Original Research

The interactions between different types of financial and human resource slacks on firm performance: Evidence from a developing country

M. M. Fonseka, G-L. Tian, X. Yang, R. L.T.N. Rajapakse
South African Journal of Business Management | Vol 45, No 3 | a131 | DOI: https://doi.org/10.4102/sajbm.v45i3.131 | © 2018 M. M. Fonseka, G-L. Tian, X. Yang, R. L.T.N. Rajapakse | This work is licensed under CC Attribution 4.0
Submitted: 05 April 2018 | Published: 30 September 2014

About the author(s)

M. M. Fonseka, School of Business, Xi’an International Studies University, China; School of Management, Xi’an Jiaotong University, China
G-L. Tian, School of Management, Xi’an Jiaotong University, China
X. Yang, School of Business, Xi’an International Studies University, China
R. L.T.N. Rajapakse, School of Management, Xi’an Jiaotong University, China; School of Power and Energy, Xi’an Jiaotong University, China

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Abstract

This paper investigates the effect of both FS and HR slack together on firm performance and how different levels of these slack resources affect performance of private-owned enterprises (POEs) and state-owned enterprises (SOEs). Hypotheses are tested using a longitudinal data set of 11,985 listed Chinese companies from 2000 to 2009. Findings reveal that the unabsorbed-financial slack and HR slack show an inverse U shape relationship on firm performance for both POEs and SOEs. However, a less-negative interaction occurs for unabsorbed-financial and HR slacks for POEs. The absorbedfinancial and HR slacks also shows an inverse U shape relationship on performance and this relationship does not have a significant negative effect on SOE’s performance. The article concludes with theoretical contributions and practical implications of the findings.


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