Human resource slack and firm performance: evidence from Henan province in China

In order to exploit the value of slack resources, this paper studies the relationship between human resources slack and firm performance. We develop a nonlinear inverted N-shaped relationship model between human resource slack and firm performance, and subsequently test this model using a sample of 283 Chinese manufacturing firms in Henan province. The results indicate that the human resource slack on the low side is negatively related to firm performance; moderate human resource slack is positively related to firm performance and human resource slack on the high side is negatively related to firm performance. The results also indicate, at present the average human resource slack is in the moderate range in China. Obviously, it is not an efficient solution for some firms to make layoff blindly, especially rigidly.