The Research Venation Analysis and Future Prospects of Organizational Slack

Abstract

At present, the external environment is full of crises and challenges. The practice of firms deploying slack resources in advance and actively coping with external disturbances has achieved good effect. But, the theoretical research process of organizational slack is relatively slow compared with practice. Therefore, this paper comprehensively applied a bibliometric method and traditional literature review method to carry out scientific econometric analysis on 958 papers from the WoS database. We visualized the results as knowledge maps and analyzed papers with the help of the knowledge graph. The research venation and evolution trend of organizational slack are sorted out from a longitudinal perspective. On this basis, we put forward the future development direction of organizational slack in line with emerging phenomena, mainly including: ① Clarifying the sources of organizational slack; ② Two new dimensions of defensiveness slack and strategic slack are proposed from functional attributes; ③ Based on the perspective of active response, we expand the research depth of firms to construct organizational resilience through organization slack to adapt to uncertain environments. The purpose of this paper is to provide new ideas for firms to make plans before turbulence occurs in highly uncertain environments. It provides a useful reference for the future development of organizational slack research and promotes the formation of a virtuous cycle of mutual promotion between theory and practice.

1. Introduction

As the ancients say, it is wiser to be ready when it is not raining than to dig a well when you are thirsty. At present, the global economic landscape is undergoing profound changes at an accelerating pace, and firms are faced with both risks and opportunities. On the one hand, the globalized economy has always paralyzed international trade through a crisis initiated on the supply and production chain side [1]. Rising energy prices and the intensification of COVID-19 have added to the volatility of the global economic environment. The sources of risk are more diversified. On the other hand, we are currently on the brink of a fourth industrial revolution, and the global economies today are transitioning at a pace faster than imagined [2]. New drivers of growth in the world economy have been replaced by old ones. The center of gravity of the global economy is shifting faster from west to east. The new round of scientific and industrial revolution has brought more development opportunities for enterprises. In addition, human society is increasingly demanding sustainable development, and emerging economies, such as China, are striving to realize their potential of sustainable production [3]. Under the situation of more changeable environments, firms need to take the initiative to “resist risks for survival, seize opportunities for development” in adversity and have a positive response to sustainable development requirements. The realization of these goals requires the support of resources, especially the organizational slack resources proactively reserved by firms. Therefore, it is particularly valuable to discuss organizational slack, which plays the role of “stability and adaptation” in firms [4]. For example, HUAWEI TECHNOLOGIES CO.LTD (Huawei for short) actively responds to external shocks by preparing organizational slack, which is called the “spare tire” plan such as “Hisilicon” in 2019. It has shown strong recovery capability in the face of the crisis of the “Entity List” sanctions. Therefore, this makes organizational slack that can withstand internal and external shocks, which is increasingly important.

Organizational slack refers to the portion of an organization’s resources that exceeds its actual needs or that is not being used [4,5]. It is a common phenomenon in the practice of firm management. In reality, there is no organization with zero slack [4]. In recent years, scholars have carried out a series of discussions in the field of organizational slack. Some scholars believe that organizational slack plays a buffer role when the environment changes [6], which can protect firms and even achieve sustainable development when facing environmental shock [7,8]. Others believe that slack will reduce the efficiency of firms [9]. In the face of fierce competition, although the importance of organizational slack in firm management practice has been confirmed, some firms still drastically reduce slack resources. It can be seen that whether slack resources are necessary for firms has obvious disputes in both theory and practice.

Research shows that slack resources exist in various forms in firms [10]. They can be used quickly or slowly after a crisis in various ways [11]. However, actively created slack such as Hisilicon cannot be accurately generalized to any dimension under the existing theoretical framework. And, there is no clear explanation of how slack occurs. It can be said that the development process of theory has been unable to match the practice of enterprise management. Moreover, although a wealth of research has been produced so far, literature information in this field is scattered. Research reviews using objective bibliometric analysis methods are scarce, and the research venation is not clear, which makes it difficult for scholars to quickly understand the evolution and development trend of this field.

According to the above problem, we presented a visual analysis and interpretation of the literature on “organizational slack” from the Web of Science database, analyzed the research hotspots of each phase and combed the research venation. In the theoretical significance, we have clarified its evolution trajectory, limitations and development trend, by sorting out the relevant research results of organizational slack, and find the key points that combine theory with practice. It can provide ideas for future development direction and promote the realization of complementarity between theory and practice. In the practical significance, we sorted out the important role of organizational slack on firm performance and strategic behavior and clearly explained the functional attributes of organizational slack. This is helpful to guide the organization to allocate all kinds of resources reasonably and achieve the promotion of competitive advantages.

2. Methods and Data

We combine bibliometric analysis and traditional literature review methods, which facilitate a comprehensive and objective analysis of the literature [12]. Citespace 5.8.R1 was used as the research tool to visually analyze the references and keywords cited in the downloaded literature. The knowledge basis of organizational slack research was summarized from the knowledge graph of literature co-citation, and the evolution phase of organizational slack research was analyzed through the time zone view of keywords. Then, the literature review is carried out with the help of the knowledge graph, so as to refine the research hotspots of each evolutionary phase and systematically sort out the research venation. We searched “ organizational slack “ or “ organizational redundancy “ or “slack resource*” or “ redundancy resource *” in the Web of Science database, selected “Web of Science Core Collection Database”, searched time span of all years (1985–2021), and selected “Article” or “Review”. The research field was limited to “Management”, “Business”, “Operations Research Management Science”, etc. According to the content, some irrelevant literature was manually removed, and 983 literature documents were obtained. Finally, the actual literature data was obtained from 1991 to 2021. A total of 958 valid papers were obtained by Citespace.

3. Knowledge Mapping Results

3.1. Descriptive Analysis

As can be seen from the growth of organizational slack publications (Figure 1), there were few papers before 2006. Then, it showed an obvious upward trend. Especially in the past three years, the number of publications has increased significantly. It peaked at 116 in 2021. This indicates that the study of organizational slack is an emerging hot topic.

According to the citation frequency of journals, the top 5 cited journals in the organization slack research field are “Academy of Management Journal”, ”Strategic Management Journal”, ”Academy of Management Review”,”Journal of Management”, ”Management Science” (

Table 1. Top 5 most cited journals with co-citation frequency.

