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Does slack always affect resilience? A study of quasi-medium-sized Italian firms

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  • Alessandra Tognazzo
  • Paolo Gubitta
  • Saverio Dave Favaron

Abstract

Research on organizational slack, which has focused mainly on its effect in large, publicly traded firms and on transitional economies, has found that slack functions as a buffer in periods of crisis. However, little work has been done on the value of slack resources for smaller firms in mature industries. This study contributes to the resource-based literature with a quantitative analysis of a broad sample of Italian SMEs that operate in the traditional ‘Made in Italy’ industries. The purpose of the paper is to use longitudinal data from before and after the 2008 world financial crisis to determine whether slack resources drive growth and profitability in organizations with limited resources that operate in mature industries in periods of recession. The results of two-stage least squares regression indicate that, similar to their larger counterparts, small firms must secure high levels of profitability in order to achieve sound growth during recessions. Potential financial slack is equally important in driving profitability in these periods, although it is not related to higher growth. Investing in R&D does not affect small firms’ ability to be profitable and grow during recessions.

Suggested Citation

  • Alessandra Tognazzo & Paolo Gubitta & Saverio Dave Favaron, 2016. "Does slack always affect resilience? A study of quasi-medium-sized Italian firms," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 28(9-10), pages 768-790, October.
    • Handle: RePEc:taf:entreg:v:28:y:2016:i:9-10:p:768-790
    DOI: 10.1080/08985626.2016.1250820
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    Cited by:

    1. Yousefi, Hamed & Yung, Kenneth & Najand, Mohammad, 2023. "From low resource slack to inflexibility: The share price effect of operational efficiency," International Review of Financial Analysis, Elsevier, vol. 90(C).
    2. Wendong Lv & Yuan Wei & Xiaoyun Li & Lin Lin, 2019. "What Dimension of CSR Matters to Organizational Resilience? Evidence from China," Sustainability, MDPI, vol. 11(6), pages 1-23, March.
    3. Essuman, Dominic & Bruce, Patience Aku & Ataburo, Henry & Asiedu-Appiah, Felicity & Boso, Nathaniel, 2022. "Linking resource slack to operational resilience: Integration of resource-based and attention-based perspectives," International Journal of Production Economics, Elsevier, vol. 254(C).
    4. Ferenc Tolner & Balázs Barta & György Eigner, 2024. "Reaction to Idiosyncratic Economic Shocks—Economic Resilience of Small- and Medium-Sized Enterprises," Sustainability, MDPI, vol. 16(13), pages 1-19, June.
    5. Sabihaini Sabihaini & Sri Astuti & Rifki Indra Perwira & Marita Marita, 2023. "Antecedent Strategic Alignment and Its Effect on Business Resilience," Technium Social Sciences Journal, Technium Science, vol. 44(1), pages 895-909, June.
    6. Ying Tian & Jiayi Hong, 2022. "In the Context of Digital Finance, Can Knowledge Enable Manufacturing Companies to Be More Courageous and Move towards Sustainable Innovation?," Sustainability, MDPI, vol. 14(17), pages 1-24, August.
    7. Teng Ma & Ya Liu & Rongyan Jia, 2023. "Multiple Driving Paths of High-Tech SME Resilience from a “Resource–Capability–Environment” Perspective: An fsQCA Approach," Sustainability, MDPI, vol. 15(10), pages 1-23, May.
    8. Ismail Gölgeci & Harun Emre Yildiz & Ulf Andersson, . "The rising tensions between efficiency and resilience in global value chains in the post-COVID-19 world," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    9. Liou-Yuan Li & Ahmad Mujafar Syah & Muhammad Syukur & Rachatawan Limkanchanapa & Chamaiporn Srisurat, 2023. "Sustainable Micro, Small, and Medium Enterprises: A Developed Model of Entrepreneurial Marketing Behaviors for Thailand’s MSMEs," Sustainability, MDPI, vol. 15(17), pages 1-18, August.
    10. Andres Felipe Cortes & Andreea N. Kiss, 2023. "Is managerial discretion high in small firms? A theoretical framework," Small Business Economics, Springer, vol. 60(1), pages 157-172, January.
    11. Attah-Boakye, Rexford & Adams, Kweku & Hernandez-Perdomo, Elvis & Yu, Honglan & Johansson, Jeaneth, 2023. "Resource re-orchestration and firm survival in crisis periods: The role of business models of technology MNEs during COVID-19," Technovation, Elsevier, vol. 125(C).
    12. Buyukbalci, Pinar & Sanguineti, Francesca & Sacco, Federica, 2024. "Rejuvenating business models via startup collaborations: Evidence from the Turkish context," Journal of Business Research, Elsevier, vol. 174(C).
    13. Essuman, Dominic & Owusu-Yirenkyi, Diana & Afloe, William Tsiatey & Donbesuur, Francis, 2023. "Leveraging foreign diversification to build firm resilience: A conditional process perspective," Journal of International Management, Elsevier, vol. 29(6).
    14. Woo, Linda & Mun, Sung Gyun & Seo, Kwanglim, 2024. "Building resilience to crisis through slack resources: A longitudinal analysis of US hotels," Annals of Tourism Research, Elsevier, vol. 106(C).
    15. Conz, Elisa & Magnani, Giovanna, 2020. "A dynamic perspective on the resilience of firms: A systematic literature review and a framework for future research," European Management Journal, Elsevier, vol. 38(3), pages 400-412.
    16. Hatice Şengül & Dilem Marşan & Tuğçe Gün, 2019. "Survey assessment of organizational resiliency potential of a group of Seveso organizations in Turkey," Journal of Risk and Reliability, , vol. 233(3), pages 470-486, June.

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