Impact of HR slack on firm performance: An empirical study on Chinese high-tech firms

• Main Author: FENG, Weixiong
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2024
• Subjects: absolute HR slack; relative HR slack; tacit knowledge; firm-specific knowledge; prior expertise; Asian Studies; Organizational Behavior and Theory
• Online Access: https://ink.library.smu.edu.sg/etd_coll/572; https://ink.library.smu.edu.sg/context/etd_coll/article/1570/viewcontent/HR_Slack_impact_on_firm_performance_20240331.pdf
• Institution: Singapore Management University

As part of organizational slack, HR slack plays a role in managing external risks and opportunities when the global business environment is in turmoil. In recent years, Chinese high-tech companies have faced external shocks such as reverse globalization, the decoupling of economic and trade relations, supply chain disruptions, and epidemics. These have posed new challenges to their strategy formulation, business operations, and talent acquisition. High-tech Chinese companies must know whether they must prepare adequate human resources as buffers to address these challenges and opportunities. For high-tech companies, this study proposes, for the first time, that HR slack must be analyzed in both quantitative and qualitative dimensions based on the Resource-based View (RBV) and Knowledge-based View (KBV). To facilitate observation and measurement, this study proposes defining absolute HR slack and relative HR slack in terms of “relative change,” which reflects the change in HR slack in the firm itself and in the industry. Furthermore, this study posits that HR slack in different groups may affect firm performance to different extents, leading to an optimal HR configuration. This study presents, for the first time, the definition and metrics of HR slack in different groups and validates the extent of its impact on firm performance. This is the first study to use mediation effects to test HR slack effects on firm performance under financial constraints. This study confirms the positive relationship between HR slack and firm performance using ten-year (2011–2021) panel data for Chinese listed companies, including more than 2,000 listed companies and more than 17,000 observations. This finding enriches empirical studies on HR slack.