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While previous strategy research has provided significant attention to resource slack and its important roles in firm performance, particularly through strategic agility and flexibility in responding to environmental conditions, the majority of such theory and empirical work was developed for large business contexts. Therefore, the understanding of the relative contributions of absorbed and potential slack, particularly for resource-constrained small businesses, remains largely under theorized and unexamined. As many small businesses often face internal resource limitations, the ability to access external resources, in addition to internal resources, is likely significant, for firm performance, especially when small firms face high economic uncertainty. The paper aims to discuss these issues.

In this paper the authors utilize a data set from National Federation of Independent Business on small business economic trends. The sample consists of approximately 13,000 US-based small and medium businesses.

The findings highlight the importance of resource slack in firm performance offering general support for the applicability of classic management theories to the small business context. Environmental hostility and competitive intensity appear to positively moderate the observed relationship between both absorbed and potential resource slack and performance, but in different ways. Environmental hostility positively moderates the relationship between potential slack and firm performance, while competitive intensity positively moderates the relationship between absorbed slack and firm performance.

Because most classic theories in strategic management were only theorized for, and examined through, large organizations, entrepreneurship research should consider these potential limitations and carefully consider factors differing between large and small firms.

Business owners and managers should be aware that not all types of slack have equal performance implications. Absorbed slack is extremely valuable in highly competitive situation. Therefore, business owners should develop plans to recover absorbed slack during highly competitive situations as a defensive strategy. One the other hand, potential slack forces more accountability, which lowers the possibility of small firms using it to engage in price wars, but it is extremely valuable during worsening economic conditions.

In this paper the authors separate absorbed slack from potential slack conceptually and then test their individual effects on firm performance. Through this study, the authors establish boundary conditions for the important role of resource slack on performance through the moderating roles of environmental hostility and competitive intensity.

The purpose of this paper is to contribute to the healthcare management literature and improve the understanding of the slack and performance link by examining the hospital slack and performance relationship using a sample of 148 US hospitals.

Using cluster analysis, ANCOVA and means comparisons, this study identifies different hospital slack configurations and their associated performance implications.

The results demonstrate that different configurations of slack resources result in different levels of hospital performance. The findings also demonstrate equifinality in this relationship suggesting that some configurations of slack can result in similar levels of performance.

The results indicate that managerial attention should be paid to not only identifying appropriate levels and types of slack for hospitals but also to appropriate ways to bundle these resources. The findings also suggest there may be multiple ways for hospitals’ administrators to effectively manage and bundle slack resources.

Organizational slack and its impact on organizational performance is an important area of research within the management literature. Unfortunately, no known studies have examined how different types of slack resources are configured or bundled together in healthcare organizations and how this impacts firm performance. This study provides a significant contribution to the literature by providing a first step in understanding the slack and performance relationship in the hospital industry.

This study aims to investigate the influence of resource slack on the decline of Brazilian companies, with a particular focus on the moderating role of environmental dynamism. The authors specifically examine three types of resource slack: available, potential and recoverable. These represent surplus resources that exceed what is necessary for the organization’s basic operations. The role of environmental dynamism, characterized by rapid changes in customer preferences, technologies and competitive dynamics, is considered as a moderating factor in this relationship.

The authors used data from Brazilian companies spanning from 1997 to 2008. The research sample was composed using the matching-pairs method, which included a group of publicly traded companies that experienced decline (43 companies) and a group that did not (40 companies) within the specified timeframe.

Findings of this study indicate that the presence of available slack, being more liquid resources, decreases the likelihood of organizational decline. Furthermore, the moderation effect of potential resource slack can mitigate decline in companies operating in dynamic industries.

This research provides valuable insights into the impact of slack resources on potential organizational turnarounds. Given the relative scarcity of resources in these companies compared to those in developed countries, whether they be financial, human or technological, the study highlights the unique influence of slack in a less explored institutional environment. This research underscores the importance of examining the decline of Brazilian companies from a broader perspective, emphasizing that decisions regarding resource use can have significant implications on a company’s trajectory, either amplifying or mitigating its decline.

¿Cuál es el impacto del slack de recursos en el declive de grandes empresas brasileñas? Para responder a esta pregunta, hemos probado hipótesis por separado para tres tipos de salck de recursos: disponible, potencial y recuperable. Estos excedentes consisten en recursos en exceso más allá de lo necesario para mantener la organización funcionando.

Desarrollamos un estudio empírico cuantitativo y longitudinal con datos de empresas brasileñas de 1997 a 2008. Adoptamos el método de pares emparejados, componiendo la muestra de investigación con un grupo de empresas cotizadas en bolsa que declinaron (43 empresas) y otro que no declinó (40 empresas) en el período de tiempo.

Encontramos que la disponibilidad de recursos más líquidos reduce la posibilidad de declive. El efecto de moderación en el slack de recursos potenciales para empresas en industrias dinámicas puede mitigar el declive.

