Impact of enterprise resource planning(ERP) system implementation on firm performance

Abstract

In recent years, many companies have been implementing ERP systems to overcome new challenges and survive among severe business environments which are dramatically changing. However, ERP system implementation requires considerable amount of investments in terms of all monetary, time, and infernal resources. Despite the tremendous efforts and costs in ERP systems, there are still doubts about the effects of ERP implementation. In this paper, with appropriate samples of ERP-adopting firms and multi-years financial data, we examined whether firms that implemented ERP systems have shown improved performance using a wide variety of performance measures. We employed the intra-firm comparison and matched pair comparison methods to compare performance measures before and after ERP implementation within a firm over 7-year time period. Overall, the results showed that ERP system implementation was positively associated with improvements of firm performance. We could also find that average performance of ERP adopting firms was greater than one of non-ERP firms. These significant findings suggest that potential ERP adopting firms may expect better firm performance since they have more future benefits gained from ERP systems.