Abstract

A significant stream of research has focused on the performance effects of slack resources—those resources in excess of resource demands from current business (Bradley et al., 2011; George, 2005). Despite the importance of slack resources, current work only describes some relatively simple patterns of how slack resources evolve in firms. For example, the accumulation of slack resources is described as “age-dependent” (Sharfman et al., 1988). Hence, our theoretical and empirical understanding of how slack resources evolve as firms age remains limited. We use imprinting theory as a theoretical lens to increase our understanding of the dynamics of financial slack. We propose that the level of financial slack at founding will be an important determinant of future levels of financial slack because consensus may develop around the suitability of this level of slack. We further propose that founder-CEO departures lead to a decay of the imprint formed at founding and the formation of a new imprint on entrepreneurial firms’ levels of financial slack.

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