Slack Time and Innovation
The relationship between slack resources and innovation is complex, with the literature linking slack to both breakthrough innovations and resource misallocation. We reconcile these conflicting views by focusing on a novel mechanism: the role slack time plays in the endogenous allocation of time and...
| Main Authors: | , , , |
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| Format: | Article |
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Institute for Operations Research and the Management Sciences (INFORMS)
2019
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| Online Access: | http://hdl.handle.net/1721.1/120770 https://orcid.org/0000-0003-1312-6705 |
| _version_ | 1811082669543391232 |
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| author | Goldfarb, Avi Agrawal, Ajay K Catalini, Christian Luo, Hong |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Goldfarb, Avi Agrawal, Ajay K Catalini, Christian Luo, Hong |
| author_sort | Goldfarb, Avi |
| collection | MIT |
| description | The relationship between slack resources and innovation is complex, with the literature linking slack to both breakthrough innovations and resource misallocation. We reconcile these conflicting views by focusing on a novel mechanism: the role slack time plays in the endogenous allocation of time and effort to innovative projects. We develop a theoretical model that distinguishes between periods of high- (work weeks) versus low- (break weeks) opportunity costs of time. Low-opportunity cost time during break weeks may induce (1) lower quality ideas to be developed (a selection effect); (2) more effort to be applied for any given idea quality (an effort effect); and (3) an increase in the use of teams because scheduling is less constrained (a coordination effect). As a result, the effect of an increase in slack time on innovative outcomes is ambiguous, because the selection effect may induce more low-quality ideas, whereas the effort and coordination effect may lead to more high-quality, complex ideas. We test this framework using data on college breaks and on 165,410 Kickstarter projects across the United States. Consistent with our predictions, during university breaks, more projects are posted in the focal regions, and the increase is largest for projects of either very high or very low quality. Furthermore, projects posted during breaks are more complex, and involve larger teams with diverse skills. We discuss the implications for the design of policies on slack time. |
| first_indexed | 2024-09-23T12:07:02Z |
| format | Article |
| id | mit-1721.1/120770 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T12:07:02Z |
| publishDate | 2019 |
| publisher | Institute for Operations Research and the Management Sciences (INFORMS) |
| record_format | dspace |
| spelling | mit-1721.1/1207702022-09-28T00:15:41Z Slack Time and Innovation Goldfarb, Avi Agrawal, Ajay K Catalini, Christian Luo, Hong Sloan School of Management Agrawal, Ajay K Catalini, Christian Luo, Hong The relationship between slack resources and innovation is complex, with the literature linking slack to both breakthrough innovations and resource misallocation. We reconcile these conflicting views by focusing on a novel mechanism: the role slack time plays in the endogenous allocation of time and effort to innovative projects. We develop a theoretical model that distinguishes between periods of high- (work weeks) versus low- (break weeks) opportunity costs of time. Low-opportunity cost time during break weeks may induce (1) lower quality ideas to be developed (a selection effect); (2) more effort to be applied for any given idea quality (an effort effect); and (3) an increase in the use of teams because scheduling is less constrained (a coordination effect). As a result, the effect of an increase in slack time on innovative outcomes is ambiguous, because the selection effect may induce more low-quality ideas, whereas the effort and coordination effect may lead to more high-quality, complex ideas. We test this framework using data on college breaks and on 165,410 Kickstarter projects across the United States. Consistent with our predictions, during university breaks, more projects are posted in the focal regions, and the increase is largest for projects of either very high or very low quality. Furthermore, projects posted during breaks are more complex, and involve larger teams with diverse skills. We discuss the implications for the design of policies on slack time. 2019-03-07T12:47:48Z 2019-03-07T12:47:48Z 2018-12 2018-02 2019-02-01T16:08:06Z Article http://purl.org/eprint/type/JournalArticle 1047-7039 1526-5455 http://hdl.handle.net/1721.1/120770 Agrawal, Ajay, Christian Catalini, Avi Goldfarb, and Hong Luo. “Slack Time and Innovation.” Organization Science 29, no. 6 (December 2018): 1056–1073. https://orcid.org/0000-0003-1312-6705 http://dx.doi.org/10.1287/orsc.2018.1215 Organization Science Creative Commons Attribution 4.0 International license https://creativecommons.org/licenses/by/4.0/ application/pdf Institute for Operations Research and the Management Sciences (INFORMS) INFORMS |
| spellingShingle | Goldfarb, Avi Agrawal, Ajay K Catalini, Christian Luo, Hong Slack Time and Innovation |
| title | Slack Time and Innovation |
| title_full | Slack Time and Innovation |
| title_fullStr | Slack Time and Innovation |
| title_full_unstemmed | Slack Time and Innovation |
| title_short | Slack Time and Innovation |
| title_sort | slack time and innovation |
| url | http://hdl.handle.net/1721.1/120770 https://orcid.org/0000-0003-1312-6705 |
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