Enterprise Systems Adoption and Firm Performance in Europe: The Role of Innovation

Despite the ubiquitous proliferation and importance of Enterprise Systems (ES), little research exists on their performance impact, especially in Europe. This paper provides large-sample, economy-wide evidence on the differential effects of enterprise systems on performance of European enterprises. It also highlights the important mediating role of innovation in the process of value creation from ES investments. This study uses data on the adoption of ERP (Enterprise Resource Planning), SCM (Supply Chain Management), CRM (Customer Relationship Management), KMS (Knowledge Management System), and DMS (Document Management System) and investigates the effects on product and process innovation, revenue, productivity and market share growth, and profitability. The results show that all ES categories significantly contribute to product and process innovation. Most of ES categories affect revenue, productivity and market share growth positively. More domain-specific and simpler system types lead to stronger positive effects. None of ES categories contribute to profitability likelihood. The findings imply that innovation acts as a full or partial mediator in the relationship between ES adoption and firm performance

Enterprise Systems Adoption and Firm Performance in Europe: The Role of Innovation

Despite the ubiquitous proliferation and importance of Enterprise Systems (ES), little research exists on their post-implementation impact on firm performance, especially in Europe. This paper provides representative, large-sample evidence on the differential effects of different ES types on performance of European enterprises. It also highlights the mediating role of innovation in the process of value creation from ES investments. Empirical data on the adoption of Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Customer Relationship Management (CRM), Knowledge Management System (KMS), and Document Management System (DMS) is used to investigate the effects on product and process innovation, revenue, productivity and market share growth, and profitability. The data covers 29 sectors in 29 countries over a 5-year period. The results show that all ES categories significantly increase the likelihood of product and process innovation. Most of ES categories affect revenue, productivity and market share growth positively. Particularly, more domainspecific and simpler system types lead to stronger positive effects. ERP systems decrease the profitability likelihood of the firm, whereas other ES categories do not show any significant effect. The findings also imply that innovation acts as a full or partial mediator in the process of value creation of ES implementations. The direct effect of enterprise software on firm performance disappears or significantly diminishes when the indirect effects through product and process innovation are explicitly accounted for. The paper highlights future areas of research.Enterprise Systems; ERP; SCM; CRM; KMS; DMS; IT Adoption; Post-implementation Phase; IT Business Value; Innovation; Firm Performance; Europe

Information technology, organizational change and firm productivity: A panel study of complementarity effects and clustering patterns in Manufacturing and Services

Organizational complementarities are an essential factor in the process of creating business value from information technology (IT) investments. Organizational change (OC) is an important complementarity. This paper investigates complementarities between IT capital and OC initiatives of the firm. It analyzes the productivity impact of different clusters of IT and OC in the manufacturing and services sectors of the economy. Three dimensions of OC are studied: process, structure, and boundary changes. Two distinct econometric approaches are applied to a unique and detailed sample of 32,619 firm-level observations in the Netherlands for the period 1994-2006. The results reveal that the productivity effect of IT significantly increases when technology investments are accompanied by relevant organizational changes. The observed complementarity effects between IT and OC are stronger for services than for manufacturing firms. The effects become stronger if different types of change are combined with each other and form clusters. In contrast to IT capital, non-IT capital and OC exhibit a substitutability relationship. As to another finding of the research, IT seems to play a dual role with respect to change: generating or stimulating it and complementing or supporting it. The first role is more dominant among manufacturing, while the second is among services firms