Organizational Slack and Firm Performance in the Process of IT Investment - An Experimental Study of Manufacturing Firms

摘要

This study considers how organizational slack (unabsorbed and absorbed) changes and affects firm performance in the different stage of IT investment. We test hypotheses using finance data (1994-2008) from 196 manufacturing listed companies in China. The results indicate there is higher unabsorbed slack in the early stage of IT investment, and there is higher absorbed slack in the run-in stage of IT investment. The correlation between unabsorbed slack and firm performance is positive in the process of IT investment. In contrast absorbed slack presents negative correlation with the firm performance. The hypothesis is not supported for the measure of absorbed slack in the run-in stage.