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Enabling or constraining? Unraveling the influence of organizational slack on innovation

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  • Osamu Suzuki

Abstract

We employ theories of organizational search and agency costs to propose a contingency perspective that reconciles mutually contradictory prior findings on the relationship between organizational slack and innovation. First, we argue that influences of organizational slack depend on whether we consider exploitative innovation or exploratory innovation. Further, absorbed slack and unabsorbed slack differ in their forms of relationship with innovation. The ways in which a certain type of innovation is enabled by organizational slack are conditioned by distinct modes of organizational search associated with alternative types of innovation, as well as by the extent to which effective shareholder monitoring is disturbed by different types of organizational slack. An empirical analysis of 37 Japanese pharmaceutical firms’ new product developments over a 20-year period supports our argument.

Suggested Citation

  • Osamu Suzuki, 2018. "Enabling or constraining? Unraveling the influence of organizational slack on innovation," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(3), pages 555-575.
    • Handle: RePEc:oup:indcch:v:27:y:2018:i:3:p:555-575.
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    File URL: http://hdl.handle.net/10.1093/icc/dtx046
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    Citations

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    Cited by:

    1. Symeou, Pavlos C. & Zyglidopoulos, Stelios & Gardberg, Naomi A., 2019. "Corporate environmental performance: Revisiting the role of organizational slack," Journal of Business Research, Elsevier, vol. 96(C), pages 169-182.
    2. Huanyong Ji & Guannan Xu & Yuan Zhou & Zhongzhen Miao, 2019. "The Impact of Corporate Social Responsibility on Firms’ Innovation in China: The Role of Institutional Support," Sustainability, MDPI, vol. 11(22), pages 1-20, November.
    3. Nguyen, Tam & Verreynne, Martie-Louise & Steen, John & Torres de Oliveira, Rui, 2023. "Government support versus international knowledge: Investigating innovations from emerging-market small and medium enterprises," Journal of Business Research, Elsevier, vol. 154(C).
    4. Ingo Stiller & Arjen Witteloostuijn & Bart Cambré, 2022. "Determinants of radical drug innovation: a systematic literature review," Management Review Quarterly, Springer, vol. 72(4), pages 967-1016, December.
    5. Boumediene Ramdani & Cherif Guermat & Kamel Mellahi, 2021. "The effect of downsizing on innovation outputs: The role of resource slack and constraints," Australian Journal of Management, Australian School of Business, vol. 46(2), pages 346-365, May.
    6. Sung, Bongsuk, 2019. "Do government subsidies promote firm-level innovation? Evidence from the Korean renewable energy technology industry," Energy Policy, Elsevier, vol. 132(C), pages 1333-1344.
    7. Yan Zhang & Ziyuan Sun & Mengxin Sun, 2022. "Unabsorbed Slack Resources and Enterprise Innovation: The Moderating Effect of Environmental Uncertainty and Managerial Ability," Sustainability, MDPI, vol. 14(7), pages 1-21, March.
    8. Jun Wan & Yongsheng Jin & Huanyong Ji, 2023. "Corporate Social Responsibility and Green Innovation: The Moderating Roles of Unabsorbed Slack Resources and Media Evaluation," Sustainability, MDPI, vol. 15(6), pages 1-15, March.

    More about this item

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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