THE IMPACT OF CORPORATE STRATEGY AND ORGANIZATIONAL SLACK ON CORPORATE PERFORMANCE: EVIDENCE FROM PAKISTAN

Abstract

This study investigates the impact of organizational slack on the relationship between firm performance and Miles and Snow's (1978) typology. We examine a sample of 274 non-financial companies listed on the Pakistan Stock Exchange between 2006 and 2021 using panel data. In order to control auto correlation and endogeneity issues, the generalized method of moments estimation (GMM) is used to get the results. Our findings demonstrate that available or potential organizational slack strengthens the already-existing positive association between prospector, analyzer, and defender strategies and a firm's financial performance, whereas recoverable slack weakens the relationship. After taking into account endogeneity, and serial correlation, the results are robust. These findings contribute to the body of knowledge on existential dilemmas relating to the use of slack resources in the company and outline the theoretical and empirical implications of Miles and Snow's typologies.