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

Fardad Zand and Cees van Beers

No 10-26, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: 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.

Keywords: Enterprise Systems; ERP; SCM; CRM; KMS; DMS; IT Adoption; Post-implementation Phase; IT Business Value; Innovation; Firm Performance; Europe (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cse, nep-eur, nep-ino, nep-knm and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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