search query: @indexterm PRODUCTION MANAGEMENT / total: 708
reference: 8 / 708
| Author: | Kunz, A. H. |
| Title: | Strategic budgeting and slack in the context of product and capital market competition |
| Journal: | Unternehmung
2003 : VOL. 57:4, p. 331-348 |
| Index terms: | Strategic management Budgeting Capital markets Production management |
| Language: | eng |
| Abstract: | According to contract theory, slack constitutes a waste of scarce resources resulting from the principal's inability to implement a more efficient contract during capital budgeting. Contradictory to this view, some organizational theorists stress the importance of slack as a buffer against variations in a firm's environment. Both claims are analyzed in a model which explicitly accounts for the impact of capital budgeting on the firm's strategic interaction on product and capital market competition. As a main result, we identify conditions under which slack acts as an institution that trades off the firm's internal and external efficiency. Particularly, we show that the extinction of slack during the capital budgeting process restricts the firm's strategy space and may make it vulnerable to predatory market elimination. |
SCIMA