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The purpose of the paper is to test the slack‐resources hypothesis in corporate social performance (CSP).
Abstract
Purpose
The purpose of the paper is to test the slack‐resources hypothesis in corporate social performance (CSP).
Design/methodology/approach
The paper uses the technique of panel data in a sample of 624 American listed companies from 2001 to 2007. The literature review builds on the contradictions between the instrumental stakeholder theory and the slack‐resources hypothesis to argue that both concepts are not fully compatible.
Findings
The results indicate that prior financial performance, measured as market value added, positively affects CSP. The results further confirm that slack resources are assigned to specific areas of involvement of CSP (product issues, community relations, environmental issues, employee relations and diversity of the work force), rather than to a unified conception of CSP.
Research limitations/implications
The current trend in social responsibility regards Friedman's arguments as old‐fashioned and assumes the instrumental stakeholder to be true. The results presented here indicate that part of Friedman's claims may be occurring in reality, so further investigation is needed before they are disregarded.
Practical implications
The multidimensional nature of CSP, here proposed and confirmed by the exploratory models, indicates that each dimension of social performance may be impacted by the availability of funds different intensities; and according to the instrumental view (assuming the virtuous circle is true), investment in each particular dimension may provide a different level of return to the firm.
Originality/value
The slack resources hypothesis has been the least researched of the two hypotheses relating to the corporate social and financial performance (CSP and CFP) links. Although the slack resources hypothesis may explain the relation as well as the good management hypothesis, most studies tend to focus on the first one, basing their argumentation on the assumption that superior CFP comes as a result of a strategic CSP.
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Gianluca Vitale, Sebastiano Cupertino and Paolo Taticchi
This paper aims to investigate the relationships between business slack resources and environmental performance and considers the possible effects that management commitment…
Abstract
Purpose
This paper aims to investigate the relationships between business slack resources and environmental performance and considers the possible effects that management commitment, corporate strategy to sustainability and innovation intensity can have on such interactions.
Design/methodology/approach
We performed partial least squares path modeling regressions on a sample of 697 non-financial listed companies worldwide, considering a time frame of 13 years.
Findings
Operational and financial slack resources are both detrimental to environmental performance in the short term. Nevertheless, financial slack resources are useful to boost innovation that enhances environmental performance. Environmental performance improvement seems to be more a matter of managerial commitment and strategic approach towards sustainability, rather than the availability of slack resources.
Research limitations/implications
Due to literature shortcomings on which effects slack resources can have on environmental performance, this paper sheds some light on the topic while also highlighting the role of management commitment, corporate sustainability strategy and innovation.
Practical implications
Managers should use financial slack resources in innovation activities to improve environmental performance. In doing so, they need to create retaining earnings to offset any costs using financial slack resources.
Originality/value
Adopting a holistic and net of endogeneity analytical perspective, this paper highlights some virtuous and critical interactions between the managerial commitment and strategic approach to sustainability, the availability of slack resources, innovation intensity and environmental performance to understand which aspects may foster or hinder the ecological transition of businesses.
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This study investigates the behaviour of family firms, family management and family ownership regarding their socioemotional wealth (Corporate Social Responsibility (CSR)) during…
Abstract
Purpose
This study investigates the behaviour of family firms, family management and family ownership regarding their socioemotional wealth (Corporate Social Responsibility (CSR)) during the COVID-19 pandemic and according to their slack resources availability.
Design/methodology/approach
This study employs a multiple regression analysis to analyse 245 firm-year observations from 2020 to 2021.
Findings
Family firms have a negative effect on CSR, as do family management and family ownership. Slack resources (both absorbed and unabsorbed) reduce the negative effect of family firms (and family ownership) on CSR. Unabsorbed slack resources reduce the negative effect of family management on CSR and absorbed slack resources increase the negative effect of family management on CSR. The results are robust with various measurements of slack resources. Extra analyses reveal that family commissioner has no effect on CSR.
Originality/value
To the best of the author’s knowledge, this is the first empirical study to analyse the impact of COVID-19 on the preservation of socioemotional wealth in family firms. This study proves the theoretical argument of prior studies that the preservation of socioemotional wealth in family firms during the COVID-19 pandemic depends on their financial condition. The study also proves that there are different attitudes among family ownership, family management and family firms concerning the use of slack resources for socioemotional wealth preservation that have not been analysed by previous research.