Amounts	Cited Journals	Impact Factors for 2021
589	Academy of Management Journal	10.194
553	Strategic Management Journal	8.641
514	Academy of Management Review	12.638
472	Journal of Management	11.79
469	Management Science	4.883

). The above journals are authoritative in the field of management. Compared with other journals, they are at the core of the research field of organizational slack and constitute the research foundation of this field.

The level and influence of academia can be measured by the citation frequency of scholars’ papers. According to the ranking of highly cited authors, it can be found (

Table 2. Top 10 most cited author with co-citation frequency.

Rank	Frequency	Author	Rank	Frequency	Author
1	286	Bourgeois L J	6	175	Singh J V
2	267	Nohria N	7	159	Voss G B
3	259	Cyert R	8	153	Barney J
4	217	George G	9	136	March J G
5	204	Tan J	10	135	Bromiley P

) that highly cited authors are the founders of organizational slack and pioneers of each subdivision field, respectively. For example, Cyert and March [4] clearly proposed the concept and role of “slack” in 1963, which laid a foundation for the study of organizational slack. George [13] explored the relationship between organizational slack and firm performance based on firm behavior theory and resource constraint theory. Voss et al. [14] explored the impact of slack on firms’ strategic activities based on the specific characteristics of slack and the environmental background faced by organizations. Although most of the highly cited authors are from European nations and the United States, their research results provide a reference for all the scholars of organizational slack in the world. Their research results have laid the research foundation and theoretical framework in this field.

The number of publications reflects the research level and contribution of different countries or regions. According to the number of articles published by countries or regions (

Table 3. Top 10 countries or regions based on frequency.

Rank	Frequency	Countries (Regions)	Rank	Frequency	Countries (Regions)
1	351	USA	6	53	Canada
2	223	Peoples R China	7	52	Australia
3	105	England	8	42	Netherland
4	83	Taiwan	9	42	Germany
5	58	Spain	10	40	France

), the United States tops the list with 351 articles published. China and Taiwan in Asia also enter the top 10 list. In addition, European countries such as The United Kingdom, Spain and Canada in North America are also major research forces in the field of organizational slack. It is worth noting that although China ranked the second with 223 articles, none of the top 10 highly cited authors were from China or Taiwan, which shows that the international academic influence of Chinese scholars needs to be further improved.

The above descriptive results show that the research on organizational slack is undergoing rapid development and progress.

3.2. Co-Citation Analysis

Classical literature that is frequently cited, at the same time, constitute the knowledge basis of a research field. Therefore, we obtain the knowledge basis of the research field of organizational slack by co-citation analysis (Figure 2). Bourgeois [10] clarified the concept of organizational slack, summarized four functions of organizational slack and provided measurement methods for subsequent empirical research. The resource-based theory proposed by Wernerfelt [15] and Barney [16] laid the theoretical foundation of organizational slack from the perspective of resources and competitive advantage. Sharfman [11] sorted out the driving factors of organizational slack and enriched the research on organizational slack motivation. Nohria [17] proposed the concept of optimal slack to try to reconcile the debate on “Is slack bad or good”. Greve [18], Bromiley [19] and Singh [6] explored the critical impact of slack on factors such as firm risk-taking, decision making, innovation and performance. Tan [20] integrated behavioral theory and agency theory and then verified the relationship between different types of slack and firm performance from the perspective of contingency.

3.3. Keyword Co-Occurrence Analysis

Hot topics and frontiers in the field of organizational slack can be summarized from keywords’ co-occurrence and high-frequency burst words. Considering the time factor can more clearly analyze organizational slack hotspot evolution and development change. Therefore, we summarized the evolution trend of research hotspots and research venation in the field of organizational slack using a time zone view of keywords (Figure 3) and burst words (Figure 4). It can be seen that the research hotspot of organizational slack is constantly shifting with the change of external environment. According to the research results, the knowledge base of organizational slack is mostly generated in the first phase. The second and third phases of research are mainly to further develop and improve the knowledge base of the first phase. Therefore, three phases can be identified as follows: foundation phase, development phase and deepening phase.

4. Findings

4.1. Analysis of the Research Venation of Organizational Slack

Combined with literature co-citation analysis, time zone view of keywords and representative burst keywords, we summarize the research venation of organizational slack into three development phases. By integrating and classifying high-frequency keywords and further tracing their relevant literature, the research hotspots in each phase are extracted.

4.1.1. Foundation Phase: Research Origin and Concept Definition (1963–2008)

It can be seen from Figure 3, at this phase, the outer edge of the node circle of “organizational slack” has the deepest red. This indicates that it has the highest centrality and reflects the research topic of organizational slack. Combined with other words with high centrality and frequency and further reading of relevant literature, five research hotspots can be concluded: The origin of organizational slack research, which explores the origin of organizational slack, has representative keywords of “organizational slack”, “firm”, “decision making”, etc.; Connotation discrimination of organizational slack, which reflects the connotation and theoretical basis of organizational slack, has representative keywords of “resource”, “slack”, “resource Based view” and “behavior theory”; Antecedents, which reflects the antecedent factors that affect the production and stock of organizational slack, has representative keywords of “organizational size”, “risk” and other; Dimensions of organizational slack has representative keywords of “financial slack”, “dimension”, etc.; The role of organizational slack, which focuses on what kind of effect organizational slack will have on firms, has representative keywords of “performance”, “strategy”, “innovation”, “research and development”, “investment”, “agency cost”, etc.

• The origin of organizational slack

Organizational slack was originally conceived as a motivational resource. In 1938, Barnard discussed a way of attracting and maintaining organizational membership in administrative theory. Then, March and Simon [25] introduced the definition of this way into organizational theory and labeled it “slack.” Slack is expressed as organizational incentives of different degrees when the resources owned by the organization exceed what the organization needs. Cyert and March [4] clearly define this view as that when the amount paid to an employee exceeds the minimum amount required to retain him/her, the excess amount is organizational slack. Subsequently, on the basis of Adam Smith’s hypothesis of “economic man”, two research branches such as firm behavior theory and agency theory birthed. Both of them explored the internal decision-making behavior of firms from different perspectives. As an internal resource of firms, organizational slack is closely related to the decision-making process of firms. Therefore, organizational slack has been discussed in firm behavior theory and agency theory.

