Blackwell Reference Online

Extract

Slack resources are resources in excess of what is required to reward the dominant coalition that governs the organization ( Cyert and March, 1963 ). Organizations can accumulate slack resources when they earn greater profits than they are expected to distribute. Slack resources relieve scarcity, increase allocation of resources to projects sought by subunits, and reduce monitoring of profitability, allowing greater experimentation. Consequently, slack resources are thought to increase innovations and risk taking in organizations. These effects may be contingent on other variables such as the organizational performance. Slack resources are usually operationalized through accounting measures of resources absorbed as extra cost or available as financial reserves ( Bourgeois, 1981 ). Empirical analysis of slack resources has generally shown the predicted effects, but sometimes the findings have been weak. Slack resources are seen as a promising construct with potential to explain organizational changes, and especially changes that have proven difficult to predict from other theories, such as organizational experimentation and innovation. Because slack interacts with other variables affecting organizational decision‐making, studies controlling for confounding effects should show stronger results. Future work seems likely to focus on establishing how slack interacts with other variables ... log in or subscribe to read full text