research methodology includes a multi-item scale questionnaire completed in three waves between 2016 and 2017, and later analysed in 2018. A final response rate of 29.5 per cent was obtained, representing 190 organisations from both manufacturing and service industries in the United Arab Emirates (UAE). Partial least squares structural equation modelling was used to test the multi-collinearity, moderation and mediation analysis.

Findings

Analysis confirmed that factors such as continuous improvement (CI), human resource management (HRM) and information measurement (IM) were positively linked to innovation. However, when slack was introduced as a moderator, innovation outcomes were stimulated through HRM and IM. The results indicate that slack acts as a full mediator for management leadership but only partially mediates supplier quality, IM, CI, HRM and process management.

Research limitations/implications

In terms of geographical coverage, research was limited to the UAE. Organisations striving for excellence through innovation may benefit from the outcomes, as they help in understanding the relationship between TQM and innovation moderated and/or mediated by slack. This could also lead businesses to develop new strategies that harmonise TQM policies with “rationale” slack policies, thus, promoting innovation.

Originality/value

This study is the first to examine the use of slack to stimulate the relationship between TQM factors and innovation outcomes. Using slack as a mediator can help in understanding when TQM might influence innovation, while slack as a moderator could invert the relationship between the two.

Details

The TQM Journal, vol. 31 no. 6
Type: Research Article
ISSN: 1754-2731

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Article
Publication date: 1 April 2002

Tor Busch

Ever since its introduction, the concept of organisational slack has constituted the basis for a considerable body of research within behavioural science. A great deal of…

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1816

Abstract

Ever since its introduction, the concept of organisational slack has constituted the basis for a considerable body of research within behavioural science. A great deal of this research has concentrated on budgetary slack, and within the field of public administration the focus has been on the slack‐ or budget‐maximising bureaucrat. As the reduction of slack is the purpose of many of the techniques which are part of the new public management, there is a need to focus on how to measure changes in the level of slack. The objective of this paper is to discuss the relationship between three central concepts within the research on slack: organizational slack, budgetary slack, and the discretionary budget; to assess whether these concepts are suitable for public organizations; and to discuss problems of measurement.

Details

Managerial Auditing Journal, vol. 17 no. 3
Type: Research Article
ISSN: 0268-6902

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