The Relationship between Slack Resources and Performance: An Empirical Study from China

Although organizational research posits various relationships between a firm's slack resources and performance, findings to date have been ambiguous. The purpose of this study is to attempt to reconcile previous views of the relationship between slack resources and performance through employing empirical analysis based on survey data from 47 pharmaceutical and chemical firms in Henan Province of China. The results indicate that the relationship between slack resources and the performance is inverse N-shaped. Results provide evidence of a curvilinear relationship between slack resources and performance and broadly demonstrate that relationships differ based on industry circumstances and slack resources. Additionally, this study is the first to empirically identify an inverse N- shaped relationship between slack resources and performance, indicating that, in certain industry circumstances, little and much slack resources are bad for performance. Overall, results highlight the importance of additional research into intervening factors impacting the slack-performance relationship.