This study examines whether slack resources have differential effects on the extent of a firm's response to environmental shifts. Using a sample of 30 airlines during the transitional period of industry deregulation, we found that the relationship between slack resources and the extent of a firm's environmental response is contingent on the firm's pattern of resource allocations. Specifically, our results show that as firms allocate more resources toward activities which enhance external market effectiveness, increases in slack increase the extent of their environmental response. Conversely, as firms allocate more resources to activities that enhance internal efficiency, increases in slack decrease the extent of their environmental response. The implications of these findings are discussed. In particular, we examine these findings relative to the ongoing debate concerning the role slack plays in organizational adaptation processes.For most managers in today's complex and dynamic environment the term "slack" conjures up a host of negative perceptions. Fueled in part by the most recent recession, slack is viewed as an unnecessary cost to organizations. Indeed, the response of most managers today is to "downsize" or "rightsize" their businesses in ways that eliminate slack. This is true of slack associated with both capital and labor resources. For instance, throughout the 1990s many firms have closed plants, shut down entire divisions, eliminated duplicate resources across departments, flattened organizational hierarchies, reduced executive perks and salaries, laid off "surplus" or "non-essential" personnel, and restructured debt obligations. One of the underlying arguments in favor of these actions is that they help firms lower their costs and improve operational efficiency. This argument is particularly popular among executives whose firms are competing in industries hard hit by economic downturns or plagued by overcapacity.

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This paper argues that the present conception of universal knowledge as generalized findings is incomplete and has limited the role of cross-national research to one of validating results obtained from single-nation studies. An alternative view is proposed which recognizes that there are two types of research findings that can be applied cross-nationally: (1) findings that are invariant across different national settings, and (2) findings that incorporate the societal context into the analysis of the phenomenon under study. This conception of universal knowledge is more inclusive in scope and suggests an expanded role for cross-national research in organizational inquiry. The new role will offer exciting opportunities for the field of organizational science, including its enhanced ability to discover knowledge that has both universal applicability and global relevance.cross-culture research, organization studies