• Connotation discrimination of organizational slack

Organizational slack is the focus of firm behavior theory and agency theory. Conceptually, firm behavior theory believes that organizational slack is the resource that has not been fully deployed within an organization, and the existence of this part of its resources provides flexibility for firms to adapt to environmental changes and make strategic decisions [4,5,19,26]. Agency theory believes that organizational slack refers to the portion of resources that exceeds the minimum required to maintain the specific production level of an organization. These remaining resources are left idle in the firm, which increase costs and reduce operational efficiency [9]. The difference between the two theories on the definition of slack is due to the different views of scholars on the role of organizational slack. Resource-based theory provides the explanation. Organizational slack essentially belongs to the resources of the firm. Resource-based theory holds that the basis for a firm to establish long-term competitive advantage is the rare and irreplaceable resources within the firm, which are difficult for competitors to imitate. Firms rely on these valuable resources to maintain daily operations and ensure long-term viability [16,27]. Organizational slack describes “surplus” or “excess” resources, which does not seem to conform to the definition of valuable resources in resource-based theory. However, according to Penrose [28], what provides value for production is not the resources themselves, but the services generated in the use of resources. Therefore, firms can obtain value from these “surplus” resources through rational allocation and utilization of organizational slack. This provides reliable theoretical interpretation of how managers use organizational slack to ensure survival and create effective value.

• Antecedents of organizational slack

Most of the research on the antecedents focuses on this phase, but it is not perfect. Factors leading to organizational slack can be divided into two levels: Firstly, at the environmental level, Sharfman et al. [11] pointed out that different environmental characteristics would promote the firm to form corresponding slack. Specifically, the faster that changes come, and the larger those changes are, the more slack the firm will need; The higher the availability of resources in the market, the more likely the firm will reduce the slack stock; In terms of industry choice, service-oriented firms need more flexibility in the free disposal of slack resources than manufacturing firms. From the perspective of the industry life cycle, firms in the growth phase prefer lower discretionary slack than those in the mature phase. Secondly, at the organizational level, the larger the scale of the firm, the more slack it is able to hold. Older companies are more likely to make predictions about the production process due to their rich experience. They have correct expectations about the type of slack that may be required under production conditions. Therefore, the older the company is and the more predictable the production process is, the more slack for specific purposes the company holds. Alliance, which plays a dominant role in organizational decision-making, is also an important driving factor. When the alliance believes that there will be opportunities in the future, the firm will maintain a high level of slack. When the alliance sees a threat in the future, the firm will reduce slack. This is closely related to the risk appetite of firms. In addition, Bourgeois [10], Cyert and March [4] put forward the view that at least part of slack is created under the conscious plan of firms, but there is no follow-up research.

• Dimensions of organizational slack

Organizational slack is not a single dimensional concept. The premise of analyzing how an organization generates value by deploying slack and what is the value of slack is to clearly distinguish between different types of slack.

Firstly, organizational slack can be divided into three dimensions according to the degree of complexity of redeployment: available slack, recoverable slack and potential slack [29]. Available slack refers to the resources that have not been put into the specific operation of the organization, such as cash and other current assets. Recoverable slack refers to the resources that have been absorbed into the specific operation of an organization as excess costs. It can be recovered by resource savings in adverse circumstances, such as management costs. Potential slack is the additional resources that an organization can obtain from the environment, such as by increasing debt or equity capital. This is the basis for other scholars to reference in the subsequent research on the dimension of organizational slack.

Secondly, Sharfman et al. [11] divided organizational slack into two dimensions from the perspective of managers’ freedom to control organizational slack and flexibility of redeployment. One is high discretion slack, such as cash and raw material inventory, which can be applied to more demanding situations due to its high liquidity. It gives managers more opportunities to choose and control. The other is low discretion slack, including finished goods inventory or specialized equipment, which is usually only applicable to specific needs and difficult for managers to quickly transform its form to meet other diversified needs. In addition, there are operational slack, financial slack, customer relationship slack and human resources slack, according to the resource’s nature [14]. According to the existing state of the organization, there are unabsorbed slack and absorbed slack [6]. It can be seen that the existing studies mainly clarify the dimension of organizational slack by distinguishing the characteristics of flexibility in resource use and freedom of manager deployment.

Finally, based on the characteristics of organizational slack, scholars discuss the factors that influence managers’ motivation and ways of allocating slack from an internal perspective of the firm. The difficulty of redeploying organizational slack and the scarcity of slack both significantly affect managers’ motivation and mode of slack allocation, which can be divided into exploration and exploitation [14]. Whether organizational slack is easy to be redeployed is generally related to its existing state in the firm. Unabsorbed slack, such as cash, has no clear purpose and has not been put into use, which is conducive to managers’ redeployment in the firm [11,20]. Absorbed slack has specificity such as under-developed capacity. They are already in use and relevant to the current operation of the firm [18]. Therefore, it is difficult for managers to quickly recycle and redeploy them for new business activities in a short period of time [30].

• The role of organizational slack

Maintain the internal stability of firm. The internal maintenance functions of organizational slack mainly include: incentive mechanism, resolving internal conflicts and smoothing internal workflow. Firstly, slack retains members for the organization by acting as an incentive [4,25]. Secondly, slack provides an available resource pool for the organization, which allows the universal distribution of resources or opportunities to all organizational sub-units. It helps to solve the goal conflicts among members or interest groups within the organization and maintain organizational harmony [31]. Finally, slack provides resource buffers between organizational workflows, such as increasing inventories of raw materials or finished products to absorb fluctuations in supply or demand. It will ensure uninterrupted production processes [32]. In short, organizational slack serves to stabilize the core of the business within the firm.

Influence strategic behavior of firm. In this phase, there is a great controversy about the influence of organizational slack on firm strategic behavior. In the view of firm behavior theory, resources are the inducement for firms to make different strategic choices [13], and organizational slack will promote firm strategy or creative behavior [10]. Slack is the catalyst to promote firm innovation and risk-taking, and influence the decision of firm to choose exploration or exploitation [25]. Firms with slack usually have more strategic options [19]. When deciding whether to invest in innovative projects, firms must face related uncertainty [33]. Such internal uncertainty makes it difficult for firms to predict the benefits of these projects in advance. As an additional “resource pool”, organizational slack can flexibly adjust the resource allocation level with the progress of projects. It provides funding and flexibility for innovation or R&D projects which would not normally be approved under resource constraints [4]. It can act as a “safety net” to withstand the impact of project failure and prevent sudden cuts or disruptions in R&D. Therefore, organizational slack improves the risk-taking level of firms [34], bringing more opportunities for firms to increase profits [13]. It makes firms dare to test new strategies by introducing new products and entering new markets [18].

