Information Technology and Organizational Slack

International Journal of Accounting Information Systems Vol. 5, Issue 1, pp. 51-63, May 2004

Posted: 25 Feb 2009

See all articles by Bruce Dehning

Bruce Dehning

Chapman University - The George L. Argyros School of Business & Economics

Kevin Dow

affiliation not provided to SSRN

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance

Date Written: may 2004

Abstract

A characteristic of the information age is the dramatic increase in expenditures by organizations on information technology (IT). As a result of these investments, managers generally anticipate productivity gains, which are commensurate with the costs of IT. However, several empirical studies in the 1980s and early 1990s found no statistical association between IT spending and financial performance (the productivity paradox, PP). One possible source of this paradox was proposed by Brynjolfsson [Commun. ACM (1993)]. He proposed that during the pre-1991 period, IT might have increased slack, but neither organizational output nor profits. We test whether the relation between investment and IT in the productivity paradox era was due to increased slack. We find that overall, IT investment led to an increase in slack in the period prior to 1991, but not after. Our results are primarily driven by manufacturing companies.

Keywords: Information technology, Organizational slack, Productivity paradox

JEL Classification: M15, M41, 014

Suggested Citation

Dehning, Bruce and Dow, Kevin and Stratopoulos, Theophanis C., Information Technology and Organizational Slack (may 2004). International Journal of Accounting Information Systems Vol. 5, Issue 1, pp. 51-63, May 2004. Available at SSRN: https://ssrn.com/abstract=1306186

Bruce Dehning (Contact Author)

Chapman University - The George L. Argyros School of Business & Economics ( email )

333 N. Glassell
Orange, CA 92866
United States

Kevin Dow

affiliation not provided to SSRN ( email )

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 x35943 (Phone)

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