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Does strategic planning help firms translate slack resources into better performance?

Published online by Cambridge University Press:  14 January 2018

Jinyu Guo ,
Bo Zhou ,
Haili Zhang ,
Chunjia Hu  and
Michael Song
Jinyu Guo
Affiliation:
School of Management, Harbin Institute of Technology, Harbin, Heilongjiang, China
Bo Zhou
Affiliation:
School of Management, Harbin Institute of Technology, Harbin, Heilongjiang, China
Haili Zhang*
Affiliation:
Institute of Entrepreneurship and Innovation, Xi’an Technological University, Xi’an, China
Chunjia Hu
Affiliation:
School of Management, Harbin Institute of Technology, Harbin, Heilongjiang, China
Michael Song
Affiliation:
School of Economics and Management, Xi’an Technological University, Xi’an City, Shannxi, China
*
Corresponding author: [email protected]
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Abstract

Is organizational slack good or bad for firm performance? Research addressing this question has obtained mixed results. Such studies have focused mainly on the impact of environmental conditions on the slack–performance relationship. In this study, instead of focusing on the uncontrollable external environment, we consider actions determined by firms internally, in particular strategic planning. Using data from 183 US firms, we explore the connection between organizational slack and firm performance with different levels of strategic planning. The results suggest that at low levels of strategic planning the slack–performance relationship is linear, while at high levels of strategic planning this relationship is inverse U shaped. We discuss the theoretical and practical implications of these findings.

Keywords

organizational slackfirm performancestrategic planning
Type
Research Article
Information
Journal of Management & Organization , Volume 26 , Issue 4 , July 2020 , pp. 395 - 407
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2018

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