Agency theory believes that organizational slack occupies cost and damages efficiency [22,35]. They think that excessive organizational slack may aggravate agency conflicts in firm and lead to under-investment in R&D or innovation projects. While a wealth of organizational slack can stimulate investment in new projects in research and development, whether these projects can truly add value for the firm is difficult to forecast. Even if managers accumulate slack resources in pursuit of personal gain, they will still make choices that are more in line with their own preferences rather than the overall economic benefits of the firm [36]. Managers may implement inappropriate strategic actions due to overconfidence [37]. For example, making conservative investment strategies [38] and allocating idle funds to low-risk activities that are beneficial to them so as to enrich their pockets, instead of making innovative decisions from the perspective of creating long-term value of the firm [20].

Influence performance level of firm. In this phase, a large number of literature papers have verified the relationship between organizational slack and firm performance. At first, the linear correlation view is the mainstream, but there is a “positive or negative” debate in the research results. For example, some scholars believed that organizational slack can help firms reduce risks and improve performance in an uncertain environment [7,39]. Therefore, organizational slack is positively linear correlated with firm performance. Some scholars said that organizational slack can make managers blindly optimistic or lead to over-diversified investments. This results in a decline in the level of corporate performance. It is suggested that there is a negative correlation between organizational slack and firm performance. As the research goes further, scholars find that there is not simply a linear correlation after the influence of mediating variables is included. Based on the contingency perspective, there is also a positive “U” or inverted “U” correlation and so on [19,20]; either too much or too little slack will have a negative impact on the firm. Only the optimal level of slack can promote the growth of firm performance and provide necessary flexibility for the firm to maintain stable operation. These studies put forward a comprehensive view on the role of organizational slack and provide direction for further research on the rationality of firms holding slack.

• Review

In the foundation phase, most of the classical literature were born, which constituted the basic research framework of organizational slack. During this period, most of the research samples and data came from western developed countries. After a long period of research, a number of subdivided fields were developed, and the general research framework was initially formed. In terms of research content, scholars defined the connotation of organizational slack from different theoretical perspectives and put forward multi-dimensional responses according to the existence state of slack in the firm or the characteristics of resources themselves. They answered the question of “what is organizational slack and what types are included”. Subsequently, Sharfman et al. [11] explored the antecedent factors, which became the basis of antecedent studies on organizational slack. The subsequent antecedent studies were all improved or verified on the basis of antecedent factors, but with no breakthrough. Although there is controversy among different scholars on “Is slack good or bad”, the utility of slack in firms is still preliminarily acknowledged. Due to the relatively low uncertainty of the external environment at this period, firms pay more attention to the improvement of internal efficiency. Scholars have paid little attention to the role of organizational slack in buffering external disturbances and adapting to external environments. The research perspective mainly focuses on the internal situation of firms. Theoretical research paid more attention to the current internal operation of firms, which mainly ensured the short-term survival of firms by stabilizing the internal workflow and achieving performance growth. The theoretical process was more consistent with the practice of firms.

4.1.2. Development Phase: Respond to the Uncertainty of the External Environment (2009–2013)

There are two research hotspots in this phase: Situational factors, whose representative keywords are “market”, “industry” and “uncertainty”; The role of organizational slack in internationalization at this stage, whose representative keywords are “internationalization”, “emerging economy”, “exploration”, etc. “ Uncertainty “ burst for a long time from 2009 to 2015, reflecting the characteristics of an uncertain external environment in this period.

• Situational factors

The disturbance of the financial crisis to the world economic environment strengthened the awareness of firms and scholars to pay attention to situational factors. The situational factors that firms must consider to reserve and use slack mainly include environmental situational factors and organizational situational factors. Environmental situational factors mainly include the dynamism and tolerance of the external market environment. The study on environmental situational factors highlights the key role of slack in the context of environmental uncertainty. The reason is that, in addition to using slack to achieve internal stability, external stability is also pursued by firms [26]. Therefore, firms may respond to external adverse events by creating slack. For example, in the context of high environmental dynamics, firms will increase inventory or capacity to maintain the independence of suppliers [40] so as to improve the reliability and flexibility of the supply chain and ensure the continuity of production in the case of supply chain interruption caused by external interference. In terms of environmental tolerance, the less resources and opportunities a firm obtains from the environment, the more it will focus on the efficient use of internal slack resources to create opportunities in this “tough” situation and the higher the performance will be [41]. In addition, Ju and Zhao [42] found that, compared with less competitive industries, the relationship between organizational slack and firm performance was more obvious in firms in highly competitive industries. At the level of organizational situational factors, company ownership is considered as a moderating variable between organizational slack and firm performance [24,42]. The type of venture capital investors is also a situational factor that affects the value of slack. For example, the type of investors and the proportion of investors’ shareholding may affect the discretion of entrepreneurs to allocate slack and affect the utility of this slack [43].

