A reexamination of the organizational slack and innovation relationship

In this study a configurational approach was used to examine the organizational slack and innovation relationship. Utilizing a sample of 437 manufacturing firms and multiple measures of firm innovation we identified distinct configurations of slack and found significant innovation differences between them. The results from our analyses demonstrate that configurations with moderately high combined levels of internal slack (available and recoverable slack) and moderately high levels of potential slack produced higher levels of innovation. Conversely, configurations with low to moderately low levels of each type of slack produced the lowest levels of innovation. Our findings also indicate that alternative configurations of slack can result in similar levels of innovation suggesting the existence of equifinality in this relationship. Overall, our findings suggest that the slack and innovation relationship is more complex than has been accounted for in previous research. The implications of these findings are discussed.