The double-edged sword of overtime: nonlinear effects and mechanisms for continuous innovation

Purpose – This study investigates “extractive human resource slack”—generated through employee overtime—and examines how it non-linearly affects continuous innovation. It further analyzes the moderating effects of internal incentives (compensation) and external governance (media oversight) to determine the conditions under which overtime supports sustainable innovation. Design/methodology/approach – This study utilizes a specific overtime measure derived from calibrated satellite nighttime light data (VNP46A2) and analyzes a panel of Chinese A-share listed firms from 2012 to 2023. An instrumental variable framework is employed to address endogeneity and rigorously estimate the causal impact of overtime intensity on continuous innovation. Findings – The results indicate a robust inverted U-shaped relationship: moderate overtime contributes to continuous innovation, whereas excessive overtime impedes it. Mechanism analyses show that this pattern results from the interaction of innovation quality, labor productivity, and employee turnover. Furthermore, employee compensation significantly moderates the relationship, while media oversight attenuates the negative effects associated with high levels of overtime. Originality/value – Beyond conceptualizing “extractive human resource slack”, this study's primary contribution lies in using a rigorous empirical framework to identify the optimal overtime intensity for continuous innovation. It provides empirical evidence and specific managerial thresholds, offering practical guidance for organizations to balance operational demands with long-term innovation capabilities.