Slack Resources and the Performance of Privately Held Firms

By Gerard George. 2005

1,258 citations recorded by the source corpus.

Empirical findings from publicly traded firms and behavioral arguments suggest a positive influence of resource slack on financial performance. While this area has remained unexplored in privately held firms, conceptual arguments indicate that resource constraints may enhance performance. Longitudinal data on 900 privately held firms confirm the differing influences of forms of slack on performance. Results indicate that a combination of behavioral and resource constraints arguments are necessary to explain the slack-performance relationship in privately held firms. The implications of these findings for theories of resources and entrepreneurship are discussed.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/0edbded110b401cfbe1ad80b1825e281094ede02

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Citations in the corpus

Resourcing new businesses: social networks, bootstrapping and firm performance (2010, background): “Second, it has been suggested that bootstrapping provides a number of advantages to small firms: overcoming information asymmetries (Bhide 1992), responding to environmental and competitive change (George 2005), introducing discipline and encouraging efficient use of resources (Timmons 1999).”
Get It Together! Synergistic Effects of Causal and Effectual Decision-Making Logics on Venture Performance (2018, background): “On the other hand, a substantive literature points out that resource commitments are positively related to performance (e.g., George, 2005; Wiklund & Shepherd, 2003).”
Building innovation capability: The role of top management innovativeness and relative-exploration orientation (2017, neutral): “In addition, in a more competitive environment, managers are likely to be constrained in their strategic choices (George, 2005), and the higher risk associated with greater competition may reduce firms' innovation activity (Jiménez-Jiménez & Sanz-Valle, 2011; March, 1991).”
An Assessment of Resource-Based Theorizing on Firm Growth and Suggestions for the Future (2018, background): “, 2004) since they can be easily applied to alternative uses (Penrose, 1959/1995) and provide organizations with flexibility (George, 2005).”
The age-effect of financial indicators as buffers against the liability of newness ☆ (2010, background): “Some have reconciled these two perspectives by demonstrating a curvilinear relationship (inverted U) between slack and performance (George, 2005; Nohria and Gulati, 1996).”
Organizational Sponsorship and Founding Environments: A Contingency View on the Survival of Business-Incubated Firms, 1994–2007 (2013, positive): “Moreover, recent research from the resource constraints perspective has argued that resource-poor environments may, in fact, drive creative solutions that overcome the limitations of material inputs (Bradley, Shepherd, & Wiklund, 2009; Bradley, Wiklund, & Shepherd, 2011; George, 2005).”
The management of natural resources: : An overview and research agenda (2015, background): “Citation GEORGE, Gerard; SCHILLEBEECKX, Simon Jan D; and LIAK, Teng Lit. The Management of Natural Resources: An Overview and Research Agenda. (2015). Academy of Management Journal.”
Can You Gig It? An Empirical Examination of the Gig Economy and Entrepreneurial Activity (2018, background): “Second, and related to the first point, the nascent entrepreneur, unburdened by earlier resource constraints, may be encouraged to explore or exploit new opportunities as they emerge (George 2005, Shah and Tripsas 2007, Voss et al. 2008).”
To Merge, Sell, or Liquidate? Socioemotional Wealth, Family Control, and the Choice of Business Exit (2019, positive): “High-discretion slack was measured as the level of cash reserves, whereas low-discretion slack was measured as the debt-to-equity ratio (George, 2005).”
Cash is surprisingly valuable as a strategic asset (2014, background): “However, strategy scholars, primarily of a behavioral bent, have theorized and identified strategic benefits of holding slack generally, including cash (e.g., George, 2005) or cash at relatively high levels (e.g., O’Brien and Folta, 2009).”