How Competitive Action Mediates the Resource Slack–Performance Relationship: A Meta‐Analytic Approach

Abstract

The fungibility of organizational slack provides firms significant latitude in addressing both internal and market pressures. A vast literature suggests that slack influences firm performance; however, the empirical record is mixed, and the underlying mechanism linking slack to performance remains ambiguous. We address these issues by theoretically expanding the slack–performance model to include mediation. Specifically, we develop and test a model in which a firm’s competitive behaviours direct the utilization of slack toward the realization of firm performance. Our meta‐analytic‐based structural equation model supports partial mediation, showing that competitive behaviours provide some resolution to the conflicted understanding of how slack affects performance. Further, we provide value to the slack literature by consolidating the evidence for the effects of various types and forms of organizational slack. Beyond providing robustness to our theoretical model, doing so offers a more complete understanding of how operationalizations of slack and performance outcomes matter.

Meta‐Analytic Research in Management: Contemporary Approaches, Unresolved Controversies, and Rising Standards

“…Habersang et al (2019) leverage QMA to introduce a new theoretical typology that would have been difficult to identify using deductive methods, quantitative analysis, or single case studies. Carnes et al (2019) use MASEM to test their theorizing about key mediators while Sihag and Rijsdijk (2019) and Karam et al (2019) Maas et al, 2019;Rosenbusch et al, 2019;Wang et al, 2019) leverage external sources (e.g., World Bank) in MARA to investigate how country-level factors shape important relationships, thereby testing hypotheses that might otherwise be cost prohibitive. Finally, Schommer et al (2019) use MARA to show how important relationships changed over 60 years of researchers' investigations.…”

“…This special issue contains three MASEM examples. Carnes et al () test new theorizing about the long‐held debate regarding how organizational slack affects firm performance (e.g., Daniel et al, ). Building on insights from competitive dynamics research (e.g., Chen, ), Carnes et al, () theorize that the aggressiveness and complexity of firms’ strategic moves mediate the slack‐to‐performance relationship.…”

“…Finally, it is difficult to test moderator variables (Bergh et al, 2016). Fortunately, there is a rich literature emerging with suggestions how to handle these problems (Tang and Cheung, 2016;Yu et al, 2016 Carnes et al (2019) test new theorizing about the long-held debate regarding how organizational slack affects firm performance (e.g., Daniel et al, 2004). Building on insights from competitive dynamics research (e.g., Chen, 1996), Carnes et al, (2019) theorize that the aggressiveness and complexity of firms' strategic moves mediate the slack-to-performance relationship.…”

“…Fortunately, there is a rich literature emerging with suggestions how to handle these problems (Tang and Cheung, 2016;Yu et al, 2016 Carnes et al (2019) test new theorizing about the long-held debate regarding how organizational slack affects firm performance (e.g., Daniel et al, 2004). Building on insights from competitive dynamics research (e.g., Chen, 1996), Carnes et al, (2019) theorize that the aggressiveness and complexity of firms' strategic moves mediate the slack-to-performance relationship. MASEM allowed the authors to provide strong evidence that slack 'must be transformed through competitive behaviour to drive performance' and that 'overlooking competitive behaviours in the slack-performance relationship is tantamount to model misspecification' (Carnes et al, 2019, p. 79).…”

Competitive action repertoire in the telecommunications industry

“…Yet, is the competitive complexity concept a necessity to achieve required performance? Complex competitive repertoire is a signal of a Þ rm's quality and efÞ ciency in adequately pursuing resources and Þ rm capabilities, it ensures positive signals from stake-holders (Miller & Chen, 1996) and results in improved Þ rm performance (Ndofor et al, 2011;Carnes et al, 2019). Connelly et al (2016) Þ nd that complexity harms performance at the early stage, but that later it has positive effects.…”