Measuring Organizational Slack: A Note on the Convergence and Divergence of Alternative Operational Definitions

Abstract

Four different approaches for operationalizing organization slack through secondary financial data have been proposed (Bourgeois, 1981; Dimick & Murray, 1978; Marino & Lange, 1982; Wolf, 1971). In this paper these measures are organized into two types of oper ations: relative and absolute; and each is applied to a common group of firms. The relative measures agree to a significant degree on the classification of firms into high and low slack groups. The absolute measures do not, however, converge. Intertype comparisons (relative vs. absolute) indicate that the proposed operations do discriminate between these two aspects of the slack construct.