Does Slack Impact Innovation Productivity? A Longitudinal Examination

Moving beyond traditional measures of innovation such as the use of R&D expense or patent related data, this study examines the relationship between slack resources and innovation productivity, a measure of innovation efficiency defined as the marginal revenue generation outcome associated with a given level of increase in R&D expense. Using a sample of 449 manufacturing firms across six years, a fixed effects panel analysis is utilized to examine how available, recoverable, and potential slack impact innovation productivity. The results from this study both support and conflict with prior slack and innovation research utilizing other innovation measures. Specifically, the analyses support the argument that an inverted U-shaped relationship exists between available slack and innovation productivity. However, the results fail to support a significant relationship between recoverable or potential slack and innovation productivity, a departure from prior literature examining more traditional measures of innovation. Both practical and theoretical implications are discussed. Keywords: Slack, Innovation, Research Quotient
Organizational slack and innovation are both key factors of success within organizations and as such have been heavily examined in the strategic management literature (Marlin and Geiger, 2015; Wang et [...]