Curvilinear Relationship Between Organizational Slack and Firm Performance:: Evidence from Chinese State Enterprises

In this project, I undertake this empirical study on the role of organizational slack among State-owned enterprises in China. I report empirical evidence based on a large data set (1995-1996) from the Chinese government archive, consisting of all Chinese large and medium SOEs. Results indicate that slack resources, regardless of the degree to which they have been committed in the production process, have contributed positively to firm performance. I also found that such an impact is curvilinear, resembling inverse parabolic curves. Research and practical implications are discussed.