A Study On The Impact Of Financial Slack Resources To Firms' Innovation Strategy

Financial theory and strategic management theory are the different branches of management, focusing on market environment in different point of view of enterprise behavior. The important research fields of financial theory are the financial resources' allocation and finance flow management for firms, while the focus of strategic management theory is how to allocate organizational resources according to specific strategy to cope with environmental changes and get competitive advantages. Viewing from the corporate strategic management decision logic, its organizational resources including financial resources can provide strong guarantee for the strategy's choice and implement and dealing with environmental impact successfully. Therefore, combining with firms'financial resources decision-making and strategic activities to make research can fundamentally grasp the overall value maximization goal of enterprise resource decision criterion. So, the problems in this field get more and more attention for researchers.Using the panel data of listed high-tech companies in Chinese A share market from 2007 to 2013, We firstly exam the impact of available slack and potential slack to firms'product innovation strategy, then segmenting available slack and potential slack to explore which segmentation have effect deeply.In general, different kinds of financial slack resources have different effect to product innovation strategy. Available slack plays a positive role in the implementation of firms'product innovation strategy, in which currency and its equivalents slack and accounts receivable slack play a positive role, while inventory slack and other available slack don't make significant effect to product innovation strategy. The other hand, potential slack plays a negative role, in which short-term potential slack and long-term potential slack come into this negative role.Then we introduce the moderating variables-ownership structure and monetary policy-to test the change of above effect, meanwhile considering the elements of firms'property, firms'size and which board the firms are. Our empirical results indicate that different financial slack resources will generate different impacts on firms'product innovation strategy. In addition, these impacts will change interestingly when considering the moderating effects of firms'ownership structure and monetary policy. Moreover, these impacts are different in relatively small firms or large firms, and in SME-GEM board listed firms or Main board listed firms.Our research enriches the existing literature on the relationship between financial slack and product innovation strategy, and making segmentation to different financial slack which is beneficial to firms'resource allocation decisions according to their resources, ownership structure and macro environment, and can also provide reference for the implementation of product innovation strategy.