How does organizational slack influence firm performance? A replication and extension of Peng, Li, Xie, and Su (2010).

Scholars have long been interested in understanding organizational slack. Peng et al. (2010) is a landmark study examining the effect of slack on firm performance. We seek to advance our understanding of the topic in three ways. First, we replicate the core findings of Peng et al. (2010) by drawing on a major and yet less investigated economy in Asia—Taiwan. Second, we differentiate the effect of slack by investigating both short- and long–term performance. Third, in addition to CEO duality, our study also examines the moderating effects of business groups and family firms as two widespread governance factors in Asia. Our results suggest that the effect of organizational slack on firm performance is contingent on the short– versus long–term perspective. Furthermore, we find that the slack–performance relationship is shaped by boundary conditions. Overall, our findings contribute to the literatures on organizational slack, corporate governance, and research in Asia. [ABSTRACT FROM AUTHOR]