Exploring the role of organizational slack in the COVID-19 pandemic: an empirical study of the manufacturing industry

Li, Zonghui

PurposeDrawing on the behavioral theory of the firm (BTF), this study aims to understand the role of organizational slack in the manufacturing industry during the COVID-19 pandemic.Design/methodology/approachUsing panel data of publicly traded manufacturing firms in the USA over a 12-quarter time period, this study uses generalized least squares modeling to test the hypothesized relationships.FindingsResults show that the COVID-19 pandemic has a negative impact on manufacturing firms’ performance and organizational slack weakens the negative relationship between the COVID-19 pandemic and firm performance. In addition, when a positive performance aspirational gap (PAG) exists, the negative relationship between COVID-19 pandemic and firm performance in firms with high levels of organizational slack is further weakened.Originality/valueThis study contributes to organizational studies by investigating the contingent impact of organizational slack in the setting of COVID-19 pandemic. This study also contributes to the BTF by investigating how firm PAG, combined with the abundance of organizational slack, moderates the impact of COVID-19 pandemic on firm performance.