This study examines whether slack resources have differential effects on the extent of a firm’s response to environmental shifts. Using a sample of 30 airlines during the transitional period of industry deregulation, we found that the relationship between slack resources and the extent of a firm’s environmental response is contingent on the firm’s pattern of resource allocations. Specifically, our results show that as firms allocate more resources toward activities which enhance external market effectiveness, increases in slack increase the extent of their environmental response. Conversely, as firms allocate more resources to activities that enhance internal efficiency, increases in slack decrease the extent of their environmental response. The implications of these findings are discussed. In particular, we examine these findings relative to the ongoing debate concerning the role slack plays in organizational adaptation processes.
Get full access to this article
View all access options for this article.
References
1.
Amburgey. T.L., Kelly, D. & Bamett, W.P. (1993). Resetting the clock: The dynamics of organizational change and failure. Administrative Science Quarterly, 38: 51-73.
2.
Bailey, E.E., Graham, D.R. & Kaplan, D.P. (1985). Deregulating the airlines. Cambridge, MA: The MIT Press.
3.
Baird, I.S. & Thomas, H. (1985). Toward a contingency model of strategic risk taking. Academy of Management Review, 10: 230-243.
4.
Bateman, T.S. & Zeithaml, C.P. (1989). The psychological context of strategic decisions: A model and convergent experimental findings. Strategic Management Journal, 10: 59-74.
5.
Bohmstedt, G.W. (1969). Observations on the measurement of change. Pp. 113-133 in E.F. Borgatta & G.W. Bohmstedt (Eds), Sociological methodology. San Francisco: Jossey-Bass.
6.
Bourgeois, L.J. III. (1981). On the measurement of organizational slack. Academy of Management Review, 6: 29-39.
7.
Bourgeois, L.J. III & Singh. J.V. (1983). Organizational slack and political behavior among top management teams. Academy of Management Proceedings: 43-47.
8.
Brittian, J. & Freeman, J. (1980). Organizational proliferation and density-dependent selection. Pp. 291-338 in J.R. Kimberly & R.H. Miles (Eds.), Organizational life cycles. San Francisco: Jossey-Bass.
9.
Carter, E.E. (197I). The behavioral theory of the firm and top-level corporate decisions. Administrative Science Quarterly, 16: 413-428.
10.
Child, J. (1972). Organizational structure, environment, and performance: The role of strategic choice. Sociology, 6: 2-22.
11.
Child, J. & Kieser, J. (1981). Development of organizations over time. Pp. 28-64 in P. Nystorm & W. Starbuck (Eds.), Handbook of organizational design. Oxford: Oxford University Press.
Cyert, R.M. & March J.G. (1963). A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice Hall.
15.
Fombrtm, C.J. & Ginsberg, A. (1990). Shifting gears: Enabling change in corporate aggressiveness. Strategic Management Journal, 11: 297-308.
16.
Galbraith, J. (1973). Designing complex organizations. Reading, MA: Addison-Wesley.
17.
Ginsberg, A. & Buchholtz, A. (1990). Converting to for-profit status: Corporate responsiveness to radical change. Academy of Management Journal, 33: 445-477.
18.
Hannan, M.T. & Freeman, J. (1984). Structural inertia and organizational change. American Sociological Review, 49: 149-164.
19.
Hambrick, D.C. & D’Aveni, R.A. (1988). Large corporate failures as downward spirals. Administrative Science Quarterly, 33: 1-23.
20.
Hofer, C.W. & Schendel, D. (1978). Strategy formulation: Analytical concepts. St. Paul, MN: West.
21.
Koberg, C.S. (1987). Resource scarcity, environmental uncertainty, and adaptive organizational behavior. Academy of Management Journal, 30: 798-807.
22.
Litschert, R.J. & Bonham, T.W. (1978). A conceptual model of strategy formation. Academy of Management Review, 3: 211-219.
23.
Marina, K.E. & Lange, D.R. (1983). Measuring organizational slack: A note on the convergence and divergence of alternative operational definitions. Journal of Management, 9: 81-92.
24.
McKinley, W. (1987). Complexity and administrative intensity: The case of declining organizations. Administrative Science Quarterly, 32: 87-105.
25.
Meyer, A. (1982). Adapting to environmental jolts. Administrative Science Quarterly, 27: 515-537.
Miles, R.E. (1982). Coffin nails and corporate strategies. Englewood Cliffs, NJ: Prentice-Hall.
28.
Miles, R.E. & Snow, C.C. (1978). Organizational strategy, structure und process. New York: McGraw Hill Books.
29.
Mintzberg. H. (1978). Patterns in strategy formulation. Management Science, 24: 934-948.
30.
Moch, M.K. & Pondy, L.R. (1977). The structure of chaos: Organized anarchy as a response to ambiguity. Administrative Science Quarterly, 22: 351-362.
31.
Mohr,L.B. (1969). Determinants of innovation in organizations. American Political Science Review, 63: 111-126.
32.
Myers, R.H. (1986). Classical und modern regression with applications. Boston, MA: Duxbury.
33.
Ostrom, C.W. Jr. (1978). Time series analysis: Regression techniques. Beverly Hills, CA: Sage.
34.
Pendleton, B.F., Warren, R.D. & Chang, H.C. (1980). Correlated denominators in multiple regression and change analyses. Pp. 80-103 in E.F. Borgatta & D. J. Jackson (Eds.), Aggregate data: Analysis und interpretation. Newbury Park, CA: Sage.
Romanelli, E. (1989). Environments and strategies of organization start-up: Effects on early survival. Administrative Science Quarterly, 34: 369-387.
37.
Romanelli, E. & Tushman, M.L. (1986). Inertia, environments, and strategic choice: A quasi-experimental design for comparative-longitudinal research. Management Science, 32: 608-621.
38.
Sharfman, M.P., Wolf, G., Chase, R.B. & Tansik, D.A. (1988). Antecedents of organizational slack. Academy of Management Review, 13: 601-614.
39.
Simon, H.A. (1957). Administrative behavior. New York: Free Press.
40.
Singh, J.V. (1986). Performance, slack, and risk taking in organizational decision making. Academy of Management Journal, 29: 562-585.
41.
Smith, KG., Grimm, C.M., Gannon, M.J. & Chen, M. (1991). Organizational information processing: Competitive responses and performance in the U.S. domestic airline industry. Academy of Management Journal, 34: 60-85.
42.
Thompson, J.D. (1967). Orgunizations in action. New York: McGraw Hill.
43.
Yasai-Ardekani, M. (1986). Structural adaptations to environments. Academy of Management Review, 11: 9-21.
44.
Zammuto, R.F. (1983). Growth, stability, and decline in American college and university enrollments. Educational Administrative Quarterly, 19: 83-99.
