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Unabsorbed slack resources are critical for organizational innovation, but research concerning the relationship between unabsorbed slack and corporate innovation has resulted in controversial findings. Using the data of all A-shared listed companies in China from 2011 to 2018, this paper examines the influence of unabsorbed slack resources on enterprise innovation. First, the paper verifies that there is an inverted U-shaped relationship between unabsorbed slack resources and R&amp;D investment and innovation output. Following that, empirical findings show that environmental uncertainty and managerial ability have a negative incentive effect on the relationship between unabsorbed slack resources and enterprise innovation. Finally, the results of mechanism testing reveal that unabsorbed slack resources affect the enterprise innovation through two channels: resource effect and agency cost.

Unabsorbed Slack Resources and Enterprise Innovation: The Moderating Effect of Environmental Uncertainty and Managerial Ability