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

Osamu Suzuki

Industrial and Corporate Change, 2018, vol. 27, issue 3, 555-575

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.

JEL-codes: L65 O31 O32 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (11)

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