• The role of organizational slack

Improve international operation of firm. In the post-financial crisis period, the world economy was in a state of rebalancing. Economic growth was slowing down and trade was shrinking. The international market environment was more severe than before. The risk of international operations of firms was sharply increasing, and the uncertainty and unpredictability of firms were significantly increased. Organizational slack, as tangible and intangible assets used by firms for emergency purposes, is usually allocated to selective emergency uses by managers as strategic resources to alleviate uncertainty. It is one of the strategic decisions to determine whether a firm is ready to alleviate internal and external challenges and provide possibilities for international activities [44]. Therefore, the role of organizational slack became prominent. First of all, from the perspective of firm behavior, slack can provide resource guarantees for firms to internationalize. On the one hand, the behavior of firms to conduct external exploration in the international market will consume firm resources and search costs such as stakeholder relationship [45]. Therefore, the external exploration behavior of resource-deficient firms is always limited [46]. Slack can provide necessary resources for the exploration behavior of firms. On the other hand, in the multinational context, the business environment is more changeable. Firms can reconfigure and integrate internal and external resources through dynamic capabilities [47] to adapt to the needs and opportunities brought by the international business environment [48]. Slack provides sufficient flexible resources for such resource reconstruction. Secondly, slack helps firms adapt to the dynamic international external environment. Slack absorbs external shocks in the process of international operations of firms, helps firms to withstand greater uncertainty and maintain corporate performance [49,50]. Finally, slack may also provide unexpected growth opportunities during the economic downturn. In an economic downturn, the decline of environmental tolerance will change the strategic environment of firms, and managers tend to avoid risks and reduce risk investment [51]. Therefore, the overall possibility of cross-border acquisition is low at this time. However, firms with more slack, especially financial slack, will have more options in cross-border acquisitions [52]. Because slack helps firm absorb potential losses in an economic downturn, it allows firms to quickly seize the opportunity to acquire weaker competitors.

Help firms of emerging economies develop across borders. According to the “Global City Economy Monitoring Report” released by The London School of Economics and Political Science in 2010, the financial crisis and world economic recession accelerated the process of the shift of the global economic development center from developed countries to developing countries. Meanwhile, in order to cope with the adverse impact of the financial crisis and stimulate economic recovery, governments of various countries have introduced more relaxed policies of foreign direct investment, which have created new markets for firms to carry out international investment cooperation. This brings both challenges and opportunities for firms from emerging economies to carry out transnational operations. Different from their competitors in developed countries, firms in emerging economies generally enter the international market relatively late and are mostly born in countries with imperfect institutions. Therefore, they face the disadvantage of new entrants with insufficient identities when entering the international market [53]. They also have relatively few resources and capabilities. So, in response to the demands of stakeholders in the international market, multinational firms in emerging economies will actively fulfill their social responsibilities and overcome the disadvantages of new entrants [54]. The undertaking of social responsibility requires abundant internal resources as a guarantee. Only when firms have enough organizational slack can they put slack resources into the field of social responsibility [55]. It can also alleviate the dilemma of resource competition caused by multinational firms, which not only need to carry out the main business in the home country but also carry out overseas investment exploration [56].

• Review

In this phase, the number of literature papers increased significantly, and the research content was gradually broadened based on the results of the first phase. The research samples and data were still mainly from developed countries, while data from emerging economies were gradually increasing. Compared with the first phase, the external environment has changed significantly. Since the beginning of the 21st century, the uncertainty of the external environment has gradually increased. The outbreak of the US financial crisis in 2008 had a violent impact on the world economy. Western developed countries have been plunged into various crises, which have deeply affected firms. Meanwhile, emerging economies were growing rapidly, and firms were actively seeking more development opportunities abroad. Previous studies have given little attention to the environment in which managers allocate and use slack. Facts and studies show that the impact of the environment on firms during this period is stronger than when Cyert and March [4] proposed the concept of slack [57]. Therefore, the research at this time focuses on responding to the uncertainty of the external environment. In general, the research paid more attention to the behavior of firms to explore outside to seek more development opportunities. As the uncertainty of external environments gradually increases, the impact of slack in resisting external risks and adapting to the environment is more obvious, but the research remains at the level of stabilizing and expanding current operations.

4.1.3. Deepening Phase: Emphasizing Equal Weight to Both Internal and External (2014–)

Two research hotspots can be summarized in this phase: Situational factors, with representative keywords of “moderating role”, “institutional theory”, “complexity”, etc., reflecting the situational factors that affect organizational slack and organizational slack itself as situational factors from an institutional perspective; The role of organizational slack, with representative keywords of “resilience”, “entrepreneurial orientation”, “environmental performance”, “sustainable development”, etc. It reflects the role of organizational slack in the sustainable development of firms at this phase. Among them, “resilience” is the latest burst word, which became active in 2020 and has a high burst intensity, representing a new trend in organizational slack research.

• Situational factors

As can be seen from the above, in terms of situational factors of organizational slack, some of the previous literature equate the external environment of a firm with its industry environment when exploring external situational factors and believe that the different characteristics of the industry environment will affect the relationship between organizational slack and firm performance [40]. The reason is that most of the data and samples in previous studies came from a single country and ignored the influence of the institutional environment in different countries [52]. With multinational business activities of firms in emerging economies becoming increasingly frequent, in order to cope with the complex and changeable international economic situation, various countries have issued corresponding policies to protect the position of their own firm in the world market. Therefore, it has been found in practice that the institutional differences between the host country and the home country of multinational firms have a non-negligible impact on firm managers’ behavior. Thus, it has become a hot topic to take the institutional environment as a situational factor to explore the impact of slack on firm performance. From the perspective of behavior–institution integration, Vanacker [58] conducted an empirical research study and found that the level and utility of slack are indeed regulated by the institutional framework at the national level. Managers in differentiated institutional environments have different motivations and judgments in terms of slack allocation. National legal institutions and regulatory agencies may limit managers’ strategic decisions or discretion in allocating resources, so managers must allocate resources within the legal framework.

In addition, organizational slack is a situational factor of other studies. For example, Jiao et al. [59] found that when firms hope to improve financial and environmental performance through green operations, organizational slack has different moderating effects on green operations and the two kinds of performance. Based on the data of Thai manufacturing enterprises, Tariq et al. [60] found that organizational slack plays a negative moderating role in enterprises’ green process innovation and financial risk.

• The role of organizational slack
• Influence strategic behavior of firm

In the context of rapid changes in the external environment, firms will make strategic behavioral decisions comprehensively considering their own resources, and organizational slack has become a key element of firm innovation and entrepreneurship.

In terms of innovation activities, the industrial revolution has put forward new requirements for the green transformation of firms. In recent years, sustainable development has become a hot issue of global concern. The sustainability of the environment and economic development has been strongly considered by scholars [61]. Firms pay more attention to ecological benefits, and green innovation becomes an inevitable requirement for firms to pursue sustainable development [62]. Research confirmed that organizational slack has a positive impact on firms’ tendency to participate in green product innovation [63]. It has a positive impact on firms’ economic performance, environmental performance and social performance. It shows that slack can effectively serve firms’ green innovation behavior, but the specific mechanism of action needs to be further enriched and improved. Slack also plays an important role in strategic emerging industries. Hu et al. shows that larger firms have more slack resources and have a stronger ability to resist the risk of innovation, so their awareness and motivation towards innovation strategy will be strengthened [64].

