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Organizational slack, national institutions and innovation effort around the world

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  • Malen, Joel
  • Vaaler, Paul M.

Abstract

We develop and test a cross-level theoretical framework assuming that countries differ in national corporate governance institutions (NCGIs) protecting firm shareholders and employees, and that such NCGI protections moderate the firm-level relationship between organizational slack and innovation effort, that is, the purposeful allocation of firm resources toward the development of new products and services (as distinct from the new products and services themselves). We find support for framework predictions in two-stage estimated dependent variable analyses of organizational slack and institutional protections of shareholders and employees at more than 7000 firms from 29 countries observed from 1991 to 2005. Stronger shareholder protections diminish while stronger employee protections magnify slack effects on innovation effort. Our findings contribute to IB research investigating how country-level governance institutions influence firm-level behavior and performance.

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  • Malen, Joel & Vaaler, Paul M., 2017. "Organizational slack, national institutions and innovation effort around the world," Journal of World Business, Elsevier, vol. 52(6), pages 782-797.
    • Handle: RePEc:eee:worbus:v:52:y:2017:i:6:p:782-797
    DOI: 10.1016/j.jwb.2017.07.001
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    11. Hameeda A. AlMalki & Christopher M. Durugbo, 2023. "Systematic review of institutional innovation literature: towards a multi-level management model," Management Review Quarterly, Springer, vol. 73(2), pages 731-785, June.
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