Do slack resources relate to the international performance of small and medium-sized enterprises (SMEs)? We examine unconstrained slack as a highly available and discretionary resource and theorize that its performance implications depend on dynamic capabilities. Using survey data from internationalized German SMEs, we find that unconstrained slack is positively associated with international performance and that this association becomes stronger as SMEs’ dynamic capabilities increase. Decomposing dynamic capabilities further suggests that the strength of this conditional relationship varies across sensing, seizing, and transforming, with the clearest subdimension pattern emerging for transforming. Marginal-effect analyses indicate that the positive slack–performance association is concentrated among SMEs with moderate to high levels of dynamic capabilities. Our findings identify an important boundary condition of the slack–performance relationship in SMEs and suggest that discretionary resource endowments are most beneficial when firms possess the capability base needed to redeploy them effectively in international markets. • Unconstrained slack is positively linked to SMEs’ international performance. • Dynamic capabilities strengthen the slack–performance relationship. • Transforming capabilities show the strongest moderation pattern. • Seizing and sensing show weaker, more conditional patterns. • Slack appears most beneficial when SMEs can mobilize and reconfigure it.
Heubeck et al. (Sat,) studied this question.
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