The Role of Operational Slack Resources on Firms’ Abrnomal Operating Performance Under the Crisis: Evidence from the Moderating Effects of ESG

This study aims to explore the relationship between a company's operating slack resources, ESG (Environment, Social, and Governance) management, and its abnormal operating performance based on the COVID-19 pandemic. As uncertainty surrounding the business environment increases, the importance of resource management and investment capability has become more prominent. Existing literature emphasizes strategies for maintaining low resource levels while managing them efficiently. In contrast, this study hypothesizes that, in the crisis context of COVID-19, an excess of operating resources may help alleviate uncertainty and positively influence a company's abnormal operating performance. Furthermore, from the perspective that ESG management may pose a burden on companies during crises, this study tries to examine whether investments in achieving ESG performance metrics might actually diminish the positive effect of slack resources. The results of the regression analysis show that the amount of slack resources has a significant impact on firms’ abnormal operating performance, and it was observed that slack resources continue to exert a positive influence in firms showing low ESG performance. This suggests that excessive resource control and management aimed at achieving ESG performance metrics in times of crisis can negatively affect firm performance. Ultimately, his study suggests that in crisis situations like COVID-19, the management of slack resources is favorable for abnormal operating performance and that it is more important to have operational flexibility than to invest in excessive ESG management systems.