How Competitive Action Mediates the Resource Slack - Performance Relationship: A Meta-Analytic Approach

Abstract

The fungibility of organizational slack provides firms significant latitude in addressing both internal and market pressures. A vast literature suggests slack influences firm performance; however, the empirical record is mixed, and the underlying mechanism linking slack to performance remains ambiguous. We address these issues by theoretically expanding the slack-performance model to include mediation. Specifically, we develop and test a model in which a firm’s competitive behaviors direct the utilization of slack toward the realization of firm performance. Our meta-analytic-based structural equation model supports partial mediation, showing that competitive behaviors provide some resolution to the conflicted understanding of how slack affects performance. Further, we provide value to the slack literature by consolidating the evidence for the effects of various types and forms of organizational slack. Beyond providing robustness to our theoretical model, doing so offers a more complete understanding of how operationalizations of slack and performance outcomes matter.