In terms of entrepreneurial activities, the decision of whether to start entrepreneurial activities depend on the availability of organizational slack [65]. Generally speaking, in order to obtain sustainable competitive advantages, innovation and entrepreneurship have become strategic choices for firms to cope with challenges and manage uncertainties in the external environment. Not only do entrepreneurs and new firms advocate the courage to take risks and actively innovate, but also incumbent firms show entrepreneurial orientation. Entrepreneurial orientation means the adjustment of the resource allocation mode. Firms with strong entrepreneurial orientation are more aggressive, more inclined to carry out creative activities or experiments [66] and have a higher level of risk taking. Organizational slack can be allocated to the resources needed for entrepreneurship of firms [67] and can effectively absorb the negative impact brought by creative activities. On the contrary, some scholars believe that too much slack will have a negative impact on the innovation and survival of new ventures [68]. Firms with too much slack will breed inertia and a sense of superiority and inhibit aggressive venture capital investment [69]. Moreover, due to the high risk of entrepreneurial behaviors, the negative expectation of investment failure also makes firms tend to be conservative [70].

• Develop the ability of organizational resilience

Organizational resilience is the core ability of a firm to cope with crises in the context of significant environmental uncertainties [71]. It enables the organization to absorb shocks and recover from them and even surpass previous performance [72]. Resilience comes from the processes of creating or retaining resources. It has the characteristics of flexibility, storability and convertibility, which can ensure that the organization can successfully deal with unexpected events and learn from them. An organization with resilience can reduce its vulnerability to external disturbances, avoid collapse and continue to grow under adversity. Research has shown that organizational slack has a positive impact on organizational resilience under uncertainty [73]. Organizational slack is an important way to obtain organizational resilience in uncertain situations [74].

First of all, as a buffer between firms and environmental unpredictability, organizational slack creates an unused improvement space for firms, enabling firms to cope with the pressure and changes of the external competitive environment calmly [75]. This is similar to building a fence between the firm and the environment. It absorbs shocks when the crisis comes and maintains the core stability of the firm. Diversification strategies driven by slack can spread investment risk, in other words “not putting all eggs in one basket”. This will reduce the negative impact of investment failure [4] and help firms recover from failure. Secondly, organizational resilience can also help firms learn and optimize from shocks, grow to a better state further, achieve reverse improvement and turn crisis into opportunity. This process also relies on slack, which is convertible, configurable and flexible for intra-firm storage [76]. Finally, in the research of the expected response of organizational resilience, some scholars pointed out that organizations with resilience can predict crisis and do preventive measures before damage occurs [77]. This means making more targeted and timely investments by maintaining a detailed understanding of business operations or deploying more slack to deal with potential threats to eliminate risk before losses occur. It can be said that the effectiveness of organizational resilience depends not only on the amount of slack, but also on the deployment of slack [78].

• Review

Since 2014, the research on organizational slack has been gradually deepened, with a significant increase in the number of literature papers. The research hotspot has continued the previous important research topics, the content has become more diversified and in-depth and emerging economies have become the focus of research. At this phase, the external environment further changes. In April 2013, Germany pioneered the concept of “ Industry 4.0”. Global industrial networking, intellectualization and green transformation began. The new round of industrial revolution, represented by technological innovations such as the mobile Internet, new energy and big data, has brought more risks and challenges to the world economy, as well as new opportunities. In terms of opportunities, with the shift of global economic focus to developing countries after the economic crisis, emerging economies are in a period of international expansion, and multinational operation and foreign investment activities become more frequent. In terms of risks, frequent extreme weather events and natural disasters caused by climate change have made the international situation more complex. In addition, the trade disputes between China and the United States in 2018 and the global spread of COVID-19 in 2020 have significantly increased environmental uncertainties and made the economic environment more complex and volatile. Increased uncertainty and sudden change may threaten organizational function and survival. Therefore, the research in this phase not only focuses on innovation and entrepreneurship to seek long-term sustainable competitive advantage. Under the change of the external environment and firm practice, new research branches that intersect with the research on organizational resilience with the theme of resisting a crisis have emerged. It can be seen that the research focus on organizational slack at this phase reflects distinct characteristics of the times. The research on impact is no longer limited to the current survival and development of firms. It gradually increases the emphasis on the long-term growth of firms, but still lacks the strategic planning of future opportunities and risks. The theoretical process has lagged behind the firm practice.

4.2. Analysis on the Evolution of Organizational Slack Research Venation

Through the above analysis, we have sorted out the evolution of organizational slack research venation (Figure 5). From the perspective of theoretical development, through the analysis of the research hotspots in each phase of organizational slack, we think that there are the following evolution laws in this field: In terms of research perspective, organizational slack research shows a trend of “internal–external–internal and external”. In terms of the application purpose, organizational slack takes firms as the research object, and the application purpose changes from focusing on the short-term survival to focusing on the development to focusing on the long-term growth of firms. In terms of research content, the contents of various research topics continue to be deeply explored and become richer and more diversified. In terms of research ideas, the research focused on organizational slack has a distinct mark of the times and gradually developed with the upgrading of practical needs.

From the perspective of the change of firm management practice, the behavior of firms to allocate slack has changed from “temporary response after the emergence of demand” to “planning and preparation before the emergence of demand”. As Huawei listed on the “entity list” in the trade disputes between China and the United States, with the “backup plan” such as “Hisilicon”, Huawei can flexibly respond to changes by making advance preparations for organizational slack. It ensures the normal operation of Huawei in a highly uncertain environment and the continuous growth of its overall performance, which reflects that the way firms use slack to deal with the crisis has shifted from passive defense to active response.

5. Discussion and Future Direction

5.1. Discussion

Based on the above analysis and the actual situation in management practices, we hold that the research ideas in the field of organizational slack remain at the level of passive defense, and the research focus is on how to use the existing slack of firms to meet the existing needs. There is still no clear explanation of where the slack comes from. Specifically, there are the following deficiencies:

First of all, existing studies are limited to the perspective of passive defense and lack of thinking about the advance planning of organizational slack. In the current complex and changeable external environment, only relying on the temporary deployment of slack to deal with emergencies will face the situation of insufficient slack or mismatch with the demand. It is difficult to achieve for firms seeking long-term growth goals and not conducive to the sustainable development of enterprises. Therefore, it is necessary to deeply trace the formation of organizational slack, pay more attention to the source of consciously creating slack and explore how to dynamically manage the slack.

