Exploration and exploitation innovation processes: The role of organizational slack in R & D intensive firms

This study considers how organizational slack (available and recoverable) affects the process of innovation by facilitating or hindering the process of exploration and exploitation in the case of technology intensive firms. It is argued that the R & D intensity of the firm moderates the effect of organizational slack on innovation quantity, innovation quality as well as the process of exploration and exploitation. These hypotheses are tested using a sample of 208 technology intensive firms in a variety of manufacturing industries during 1989-1995. The hypotheses are supported for the measure of available slack but not recoverable slack. These findings suggest that different types of slack may impact firm behavior in different ways.