Organizational Slack And Performance: The Impact Of Outliers

Wefald, Andrew J.; Katz, James E.; Downey, Ronald G.; Rust, Kathleen G.

doi:10.19030/jabr.v26i1.271

Cited by 34 publications

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“…Slack resources were historically viewed from the perspective of the organization, and operationalized by investigating factors such as: general and administrative expenses, debt to equity ratios, credit ratings, working capital, R&D expenditures, and the number of employees in a firm (Bourgeois, 1981; Daniel et al, 2004; Mishina et al, 2004; Voss et al, 2008). Several studies have found that slack resources, at least to some extent, enhance firm performance (Daniel et al, 2004; George, 2005; Tseng et al, 2007; Wefald et al, 2010; Goldstein and Iossifova, 2012).…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Although this study investigated slack resources as they relate to performance, it did not consider the influence of a firm's environment. Wefald et al (2010) recognized that the performance‐enhancing benefits of slack resources are dependent on the specific industry for which a firm operates. A meta‐analysis by Daniel et al (2004) documents a positive relationship between slack resources and firm performance, and the results are more significant if the analysis includes industry‐relative performance.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

“…Operational slack represents the buffer resources available to support the operational activities of a firm and allows firms to better match variations between supply and demand. Insufficient operational slack leads to reduced responsiveness to demand variations and reduced reliability of product deliveries (Wefald et al, 2010). Excess capacity and inventory (each representing a form of operational slack) help firms effectively manage demand variation for their products (Sharfman et al, 1988; Palich et al, 2000).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Firm performance in dynamic environments: The role of operational slack and operational scope

Kovach

Hora

Manikas

et al. 2015

J of Ops Management

129

151

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a b s t r a c tThis study examines the effects of operational scope (breadth of product offering, extent of geographical diversification, and extent to which production processes can effectively meet varying demand) and operational slack (resources in excess of what is required to fulfill expected demand) on firm performance, contingent on two components of a firm's dynamic environment, unpredictability and instability. We collate quarterly data on 3857 publicly traded firms in 19 industries from the years 1991 to 2013 (representing 99,559 firm-quarter observations). Using panel data analysis, we find that narrow product offerings, low geographical diversification, low levels of excess capacity, and low inventory slack are each positively associated with firm performance. More importantly though, we find that operational scope is associated with improved performance in unpredictable environments, whereas operational slack is associated with improved performance in unstable environments. These findings contribute to the research on operations strategy by identifying the industry-specific environmental conditions under which operational slack and operational scope are associated with firm performance.

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Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Theory and Hypothesesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Firm performance in dynamic environments: The role of operational slack and operational scope

Kovach

Hora

Manikas

et al. 2015

J of Ops Management

129

151

View full text Add to dashboard Cite

show abstract

“…A company is an organizational entity that processes and accumulates resources [Penrose (1959) in (Zhong, 2011)]. Companies with limited resources find it difficult to gain competitive advantage (Wefald, Katz, Downey, & Rust, 2010). If the company has limited resources, the company that has allocated its resources on social responsibility cannot use its resources to make investments as per its growing opportunity.…”

Section: Slack Resources Theorymentioning

confidence: 99%

Impact of Corporate Social Responsibility and Capital Allocation Efficiency on Family and Non -Family Firms

Rudyanto

2019

HSSR

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Purpose of the study: Purpose of this study was to examine how family firms differ from non-family firms in the relationship between corporate social responsibility (CSR) and capital allocation efficiency, including slack resources as moderating variables. Methodology: This study used moderated regression analysis and subgroup analysis of nonfinancial companies listed in Indonesia Stock Exchange from 2011-2016. The data were gathered from Thomson Reuters and analyzed using STATA 14 unbalanced panel fixed effect. Main Findings: The results show that family firms and non-family firms are different in relation to CSR performance and capital allocation efficiency. When family firms are efficient, there is no relationship between CSR, capital allocation efficiency, and slack resources. When family firms are inefficient, CSR performance negatively affects capital allocation efficiency and slack resources reduce this negative effect. Implications: It is implied that trade-off theory only applies to non-family firms and inefficient family firms. Family firms are more efficient in allocating resources for CSR. Therefore, shareholders shall not be afraid of investing in family firms.

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“…Further, when considering these relationships, questions arise as to whether -and to what extent -slack resources vary across industries. To date, there is little research specifically focusing on differences in various types of slack across industries (see Wefald et al, 2010 for an exception).…”

Section: Introductionmentioning

confidence: 99%

Industry Influences On Organizational Slack

Marlin

2013

JBER

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The purpose of this study is to identify and examine differences in organizational slack across multiple industries. Using a sample of 353 US publicly traded firms, eight measures of organizational slack were examined across six 2-digit SIC industry groupings. The author's analyses revealed significant differences across industries in each of the slack measures examined. Implications and areas for future research are discussed.

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Organizational Slack And Performance: The Impact Of Outliers

Abstract: Extending initial theory development and empirical studies conducted in the early

Cited by 34 publications

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Firm performance in dynamic environments: The role of operational slack and operational scope

Firm performance in dynamic environments: The role of operational slack and operational scope

Impact of Corporate Social Responsibility and Capital Allocation Efficiency on Family and Non -Family Firms

Industry Influences On Organizational Slack

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