Secondly, the existing research on the classification of organizational slack is based on the form of resources, which can only answer the question of “what is organizational slack”. There is a lack of research from the perspective of functional attributes. So, the question “what organizational slack is for?” cannot be effectively answered. It can be said that the existing theories cannot guide firms in how to reserve and allocate organizational slack in advance according to the possible future demands based on the functional attributes of organizational slack. Although there have been successful cases in practice, this creates a clear disconnect between theory and practice. That is why some firms tend to reduce slack—they don’t know if the organizational slack they have is useful and what kind of use it has.

Finally, the development of organizational slack research has gradually expanded in the scope of research; the depth of research needs to be further improved. In the new economic environment, the research needs to be more consistent with firm practice. In the context of highly uncertain environments, building resilience through organizational slack to enhance the ability of enterprises to cope with crises has gradually become a hot research and frontier topic. At present, scholars have initially put forward the view that firms should proactively create slack in order to deal with potential risks and opportunities in the future. This is the trend of theoretical development consistent with the practice of enterprises. But, at present, this research branch is still in the early stage of development and it is in urgent need of deepening and expanding. In general, the future study of organizational slack should change from “temporary response” to “preparation in advance” from the perspective of active response.

5.2. Future Direction

Based on the above analysis, in order to fill the gap between theory and practice, we think that the following three aspects should be further explored in the future. In a word, firms should be prepared for danger in times of peace.

5.2.1. Plan Ahead for the Management and Creation of Organizational Slack Based on Judgment of Future

At present, the high level of uncertainty of external environments leads to the vagueness of resources demanded for firm development and maintaining competitive advantage. The vagueness indicates that firms need slack resources to change existing capabilities or create new capabilities to cope with environmental changes (no matter the opportunities or threats). Therefore, future research should strengthen the research on the pre-planning of organizational redundancy. First of all, it is necessary to clarify the source of organizational slack. On this basis, combined with the judgment of the future situation, it is necessary to research the creation and dynamic maintenance of organizational slack.

• The source of organizational slack should be consciously considered

As can be seen from the foregoing, scholars led by Sharfman have found that firm age, previous performance and other factors affect firms’ behaviors of creating and accumulating slack, but it is not clear that firms will purposefully create slack. Bourgeois [10], Cyert and March [4] have proposed that slack should be regarded as a dependent variable. They think that the method of discovering, creating and maintaining slack should be explored, and at least part of the slack is consciously planned. However, no related research branches have been developed in the existing literature. The reason is that the external environment was relatively stable when this view was put forward, and slack did not play an obvious role in resisting external shocks. Although it was helpful for the stable operation of firms, deliberately holding slack would produce costs. Therefore, the focus of research debates before is whether slack should exist, rather than why it exists.

Taking firm managers as the subject of action, we think that the sources of organizational slack can be roughly classified into two categories: One type of organizational slack is planned and intentionally created by managers, which can be further divided into two types. First, it can be seen as a product of the agency problem within firms, in which managers tend to accumulate slack by overestimating costs and underestimating revenues in terms of budgets [79]. Secondly, in order to deal with uncertainty, managers will deliberately create slack as a “buffer”, which reflects the foresight of managers. For example, managers may maintain slack in perceived opportunity situations and eliminate it in threat situations [11].

The other is unplanned and unconscious, which is also divided into two situations. First, firms fail to make full use of its resources, leading to the accumulation of some surplus resources. Secondly, under special circumstances, some unexpectedly successful projects may also generate additional income, which brings changes in financial slack and is therefore regarded as a kind of unexpected slack [80].

• Creating and managing slack from dynamic perspective

Organizational slack is not static. Its nature will change over time or in specific situations. The slack of objects may cause wear and tear, so it is necessary to periodically maintain and check resources. For example, regular evaluation of the operational state of power transformers is an essential stage for maintenance of the electric power supply and increase in reliability of the network [81]. Meanwhile, according to the dynamic resource-based view, managers need to remain sensitive to changes in the external environment, accumulate or develop new slack with changes in the environment or demand or reduce slack when necessary to ensure the most effective combination of slack at any time [82]. Therefore, enterprises should ensure the long-term and effective existence of slack resources. The stable access to essential resources is also one aspect of sustainable development [83]. This is complementary to the resource-based view. Future research can explore the creation and dynamic management of organizational slack from the perspective of a dynamic resource-based view. In general, the study of “where organizational slack comes from” and how to dynamically manage it is helpful to provide theoretical guidance for the behavior of firms in acquiring resources according to demand and promote firms to make better choices on slack based on the analysis of environment and organizational characteristics.

5.2.2. Reserve Organizational Slack According to the Future Demand

Under the new environmental conditions, firms need to make corresponding slack reserves according to different requirements that may occur in the future. Future research should consider the short-term survival and long-term development needs of firms. The creation and allocation of organizational slack should be promoted to the level of firm strategy.

• Functional classification basis of organizational slack

As can be seen from the foregoing, organizational slack refers to resources that can be deployed and used by managers within a firm. Whether it is used to stimulate innovation or to buffer internal and external shocks, managers must scan the internal and external environment of the firm and configure the slack to the extent that it can match the requirements of the firm environment. This process reflects the definition of firm strategy by Mintzberg. Therefore, the development and allocation of organizational slack are strategic behaviors of the firm as well as other resources in the firm. Therefore, based on the strategic framework of Miles and Snow, we propose the hypothesis of the organizational slack function be divided into Defensiveness Slack and Strategic Slack, with its sources and deployment intentions. Therefore, drawing on the Proactiveness Strategy and Defensiveness Strategy based on the strategic framework of Miles and Snow, and incorporating the functional attributes of organizational slack, organizational slack is divided into Strategic Slack and Defensiveness Slack. Their characteristics are compared as shown in the

Table 4. Characteristic contrast.