Esta investigación contribuye a una mejor comprensión del efecto del excedente en posibles recuperaciones. Extender los estudios de recursos excedentes al contexto de empresas brasileñas mostró la influencia que el excedente ejerce en un ambiente institucional relativamente menos explorado. Ya sea financiero, humano o tecnológico, la escasez de recursos es más pronunciada que en empresas de países desarrollados. Esta investigación llama la atención sobre el hecho de que la declinación de empresas brasileñas se analiza desde una perspectiva más amplia. Las decisiones sobre cómo la empresa usa sus recursos pueden afectar positiva o negativamente la declinación de las empresas, reforzando la importancia de discutir esta relación.

A Qual é o impacto da folga de recursos no declínio de grandes empresas brasileiras? Para responder a essa pergunta, testamos hipóteses separadamente para três tipos de folga de recursos: disponível, potencial e recuperável. Essas folgas consistem em recursos além do necessário para manter a organização funcionando.

Desenvolvemos um estudo empírico quantitativo e longitudinal com dados de empresas brasileiras de 1997 a 2008. Adotamos o método de pares combinados, compondo a amostra de pesquisa com um grupo de empresas de capital aberto que declinaram (43 empresas) e outro que não declinou (40 empresas) no período.

Descobrimos que a disponibilidade de recursos mais líquidos reduz a possibilidade de declínio. O efeito moderador na folga de recursos potenciais para empresas em indústrias dinâmicas pode mitigar o declínio.

Esta pesquisa contribui para uma melhor compreensão do efeito da folga sobre possíveis recuperações. A extensão dos estudos de folgas de recursos para o contexto de empresas brasileiras mostrou a influência que a folga exerce em um ambiente institucional relativamente menos explorado. Seja financeiro, humano ou tecnológico, a escassez de recursos é mais pronunciada do que em empresas de países desenvolvidos. Esta pesquisa chama a atenção para o fato de que o declínio de empresas brasileiras é analisado sob uma perspectiva mais ampla. Decisões sobre como a empresa usa seus recursos podem afetar positiva ou negativamente o declínio das empresas, reforçando a importância de discutir essa relação.

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.

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

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.

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.

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.

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.

This study aims to examine the relationship between organizational capacity, slack resource, platform strategic choice and firm performance. It also tackles the endogenous issues regarding the strategic choice of platform types.

This study uses Heckman’s two-stage procedures to examine the relationship between the variables. The sample in this study comes from Compustat annual company and segment files. The sample used in the main analysis consists of 252 individual corporations globally and 3,528 firm-year observations from 2004–2017.

The empirical results suggest that: (1) firms are more likely to develop physical platforms than virtual platforms when they possess higher levels of available slack, potential slack, research and development (R&D) capacity and marketing capacity; (2) in general, firms developing physical platforms perform better than firms developing virtual platforms after the endogeneity bias are controlled; and (3) firms that choose to develop physical platforms perform better than if they had chosen to develop virtual platforms.

This study contributes to the platform research literature by proposing the endogenous role of platform type choice in firm performance in the context of the retail industry. Prior conceptual and theoretical platform studies have seldom focused on the retail industry through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies. This study also presents many opportunities for further explorations on the relationship between firm strategic choice and firm performance in the context of platform retail industry.

The findings of this study suggest that firms must realize that their performance is not necessarily affected by these platform type choice determinants in terms of potential slack, available slack, R&D capacity and marketing capacity. By contrast, they should pay more attention to developing physical platforms if it is possible. The study findings indicate that although virtual platforms have grown rapidly because of the development of technology, firm performance is at all times superior when firms choose to develop physical platforms.

Prior platform studies have focused on the topic of network structure, platform architecture, pricing strategy, platform leadership and platform design and governance within the context of video game industry, software industry, hardware industry and telecommunications industry. Seldom of them focus on other industries through a strategic choice perspective. Furthermore, one of the contributions of this study is the derivation of empirical support for the research’s prediction using data from actual firms carried out by global physical and virtual platform companies.

Management research has emphasized the effects of slack resources on the decision-makers’ strategic choices. Behavioral theorists have argued for a positive effect of slack through encouraging search and innovation while agency theorists have emphasized that slack can accentuate the principal–agent problem, which negatively affects firm performance. This paper aims to extend this argument and empirically investigate the separate effects of three types of slack resources (i.e. available, recoverable and potential) on firm performance in an important emerging market, namely, the Gulf Cooperation Council (GCC).

The two-step system generalized method of moments (Sys-GMM) is applied to a panel of 360 firms in the six GCC countries, namely, Kuwait, Saudi Arabia, UAE, Qatar, Oman and Bahrain, over the period between 1999 and 2019.

