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ORGANIZATIONAL SLACK AND FIRMS INTERNATIONALIZATION :A LONGITUDINAL STUDY OF HIGH-TECHNOLOGY FIRMS

Leni Nur PratiwiM10324055Afriyanti HasanahM10324057Randy HeriyantoM10324058Dimas Sumitra DanisworoM10324053Endah Dwi KusumastutiM10324059

GROUP 2METHODSSample Selection

306 companies in High-technology industry (Taiwan Economic Journal -TEJ) International firms data from TEJ and Market Observation Post System databaseOrganizational Slack was collected from the TEJ Select from 2000 to 2005 (six years)

Internationalization of firms were measured by :

Foreign Sales : Foreign sales / total salesForeign Assets : Foreign Asset as a percentage of total assetsGeographic dispersion : the number of countries in which a firm has subsidiaries.Cultural and institutional varietyInternationalizationDEPENDENT VARIABLES Independent variablesHigh-discreation slack and Low-discretion slack (Organizational Slack)the way of measure slack resources : Questionnairesfinancial indicator These have usually been selected by scholarsThey more nonreactive

this research use : Current ratio as High-discreation slacks proxyEquity/Debt ratio as Low-discretion slacks proxyCurvilinear effects were measured by current ratio square and equity/debt square

INDEPENDENT VARIABLES CONTROL VARIABLES & ANALYTICAL APPROACH

CONTROL VARIABLES

Firm Age

Calculated as the number of years since incorporationFirm SizeTypically related to extensive international activitiesMeasured as the logarithm of sales in given yearFirm PerformanceCalculated as the three-year average of ROACONTROL VARIABLES

ANALYTICAL APPROACHRESULTSTable 1

Results

The linear main effect result provides general support for both hypotheses 1&3

A curvilinear relationship between high discretion slack and firms internalization in hypotheses 2 was foundLow-discretion slack is only linearly associated with firm internationalizationTable 2MANAGERIAL RELEVANCEManagers should frequently remind themselves to forego the attitude of managerial complacency or irrational optimismManagers must carefully scrutinize low-dicretion slack seek to accumulate more additional resources to support their existing foreign activitiesManagers perceive low-discretion slack as necessary to expand international market but it may significantly impact a firms interest stock priceManagers who use such organizational slack in a firm must consider that slack forms lead to different kinds of effectivenessLIMITATIONSAuthors hope that their study represents a pivotal step toward a better understanding of the manner which organizational slack impacts global strategyTHANK YOU FOR YOUR ATTENTION