	Strategic Slack	Defensiveness Slack
Whether it has been assigned a specific purpose	Yes	No
Functional characteristics	Conscious prevention	Unconscious protection

.

• Strategic slack

This paper argues that the temporarily idle resources deliberately reserved by firms for a specific purpose have the characteristics of proactiveness strategy, such as going out to attack, which reflect the behavior of enterprises to take the initiative to respond to the demand before it appears. It is a consciously preventive resource. This type of slack has a clear purpose and can better help organizations achieve strategic goals. In addition, slack is a strategic phenomenon [10], so this type of slack is classified as strategic slack. Strategic slack is consciously developed and given specific themes and applications. For example, the surplus capacity deliberately idle in response to sudden changes in market demand [10], or the technology beyond its own production demand to maintain a stable competitive position, are strategic slack resources [84]. A more typical example is the “spare tire” of Hisilicon.

Investment in strategic slack can be detrimental to overall value creation at the moment [85], and it is not necessarily something the business can use immediately. It does not directly contribute value to the firm, but the firm still intends to develop it. The purpose is to deal with the opportunities or threats that may exist in the future, which is a forward-looking organizational strategy. Therefore, the purpose of creating and holding strategic slack is twofold: on the one hand, strategic slack allows firms to make corresponding strategic choices in order to proactively acquire future opportunities [86]. On the other hand, strategic slack can be used to guard against potential disruption and impact consequences. It can be used as insurance against possible future losses in the event that the firm anticipates future high-risk events [87]. According to the resource conservation theory, individuals actively construct and maintain their current resource reserves to cope with potential future resource loss scenarios [88]. It can be said that proactively created strategic slack is closely related to loss aversion. Therefore, we believe that it will be a significant research direction to personalize firm organization and try to explain the internal driving force of strategic slack input and output by applying resource conservation theory at the organizational level.

• Defensiveness slack

According to the characteristics of defensiveness strategy, this paper classifies the idle resources of enterprise memory product with no clear purpose as defensiveness slack. It is passively activated in times of crisis and is an unconscious protective resource. For example, firms always fail to make full use of their own resources, and the remaining resources will be stored [5]. These resources will become the “buffer” for firms in the face of difficulties, and this “buffer” may not be anticipated in advance. Or, firms will deliberately accumulate financial resources that have not been found suitable uses until they unlock these resources to support production or innovation in times of crisis [89]. Since the use of defensiveness slack is not clear in advance, it will be temporarily released by firms in emergencies, and there is uncertainty in the matching degree of resource demand brought by emergencies. Therefore, as the “buffer” and “resource pool” to deal with the crisis, defensiveness slack may more often become the auxiliary role of strategic slack.

With the global economy so closely linked, companies can be hit by any slight fluctuations in the external environment. Holding defensiveness slack can effectively protect the internal core of firms and ensure the basic survival of firms. Maintaining strategic slack can not only reduce the firm’s dependence on external trading partners, but also improve the internal technology core of the firm. This helps firms to improve the safety factor of operating in an uncertain environment, establish a leading competitive advantage and ensure further growth and expansion.

5.2.3. Deeply Exploring the Internal Mechanism of Organizational Slack Influencing Organizational Resilience

Allocate slack actively to cope with crisis and challenges. In a highly uncertain environment, firms are more disrupted than ever before. Firms urgently need to establish organizational resilience to cope with crises and challenges. So, it makes sense to focus on how organizational slack can be used to build organizational resilience.

Proactive accumulation of organizational slack, especially strategic slack, provides key support for building organizational resilience. The literature on organizational resilience suggests that organizational resilience represents extensive reserves. Resilient organizations always try to be well prepared for adversity [78]. It emphasizes that an organization’s ability to withstand and recover from shocks depends on its preparation and characteristics before the shock [90,91]. Such prior preparation relies on the prediction of emergencies [92]. The key point of emergency prediction is to detect and respond to danger signals more quickly [93]. Creating slack is an effective response. From a predictive perspective, proactively created slack can be seen as an investment in “insurance” [94]. Insurance is a means of preventing loss, and the prediction of the acquisition of insurance is proactive [95], such as pre-structurally substitutable in-option portfolios [72]

The existence of organizational slack is the premise for resilient firms to recover from pressure or crisis. Slack is activated, reused or reconfigured during a crisis. It can be said that the initiative to plan and configure slack before the crisis can make the firm well prepared. In the future, under the new normal of environmental uncertainty, from the perspective of active response, the anticipatory strategic slack is introduced into the research of organizational resilience, which can not only provide targeted resource guarantee for firms, but also promote firms to change from passive defense to active response when facing crisis impact.

In general, we suggest that future research should be further explored in the following three aspects:

Firstly, research should explore the antecedents of organizational slack systematically. In particular, scholars should pay more attention to the slack created actively, explore its antecedents and formation mechanisms, so as to fill the research gap. In addition, subsequent research should focus on how firms dynamically adjust slack resources from the perspective of a dynamic resource-based view to ensure that they always meet demand. It is also the first step in exploring how firms create and use slack in a highly uncertain environment to meet challenges and achieve long-term growth and sustainable development from a proactive response perspective.

Secondly, research should focus on further summarizing and improving the dimensions and characteristics of slack from the functional perspective, and clearly defining the connotation and characteristics of strategic slack and defensive slack, constructing measurement indicators and providing empirical research results. It will provide a theoretical explanation for slack actively created by firms. Moreover, it will clearly answer the question of “what is the use of different types of slack”, and provide theoretical guidance for firms to create and maintain slack. It will be a solution to the controversy about” whether slack resources are necessary for firms” -- When academics and managers know exactly what functional properties a kind of slack has, they can decide whether it should exist or not.

Finally, research should explore the relationship between organizational slack and organizational resilience further. At present, excellent and successful cases led by Huawei and Google have emerged in the world. Future research studies can use the case study method to conduct in-depth excavation of these typical firms, so as to more clearly reveal the internal mechanism of the impact of actively created organizational slack on organizational resilience. Meta-analysis that involves qualitative and quantitative techniques [23,96] and other methods can also be used to conduct a literature review of the research on organizational resilience to better find the intersection between organizational slack and organizational resilience. In theory, it will expand the research depth of organization slack and promote the development of theoretical research to match the demands of practice. In practice, it will help firms recover and grow from crisis and achieve sustainable development.