Publication Type

Journal Article

Version

acceptedVersion

Publication Date

2-2016

Abstract

We examine how two types of slack resources relevant to knowledge employees—human resource slack and financial slack at the R&D functional level—influence the rent-generating potential of firm-specific knowledge resources. According to the resource- and knowledge-based views of the firm, firm-specific knowledge resources are critical for generating economic rents for a firm. However, without motivated knowledge employees investing in the corresponding specialized human capital in the process of absorbing and deploying firm-specific knowledge resources, the resource potential for rent generation would be greatly discounted. We argue that human resource slack among knowledge employees and financial slack available for R&D activities affect the rent-generating potential of firm-specific knowledge resources by influencing knowledge employees’ incentives to invest in specialized human capital. In particular, while financial slack facilitates rent generation of firm-specific knowledge resources by increasing employee incentives to invest in specialized human capital, human resource slack hinders it by reducing such incentives. Empirical results based on longitudinal R&D employment data, U.S. patent data, and Compustat support these arguments.

Keywords

firm-specific knowledge resources, financial slack, human resource slack, employee incentives, specialized human capital investments, firm performance

Discipline

Corporate Finance | Human Resources Management | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Journal of Management

Volume

42

Issue

2

First Page

500

Last Page

523

ISSN

0149-2063

Identifier

10.1177/0149206313484519

Publisher

SAGE

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1177/0149206313484519

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