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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…
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.
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Roulin Chen and Ling Cao
Drawing on the “Resource- Capability – Competitive advantage” framework within Natural Resource-Based View, this study is purposed to address problems of manufacturing companies…
Abstract
Purpose
Drawing on the “Resource- Capability – Competitive advantage” framework within Natural Resource-Based View, this study is purposed to address problems of manufacturing companies “turning into the green” issues, providing references for manufacturing companies to achieve green competitive advantage via internal motivation and identity perspectives.
Design/methodology/approach
This study collected survey data from 112 Chinese manufacturing listed enterprises from the Shanghai Stock Exchange, and obtained 418 questionnaires. Following an empirical design, hierarchical regression analysis and Bootstrapping analysis were applied to examine these hypotheses.
Findings
Results show that green innovation behaviors positively mediate the positive relationship between organizational environmental identity and green competitive advantage. Furthermore, slack resource not only positively moderates the interaction effect between organizational environmental identity and green product innovation behaviors, but also moderates the mediation role of green product innovation behavior in the main effect.
Research limitations/implications
The study is limited to the data samples and dynamic evolution between variables. More longitudinal designs and diverse enterprise fields will be considered in future.
Practical implications
The findings provide guidance for manufacturing enterprises to gain green competitive advantage in green manufacturing era from identity value origins. Moreover, the results provide practical suggestions for manufacturing enterprises to enhance green innovation behaviors and integrate useful but slack resources.
Social implications
The findings provide implications for manufacturing industry to increase both the awareness of organizational environmental identity and green innovation behaviors, all of which helps promote the corporate environmental responsibility.
Originality/value
The study breaks the limitation of the existing literature which focuses on the influence of external push factors (e.g. environmental regulation), and bring new visions in constructing green competitive advantage in green manufacturing era, not only extending the identity theory and upper echelon theory, but also enriching the current studies on green management. Also, these findings provide deeper and new insights into risks and uncertain features of green manufacturing era, analyzing how polluted manufacturing enterprises obtain green competitive advantages through the mediating role of green innovation behaviors and the moderating role of slack resource.
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This study aims to focus on the resource-based faultline of a top management team (TMT) and intends to investigate the impact of TMT resource-based faultline on corporate green…
Abstract
Purpose
This study aims to focus on the resource-based faultline of a top management team (TMT) and intends to investigate the impact of TMT resource-based faultline on corporate green innovation, by indicating the environmental management as a mediator and slack resources as a moderator to understand the relationship.
Design/methodology/approach
Based on the empirical data of Chinese listed manufacturing companies from 2008 to 2020, this study assesses the hypotheses using an OLS model with fixed effects of time and industry.
Findings
The results indicate that TMT resource-based faultline is significantly negatively correlated with corporate green innovation. The conclusion remains valid after endogeneity tests and robustness checks. Mechanism test shows that environmental management plays a mediating role in the association between TMT resource-based faultline and corporate green innovation. Moreover, slack resources diminish the negative association between TMT resource-based faultline and corporate green innovation.
Originality/value
The study not only expands the theoretical understanding of the deeper motivation of TMT faultline on corporate green innovation, but also provides a practical reference for optimizing the human resource allocation of the TMT and accelerating green transformation development.
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Aanchal Singh, Subir Verma and Samik Shome
This study aims at examining the contentions of the agency theory by exploring the direct relationship between environmental, social and governance (ESG) disclosure score and…
Abstract
Purpose
This study aims at examining the contentions of the agency theory by exploring the direct relationship between environmental, social and governance (ESG) disclosure score and corporate financial performance (CFP) from the years 2016–2020. It also tests for the adaptability of slack resources theory by testing this relationship in the presence of a moderating variable (financial slack).
Design/methodology/approach
The study relies on the data obtained from Bloomberg database of 112 companies belonging to different sectors. It employs the use of partial least square structure equation modelling (PLS-SEM) for carrying out the empirical analysis.
Findings
The results obtained show that there exists a negative relationship between ESG and CFP of the sample firms. These results lend support to the propositions of both the agency theory. Further, the financial slack in the organizations does not ensure a firm's responsible behavior.
