organizational slack

organizational slack

the tendency for bureaucratic ORGANIZATIONS to use more resources than are strictly necessary to perform the functions of the organization, with the result that resources are used inefficiently and costs rise. See NATIONALIZATION VERSUS PRIVATIZATION.

organizational slack

any organizational resources devoted to the satisfaction of claims by managers of subunits within the business organization in excess of the resources that these subunits need to complete company tasks. Organizations tend to build up a degree of‘organizational slack’, or ‘managerial slack’, where they operate in less competitive, oligopolistic markets (see OLIGOPOLY) in the form of excess staffing, etc., and this slack provides a pool of emergency resources that the organization can draw upon during bad times. When confronted with a deterioration in the economic environment, the organization can exert pressure on subunits within the organization to trim organizational slack and allow the organization to continue to achieve its main goals. Faced with increasing market competition, the organization will increasingly be run as a ‘tight ship’ as slack is trimmed until, in the limiting case of PERFECT COMPETITION, organizational slack will be zero and PROFIT MAXIMIZATION becomes the rule.

The concept of organizational slack is a particular feature of the BEHAVIOURAL THEORY OF THE FIRM and is similar in many respects to the concept of X-INEFFICIENCY. See also PRODUCTIVITY.

References in periodicals archive ?
The article "Relationship between organizational slack and innovation in companies of BM&FBovespa" was elaborated by Eduardo Vinicius Bassi Murro, Guilherme Bittencourt Teixeira, Ilse Maria Beuren, Luciano Marcio Scherer, and Gerlando Augusto Sampaio Franco de Lima.
Guided by the literature, we selected three other factors that would be likely to influence investment in analytics: firm size, organizational slack, and industry competitiveness.
Organizational Slack and Appropriability Mechanisms
Incorporating size allows us to capture organizational slack indirectly.
RDT suggests that the use of organizational slack as a strategy may help organizations cope with interdependence because it provides them with leeway to deal with a larger set of environmental elements.
It secondly raises the issue of organizational ambidexterity and suggests that some organizational slack may provide helpful headroom for protecting external search, innovation and long term growth.
Scholarship has long recognized organizational slack as a critical determinant of firm behavior (Cyert and March, 1963; Thompson, 1967).
Organizational slack effects on innovation: the moderating roles of CEO tenure and compensation, Journal of Business Economics and Management 15(2): 369-383.
Results show that implementation of this new nursing practice was more successful when nurses had a high degree of cosmopoliteness, they perceived the new practice as simple, they worked in youth clinics and if health organizations where they worked were open to innovation, had low centralized decision-making and organizational slack.
Alternatively, limited organizational slack and concentrated practices delay market entry.
For example, employers may hire individuals with seemingly underutilized skills as a form of organizational slack in order to expedite upgrades or respond to demand surges when circumstances warrant.

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