How Do Slack and Network Resources Interact to Boost Innovation?
Dr. Irem Demirkan is an advanced Assistant Professor in the Sellinger School of Business and Management at Loyola University Maryland, in MD, USA. Her research interests include innovation at various contexts such as organizations and teams, and corporate entrepreneurship. Dr. Demirkan received her Ph.D. in International Management Studies with a focus in Strategic Management from The University of Texas at Dallas in Richardson, TX. Since then she has published articles in prestigious management journals including Management Science, Journal of Management, Journal of Business Research, European Journal of Innovation Management and IEEE-Transactions on Engineering Management among others.
Managers must continuously orchestrate a firm's internal and external resources. This paper extents this view and suggests that the effects of firm’s internal and external resources may be interdependent to each other and the interplay among these resources may boost (or detract from) firm innovation. The paper proposes that slack resources, in the form of financial and human slack, interact with network resources, in the form of network size, diversity, and tie-strength, to enhance firm innovation. Our sample of 300 public biotechnology firms in the U.S. that are listed in Recombinant Capital (ReCap) show that while human slack has negative effects on innovation, its interaction with network level variables, namely the network size and network diversity, enhances innovation. Furthermore, results show that financial slack for firms with large network size s positively influences innovation while it harms innovation for firms with strong network ties. The findings of the paper shed light into the contradictory reports on the effects of slack resources on firm innovation by showing that there are interdependencies between internal slack and external network resources.