The impact of CEO power on radical innovation: the differentiated mediation effects of absorbed slack resources and unabsorbed slack resources

Purpose Despite the growing body of evidence on the impact of CEO power on firm innovation, the empirical results remain inconclusive. The purpose of this paper is to examine the impact of CEO power on radical innovation, with a particular focus on the mediation role of slack resources. To gain a deeper understanding of this impact, this paper divides slack resources into absorbed slack resources and unabsorbed slack resources to examine their differentiated mediation effects. Design/methodology/approach The research sample comprised A-share manufacturing firms that were listed on the Shanghai and Shenzhen stock exchanges between 2013 and 2022. Bootstrapping analysis was used to test the proposed hypotheses. Further tests were conducted to confirm the robustness of the research results. Findings The research results suggest that absorbed slack resources have a negative mediation effect, whereas unabsorbed slack resources have a positive mediation effect. Further analysis reveals that both kinds of slack resource can mediate the relationships between formal power/informal power and radical innovation. However, the mediation effects of the two kinds of slack resource on different kinds of CEO power differ. Originality/value First, this paper suggests that the impact of CEO power should not be viewed as either wholly positive or negative in isolation, but rather in conjunction with specific resource conditions. Second, this paper provides significant evidence that absorbed slack resources and unabsorbed slack resources play different roles in the relationship between CEO power and radical innovation. Third, this paper provides a detailed analysis of how combinations of different kinds of CEO power and slack resources can drive radical innovation.