Resource slack, in the business and

management Management (or managing) is the administration of an organization, whether it is a business, a nonprofit organization, or a government body. It is the art and science of managing resources of the business. Management includes the activities ...

literature, is the level of

availability In reliability engineering, the term availability has the following meanings: * The degree to which a system, subsystem or equipment is in a specified operable and committable state at the start of a mission, when the mission is called for at ...

of a

resource Resource refers to all the materials available in our environment which are technologically accessible, economically feasible and culturally sustainable and help us to satisfy our needs and wants. Resources can broadly be classified upon their av ...

. Resource slack can be considered as the opposite of resource

scarcity In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good. ...

or resource constraints. The availability of resources can therefore be defined in terms of resource slack versus constraints, as two ends of a continuum. Resource slack then refers to the relative abundance of the resource, and resource constraints refer to its limited availability. However, the effects of both resource slack and resource constraints are ambiguous, as both can have both negative and positive consequences. Both new and established

firm A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared go ...

s need resources for their survival, growth and

sustainable competitive advantage In business, a competitive advantage is an attribute that allows an organization to outperform its competitors. A competitive advantage may include access to natural resources, such as high-grade ores or a low-cost power source, highly skilled ...

. On the other hand, severe resource constraints hinder the growth of firms and lower the probability of their survival. However, resource constraints have also been observed to foster creativity and force firms to deal with problems promptly. Moreover, slack resources tend to improve firms’ financial

performance A performance is an act of staging or presenting a play, concert, or other form of entertainment. It is also defined as the action or process of carrying out or accomplishing an action, task, or function. Management science In the work place ...

, serve to buffer environmental shocks and allow for more discretion and flexibility in responding to competitors. However, large amounts of resources could also hinder the entrepreneurial process by impairing the firm's ability to identify new business opportunities. These contradictory potential outcomes of resource slack/constraints on creativity and performance have been explained in terms of an inverse

U-shaped Many shapes have metaphorical names, i.e., their names are metaphors: these shapes are named after a most common object that has it. For example, "U-shape" is a shape that resembles the letter U, a bell-shaped curve has the shape of the vertica ...

relationship and context-dependent effects, as well as the underlying dynamics of resource constraints and slack. The latter dynamic perspective implies that, for example,

entrepreneurs Entrepreneurship is the creation or extraction of economic value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values t ...

perceive resource constraints/slack as transient positions relative to their start-up’s own resource

demand In economics, demand is the quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve. Demand for a specific item ...

s at any given moment.

References

{{reflist Strategic management

See also

References