Which slack resources matter? The fit between market orientation and slack resources to innovation

Authors: Yang-Chieh Chin, Yen-Chih Huang, & Cheng-Yu Lee

Journal: Corporate Management Review. June. 2018, 38(1): 1-35.

Keywords: New product development project; market orientation; product innovation; process innovation; slack.

Abstract:
This research aims to advance our understanding of the relationship market orientation (MO) and innovation performance by identifying unabsorbed and absorbed slack as moderators. Based on a survey of 188 product development projects of Taiwanese hi-tech firms, we find that proactive and responsive MO are positively related to product innovation performance, while only responsive MO is positively related to process innovation performance. In addition, we validate that the relationship between proactive MO and product innovation performance is positively moderated by both unabsorbed and absorbed slack. In particular, unabsorbed slack positively moderates the relationship between proactive MO and process innovation performance, but negatively moderates the relationship between responsive MO and product innovation performance. Overall, our findings suggest that project teams engaging in process or product innovations are likely to yield superior performance when they are matched with right market orientation. If hi-tech firms aim to achieve superior innovation performance, they should endeavor to direct their project teams towards right market orientation while simultaneously providing the teams with adequate slack resources.