The Effect of Organizational Slack on Innovation Performance: An Empirical Study of High-Tech Industry in China

The Effect of Organizational Slack on Innovation Performance: An Empirical Study of High-Tech Industry in China

Qiuyue Pan (Zhejiang University, China), Jiang Wei (Zhejiang University, China) and Latif Al-Hakim (University of South Australia, Australia)
DOI: 10.4018/978-1-5225-9273-0.ch070

Abstract

To compete through disruptive innovation, organisations allocate part of its resources as a buffer to support its capability of disruptiveness or to face challenges created by competitors. These resources could be in terms of human resources, technology, equipment, information and/or financial resources. Literature refers to the buffer of resources as organisational slack. This research considers high-tech industry in China and investigates the relationship between the characteristics of the organisation's governance body, organisational slack and innovation performance. Data required by our research were obtained from various national databases available in the library of Zhejiang University. Data from 233 high-tech organisations listed in Chinese stock market were analysed. The results indicate that the interaction of the organisational slack of an organisation with various characteristics of the governance body partially moderates the innovation performance.
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Disruptive Innovation

The concept of disruptive innovation goes back at least to the work by Schumpeter (1934) who emphasised in his book ‘The Theory of Economics Development’ that innovation strengthens organisations competitiveness through creating new demand in new market while destroying old market (Wu et. al 2010). Abernathy and Clark (1985) stress that new innovation may destroy the value of existing innovation. However, the theory of disruptive innovation has first been shaped by Bower and Christensen (1995) with the focus on technology and the theory of disruptive technology has been established by (Christensen, 1997) in his seminal book ‘The innovator’s Dilemma’. Overtime, Christensen widened the concept to include also products, services and business models and refers to the new concept as disruption innovation (Christensen, 2006; Christensen & Raynor, 2003; Markides, 2006). To support the new concept, Christensen and Raynor (2003) provide examples of disruption innovation, including discount department stores, mass-market products, online businesses such as bookselling and education. Markides (2006) agrees that these innovations are disruptive to incumbents, but treatment all as one and the same “has actually confused the matters considerably”.

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