The influence of slack resources on the financial performance of ambidextrous firms

Abstract

In this study it is tried to explain the performance differences of ambidextrous firms by taking a resource-based perspective. Literature shows that ambidextrous firms are more capable to perform well in changing environments and that unabsorbed slack resources can lower the costs of ambidexterity. Accordingly, it is hypothesized that financial and customer relational slack can – individually as well as combined – increase the financial performance of ambidextrous firms. Based on qualitative comparative analyses of twenty-four Dutch car leasing firms, this study shows that customer relational slack is detrimental for a firm’s financial performance as the organizational inertia it creates are difficult to overcome. Financial slack was not found to explain financial performance and neither was a combination of slack resources. These findings contradict the hypotheses, and undermine the relationship between the possession of slack resources and the performance of ambidextrous firms. Meanwhile, ambidexterity and aging were found to improve financial performance. This supports the related hypotheses and proves the importance of ambidexterity and aging for firms dealing with changing market conditions.