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Does technological diversification matter to firm performance? The moderating role of organizational slack

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  • Chen, Yi-Min
  • Yang, De-Hsin
  • Lin, Feng-Jyh

Abstract

The first decade of the twenty-first century has witnessed a significant increase in technology strategy research related to innovation capacity and technological diversity. Recent studies in the field of innovation capacity investigate whether the underlying performance differential among firms is attributable to organizational slack resources. However, few scholars have examined the relationship between corporate technological diversification and firm performance with the moderating effect of organizational slack. In acknowledging the increasingly important role of the Taiwanese smart phone sector, this study follows the contingency approach to explore the impact of a strategic orientation toward corporate technological diversity on Taiwanese smart phone firms' performance in the context of different organizational slack conditions, absorbed and unabsorbed slack resources. The results of hypothesis testing confirm the existence of a significant and negative relationship between technological diversification and firm performance in terms of Tobin's q and MVA, but not of ROA and EVA. In addition, the organizational slack of a company moderates the relationship between technological diversification and firm performance in terms of EVA and MVA, but not of ROA and Tobin's q. The current findings indicate that Taiwanese smart phone firms adopting a different approach to technological diversity could utilize different slack resources to improve their firm performance. Based on different types of slack resources, the current results of different moderating roles of organizational slacks in affecting firm performance support the predictions of technological diversity and organizational theory.

Suggested Citation

  • Chen, Yi-Min & Yang, De-Hsin & Lin, Feng-Jyh, 2013. "Does technological diversification matter to firm performance? The moderating role of organizational slack," Journal of Business Research, Elsevier, vol. 66(10), pages 1970-1975.
  • Handle: RePEc:eee:jbrese:v:66:y:2013:i:10:p:1970-1975
    DOI: 10.1016/j.jbusres.2013.02.020
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    References listed on IDEAS

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    Cited by:

    1. Marlin, Dan & Geiger, Scott W., 2015. "A reexamination of the organizational slack and innovation relationship," Journal of Business Research, Elsevier, vol. 68(12), pages 2683-2690.
    2. Malen, Joel, 2015. "Motivating And Enabling Firm Innovation Effort: Integrating Penrosian And Behavioral Theory Perspectives On Slack Resources," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 49(1), pages 37-54, January.
    3. repec:eee:jbrese:v:85:y:2018:i:c:p:127-141 is not listed on IDEAS
    4. Lopatta, Kerstin & Kaspereit, Thomas, 2014. "The cross-section of returns, benchmark model parameters, and idiosyncratic volatility of nuclear energy firms after Fukushima Daiichi," Energy Economics, Elsevier, vol. 41(C), pages 125-136.
    5. Chen, Yi-Min & Liu, Hsin-Hsien & Liu, Yu-Siang & Huang, Huei-Ting, 2016. "A preemptive power to offensive patent litigation strategy: Value creation, transaction costs and organizational slack," Journal of Business Research, Elsevier, vol. 69(5), pages 1634-1638.

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