How Organizational Slack Resources Affect Disruptive Innovation: The Moderating Roles of Absorptive Capacity and Executive Risk Appetite

Xue  Zhao

doi:10.54254/3657-4300/1/2025008

Research Article

Open access

Published on 18 April 2025

Download pdf

Zhao,X. (2025). How Organizational Slack Resources Affect Disruptive Innovation: The Moderating Roles of Absorptive Capacity and Executive Risk Appetite. Journal of Economic and Managerial Dynamics,1(1),55-62.

Export citation

How Organizational Slack Resources Affect Disruptive Innovation: The Moderating Roles of Absorptive Capacity and Executive Risk Appetite

Xue Zhao *^,1,

¹ Central South University

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/3657-4300/1/2025008

Abstract

This study examines the relationship between organizational slack resources and disruptive innovation, with a focus on the moderating effects of absorptive capacity and executive risk appetite. Drawing on resource-based view (RBV) and dynamic capability theory, we hypothesize that different types of slack (financial, human, and operational) exert heterogeneous impacts on firms’ ability to pursue radical innovation. Using panel data from 1,200 technology firms across 15 countries (2010–2022), we employ hierarchical regression and three-way interaction models to test our hypotheses. Results reveal that human resource slack positively drives disruptive innovation, while financial slack exhibits an inverted U-shaped relationship. Absorptive capacity amplifies the innovation-enhancing effects of operational slack, whereas executive risk appetite moderates the link between financial slack and innovation outcomes. The findings advance scholarly understanding of slack resource allocation strategies and provide actionable insights for managing innovation portfolios in volatile markets.

Keywords

Organizational slack resources, disruptive innovation, absorptive capacity, executive risk appetite, resource allocation, dynamic capabilities

View pdf

References

[1]. Barney, J.** (1991). Firm resources and sustained competitive advantage. *Journal of Management, 17*(1), 99–120.

[2]. Christensen, C. M.** (1997). *The innovator’s dilemma: When new technologies cause great firms to fail*. Harvard Business Review Press.

[3]. Cohen, W. M., & Levinthal, D. A.** (1990). Absorptive capacity: A new perspective on learning and innovation. *Administrative Science Quarterly, 35*(1), 128–152.

[4]. Cyert, R. M., & March, J. G.** (1963). *A behavioral theory of the firm*. Prentice-Hall.

[5]. George, G.** (2005). Slack resources and the performance of privately held firms. *Academy of Management Journal, 48*(4), 661–676.

[6]. Hambrick, D. C., & Mason, P. A.** (1984). Upper echelons: The organization as a reflection of its top managers. *Academy of Management Review, 9*(2), 193–206.

[7]. Katila, R., & Ahuja, G.** (2002). Something old, something new: A longitudinal study of search behavior and new product introduction. *Academy of Management Journal, 45*(6), 1183–1194.

[8]. Levinthal, D. A., & March, J. G.** (1993). The myopia of learning. *Strategic Management Journal, 14*(S2), 95–112.

[9]. Nohria, N., & Gulati, R.** (1996). Is slack good or bad for innovation? *Academy of Management Journal, 39*(5), 1245–1264.

[10]. O’Brien, J. P., & David, P.** (2014). Resource slack, strategic experimentation, and R&D investment. *Strategic Management Journal, 35*(3), 468–487.

[11]. Sanders, W. G., & Hambrick, D. C.** (2007). Swinging for the fences: The effects of CEO stock options on company risk taking and performance. *Academy of Management Journal, 50*(5), 1055–1078.

[12]. Sharfman, M. P., Wolf, G., Chase, R. B., & Tansik, D. A.** (1988). Antecedents of organizational slack. *Academy of Management Review, 13*(4), 601–614.

[13]. Simsek, Z.** (2009). Organizational ambidexterity: Towards a multilevel understanding. *Journal of Management Studies, 46*(4), 597–624.

[14]. Teece, D. J., Pisano, G., & Shuen, A.** (1997). Dynamic capabilities and strategic management. *Strategic Management Journal, 18*(7), 509–533.

[15]. Voss, G. B., Sirdeshmukh, D., & Voss, Z. G.** (2008). The effects of slack resources and environmental threat on product exploration and exploitation. *Academy of Management Journal, 51*(1), 147–164.

[16]. Wiseman, R. M., & Gomez-Mejia, L. R.** (1998). A behavioral agency model of managerial risk taking. *Academy of Management Review, 23*(1), 133–153.

[17]. Zahra, S. A., & George, G.** (2002). Absorptive capacity: A review, reconceptualization, and extension. *Academy of Management Review, 27*(2), 185–203.

[18]. Zhang, Y., & Li, H.** (2010). Innovation search of new ventures in a technology cluster: The role of ties with service intermediaries. *Strategic Management Journal, 31*(1), 88–109.

[19]. Chen, W. R., & Miller, K. D.** (2007). Situational and institutional determinants of firms’ R&D search intensity. *Strategic Management Journal, 28*(4), 369–381.

[20]. Manso, G.** (2011). Motivating innovation. *Journal of Finance, 66*(5), 1823–1860.

Cite this article

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Journal：Journal of Economic and Managerial Dynamics

Volume number: Vol.1

ISSN：3657-4300(Print) / 3657-4325(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).