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Slack and the performance of state-owned enterprises

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Abstract

Organizational slack has been recognized as critical to firm performance, although its impact is not always positive. Slack may be used to fuel innovation or alternatively excess resources may be squandered on pet projects. However, most research on slack is rooted in studying private firms in developed economies, especially the United States. Whether prior research on organizational slack can readily inform our understanding of state-owned enterprises’ (SOEs) behavior is questionable since SOEs prioritize goals such as social welfare and full employment differently than do the privately owned enterprises (POEs). The differences between SOEs and POEs influence their sources and use of slack due to the nature of their ownership, budget constraints, and agency relations. To bring insight to this issue we develop an institutional change lifecycle model to study the relationship between slack and the economic and social aspects of SOE performance.

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Notes

  1. We use the term SOE to define firms created by governments to pursue commercial as well as social actions on their behalf, in which the state owns a minimum 10 % of the shares (according to the United Nations Conference on Trade and Development). SOEs are also known as government-sponsored enterprises in the United States, crown corporations in Canada, government business enterprises in Australia, public sector undertakings in India, and government-linked companies in Malaysia, among others.

  2. In contrast to SOEs, we define POEs as firms that have private ownership, both private and publicly listed.

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Acknowledgement

We thank Greg Dess, Livia Markoczy, and Weichieh Su for helpful comments, and the Jindal Chair at the University of Texas at Dallas and the Entrepreneurship Center at Texas Christian University for financial support.

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  1. Jindal School of Management, University of Texas at Dallas, 800 West Campbell, SM 43, Richardson, TX, 75080, USA

    Ciprian V. Stan & Mike W. Peng

  2. Neeley School of Business, Texas Christian University, Fort Worth, TX, USA

    Garry D. Bruton

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Stan, C.V., Peng, M.W. & Bruton, G.D. Slack and the performance of state-owned enterprises. Asia Pac J Manag 31, 473–495 (2014). https://doi.org/10.1007/s10490-013-9347-7

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