Research limitations/implications
The paper provides important implications both from the perspective of managers as well as policymakers. The results of this study will aid the managers in reducing the instances of information asymmetry in the market, thereby tackling the issue of principle agent problems within an organization. From the policy marking perspective, the results of this study will help the regulatory authorities in implementing the necessary rules, regulations and laws that will ensure increased participation from the corporate sector in disclosing their sustainability-related information.
Originality/value
This study is one of its kind to explore the impact of a moderating variable on the ESG-CFP relationship in the context of an emerging economy. It also contributes to the present stream of literature by providing both a theoretical and empirical support to the propositions under consideration.
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Shafat Maqbool and Shabir Ahmad Hurrah
This study aims to investigate the relationship between corporate social responsibility (CSR) and financial performance from the bi-directional perspective.
Abstract
Purpose
This study aims to investigate the relationship between corporate social responsibility (CSR) and financial performance from the bi-directional perspective.
Design/methodology/approach
The final sample for this study are 79 companies listed in the national stock exchange for a period of eight-years (2008–2015). Random effect panel regression was performed to examine the possible link.
Findings
The result shows that CSR has a positive impact on the contemporaneous and future financial performance of the selected companies. Further, the study shows that only social dimension has a positive and significant impact on concurrent and future financial performance. The results further validate slack resource theory as lagged financial performance has a positive and significant impact on CSR.
Practical implications
The strategic value of CSR indicates that it should be seen as a value-enhancing strategy, and therefore, incorporated with the broader corporate strategy of the company. Companies should not trade-off between CSR and financial performance, rather a strategic synchronization of CSR with corporate functioning is essential. This will pave a way to build a stakeholder-sense in the corporate entities.
Originality/value
The study comprehensively examines the relationship between CSR and financial performance from both “prospective” and “retrospective” framework. This bi-directional approach has received minimal attention in the Indian context.
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Paul Ingram, Jiao Luo and Joseph P. Eshun
It is now widely accepted that the institutional interventions of states are a foundational influence on the dynamics of organizational forms. But why do states act? In this…
Abstract
It is now widely accepted that the institutional interventions of states are a foundational influence on the dynamics of organizational forms. But why do states act? In this chapter, we apply the behavioral theory of the firm to develop an explanation of state actions based on the fact that they are boundedly rational rivals. The instrument of state competition we examine is the founding of business incubators, a primary tool in the entrepreneurial strategy of economic development. We predict that business incubators are more likely to be founded in a state when (1) the state falls behind comparable states in the indicators of economic development; (2) the state falls behind its own historical trajectories of economic development; (3) the state has slack resources in the form of budget surpluses; (4) comparable and rival states adopt incubators as a development strategy. Our analysis of incubator foundings in New York, New Jersey, and Pennsylvania throughout 1980–2004 supports all of these propositions.
Ines Bouaziz Daoud and Amani Bouabdellah
This study aims to investigate the association between Corporate Social Responsibility (CSR) and tax avoidance, as well as the effect of earnings performance on this link. We…
Abstract
This study aims to investigate the association between Corporate Social Responsibility (CSR) and tax avoidance, as well as the effect of earnings performance on this link. We suggest a negative association between CSR and tax avoidance based on the Stakeholder Theory. We also suggest that earnings performance moderates this relationship. Based on a sample of 25 Tunisian firms during the years 2012–2017, data were gathered via annual reports of the companies, and a survey-questionnaire was used to gather CSR information. The research design uses ordinary least squares (OLS) regression to investigate the association between CSR and tax. In addition, the analysis is performed using panel data to account for heterogeneity at the individual level and over time. Using this research design, the study provides a comprehensive examination of the effect of CSR on tax avoidance among Tunisian companies over a 6-year period. According to our findings, companies that participate in CSR initiatives show less tax avoidance than those that do not. Moreover, in line with the Slack Resource Theory, for businesses with higher earnings, the negative link between CSR and tax avoidance is stronger. Our research demonstrates that businesses may utilize CSR to improve their standing in the community and lower the likelihood of tax avoidance. These results suggest that profitable firms may have more funds available to spend on CSR initiatives and, as a result, are more motivated to maintain a positive reputation by refraining from tax avoidance strategies.
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