Slack Resources and the Performance of Privately Held Firms
36 Pages Posted: 15 Jul 2004
Empirical findings from publicly traded firms and behavioral theory arguments suggest a positive influence of resource slack on financial performance. While this area has remained unexplored in privately held firms, conceptual arguments indicate that resource constraints may serve to enhance performance. Longitudinal data on 900 privately held firms confirm the differential influence of forms of slack on performance. Results indicate that a combination of behavioral and resource-constraints arguments are necessary to explain the slack-performance relationship in privately held firms.
Keywords: Resources, slack, endowments, efficiency, performance, private firms, family business
JEL Classification: D21, D23, D24, G32, L23, M13, M1
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