The authors find that available and potential slack are both negatively associated with firm performance. The relationship between recoverable slack and performance is quadratic (inverse U-shaped) where recoverable slack improves performance only up to a specific point, but after that level, recoverable slack starts to negatively affect the performance of the firm.

This paper contributes to the literature in three important ways. First, this paper advances a first attempt to differentiate between three separate types of slack on firm performance in the context of the GCC market. Second, this paper empirically investigates the presence of the principal–agent problem in the GCC market and relates it to the ongoing debate on the agency effects of slack resources. Finally, this paper underlines the effects of institutional frameworks and environments on the relationship between slack resources and firm performance.

This research analyzes the green activities implemented by banks in Indonesia following a new regulation on sustainable finance and the role of slack resources to fund the initiatives. Green practices of 35 banks in 2020–2021 were evaluated through the disclosure using green banking disclosure index (GBDI). The results show that the green practices have been disclosed adequately; however, no significant association was found for the role of financial and potential slack resources. This reflects the facts that the green activities might not have been adequately implemented and the organization’s resources might not have been allocated to support the green practices. The research periods that were still overloaded with COVID-19 issue might hinder the banks from the adequate and appropriate allocation of resources toward green practices. This research recommends a prioritization approach for the implementation of the sustainable finance regulation by banks and authorities through the increased implementation of substantive green practices, not only the increased disclosures.

Although slack resources and their relationship to performance have been widely studied in the literature, the temporal symmetry of this relationship, and the duration of its effects, are still unknown aspects and are the objective of this paper.

To evaluate this effect, an exploratory study has been designed on a sample of 449 Spanish industrial companies over a period of 12 years, assessing the impact of idle resources on economic and financial profitability. By means of hierarchical regressions, the short- term, medium- term and long-term effects of slack resources have been evaluated.

The results show that the impact on performance depends on the type of resource considered. Available slack has a consistent and positive effect on economic profitability in the short term. Other types of slack show persistent effects on performance, but, in the case of the recoverable slack, with a negative sign that contradicts the benefits provided by these resources. Finally, potential slack only has a permanent effect on financial profitability, but the sign changes depending on the economic context under consideration. There are also differences in the duration of the effects according to the type of resources.

This paper advances the knowledge about the slack-performance relationship over time that has been scarcely studied.

閒置資源與表現的關係從文獻中可見得到廣泛的研究。唯這關係的時間對稱性及其影響的持續期則是未知之數，這正是本研究的目的。

此為一探索性研究，以評估這影響。研究樣本為449 間西班牙工業公司，研究為期12年，目的為評估閒置資源對經濟和財務盈利能力的影響。研究使用層次回歸，評估了閒置資源的短期、中期及長期的影響。

研究結果顯示、閒置資源對表現的影響是視乎被考慮之資源所屬種類的。可用冗餘就短期而言，對經濟盈利能力產生一貫積極的影響。其它種類的閒置資源對表現有持續的影響。但可恢復的冗餘，則與這些資源會帶來好處的現象相矛盾，帶來負面跡象。最後、潛在的冗餘對財務盈利能力只產生持久的影響，唯有關的跡象則會視乎被考慮的經濟環境而改變。致於影響的持續期則會根據資源的種類而有所不同。

本研究使我們更了解冗餘與表現在時間推移上的關係，而探討這關係的研究是罕見的。﹞

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.

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.

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.

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.

Companies vary in their attitudes toward regulatory (ethics) risk. The purpose of this study is to assess how regulatory risk‐averse, risk neutral and risk seeking companies employ distinct managerial risk and slack accumulation strategies and differ in their auditor scores and bankruptcy risk.

The authors test their hypotheses using the GAO‐assembled database of financial restatements that allows contrasting voluntary restaters (firms that restated without being prompted either by external auditors or the SEC) and forced restaters (firms requested to restate by the SEC or external auditors). The paper uses logistic regression for comparing different groups of firms to test the hypotheses.

The results of the data analysis mostly supported the hypotheses. The findings suggest that a firm's attitude towards regulatory risk is associated with organizational slack (available and potential), risk (managerial and organizational), and auditor's rating.

Some limitations of the study are: use of cross sectional data does not allow testing causal effects, relying on GAO office for categorizing firms in different regulatory category introduces the possibility of bias in analysis, and use of only North American firms in the sample limits the generalizability of the findings.

Firms' attitudes toward regulatory risk and their respective risk and slack management strategies could be used to detect fraud early on before such firms transgress from the realm of legality to borderline legality and illegality.

Some contributions of the study are: it shows that a firm's fraud tendency or regulatory risk behavior is associated with the type of slack accumulated and available in the firm, regulatory risk‐averse companies take less managerial and bankruptcy risks, and earn higher evaluations from auditors, it demonstrates that regulatory risk‐averse companies differ from regulatory risk neutral companies.