Investment in Enterprise Resource Planning: Business Impact and Productivity Measures

“Existing post-implementation studies mainly focus on ascertaining their organizational impact of ERP systems and consequently their business value (e.g., Gattiker and Goodhue 2005; Hitt et al. 2002).”

“The notion of increasing greenness in urban environments not only connects with the aesthetic evaluation but also show beneficial physiological response compared to spaces with little vegetation [Qin et al. 2013].”

“In addition, since larger firms may be in a better position to achieve performance gains due to their ability to gamer scale efficiencies (Hitt et al. 2002), we specity firm size as a control variable.”

“Besides process automation, ERP systems also distribute timely and accurate data, which provides the basis for information analysis and management decision support (Hitt, Wu, and Zhou 2002).”

“For example, implementation of enterprise software often requires extensive effort to configure it to meet the user’s idiosyncratic needs (Hitt et al. 2002; Ko et al. 2005).”

“Thirty Second International Conference on Information Systems, Shanghai 2011 3 Closely related to these studies is the emerging literature on the value of enterprise systems, that have shown that investments in ERP (Hitt et al. 2002; Anderson et al. 2003) and combinations of ERP systems with other complementary enterp…”

“These have included studies of automated teller machines (Dos Santos and Peffers, 1995), enterprise resource planning, (Hitt et al., 2001; McAfee, 2002), electronic data interchange (Mukhopadhyay et al., 1995) and hospital information systems (Devaraj and Kohli, 2003; Kohli and Devaraj, 2003).”

“Manajer perlu membuat keputusan dasar mengenai integrasi dari interdependensi.”

“ERP implementation and organizational performance (Hitt et al. 2002), studies have yet to examine ERP implementations in an integrative way by linking them to implementation effort and organizational performance.”

“the BDA dummy variable can be interpreted as the percent productivity change associated with owning BDA assets [4, 30].”

“Larger firms also enjoy potential advantages in exploiting the resource endowments of smaller partners and in influencing their information-sharing behaviors (Hitt et al. 2002).”

“Earlier work measures the returns to specific technologies using data collected from firms or software vendors (e.g. Hitt, Wu, and Zhou 2002).”

“In addition, since larger firms have greater available resources and power to influence the level of coordination among supply chain partners, we specify firm size as a control variable [81].”

“The first provides comprehensive overview of ERP systems (Appleton 1997, Bowman 1997, [12] [13] [14] [15] [16]) and focuses on the fundamental corporate capabilities driving ERP as a strategic concept [17] [18] [19] [20] [21] [22] [23].”

“In addition to process automation and visibility, which reduce errors and delays associated with manual processes, integrated information systems for manufacturing enable improved decision making as well as improved interactions with supply chain partners (Hitt et al. 2002).”

“[26] analysis of the association between a firm’s Tobin’s q value and ERP implementation.”

“Following the literature on IT productivity (Brynjolfsson and Hitt 1996, 2003; Hitt et al. 2002; Aral et al. 2006), we adopt a Cobb–Douglas specification.”

“We found that contrary to popular opinion and research treating implementation as complete (Hitt et al., 2002), most organizations that we studied are still implementing ES functionality (see Figure 1).”

“Hunton et al. (2003) collected a sample of 63 ERP-adopting firms and examined the longitudinal impact of ERP adoption on firm performance.”

“The companies which have implemented ERP systems and are relatively satisfied with their operations are now considering the extension of the functionalities provided by the original ERP systems.”

“…10, ∗∗ p < 0 (cid:48) 05, ∗∗∗ p < 0 (cid:48) 01. this finding, including that enterprise systems (e.g., SAP) are disproportionately employed in larger firms and have significant effects on productivity (Hitt et al. 2002) or simpler arguments such as economies of scale in IT purchasing or deployment.”

“…most of the prior instruments were developed prompted the inclusion of new items to measure the IS function’s performance in seven new areas: ERP [51], knowledge management [45, 64, 97], electronic business [9, 55], customer relationship management [39], supply chain management [37], electronic…”

“Benefits such as reduced capital costs due a reduction in scope changes and clash detection will be readily identifiable, but those of strategic and organizational nature may not come to fruition early in project life [1,31].”

“Despite its high implementation and maintenance cost, the ERP system has become the de facto solution in industry to realise an enterprise-wide information system (Hitt et al., 2002).”

“: +1 419 372 2932; fax: +1 419 372 2875. resses: anicol@cba.bgsu.edu (A.I. Nicolaou), sbhatt@fau.edu (S. Bhattacharya).”

“Numerous researchers have incorporated tangibles in operational and tactical level IT/IS evaluations (Some of them are: Anandarajan and Wen, 1999; Clemons, 1991; Ezingeard et al., 1999; Farbey et al., 1994; Grover et al., 1998; Irani and Love, 2001; Hitt et al., 2002; Love and Irani, 2001; Sethi et al., 1993; Small an…”

“have even higher failure rates (Hitt et al. 2002).”

“, 2009), empirical evidence confirms that their dream to improve market positioning and to take advantage of governments’ support programs have lately precipitated SMEs to adopt ERP in some economies (Hitt et al., 2002; Lall & Teyarachakul, 2006; Ramdani, Kawalek, & Lorenzo, 2009).”

“The issues include whether and under what conditions ERP systems have paid off (Hitt et al. 2002), and the requirements to achieve fully linked or networked organizations for interacting with close supply chain partners and arms-length market participants.”

“(Hitt et al., 2002) explain the business impact of ERP implementation on a wide variety of performance measures and empirically test for the productivity and business performance effects of ERP on firms that adopted ERP versus those that did not.”

“Hitt et al. 2002; McAfee 2002) in that it reinforces the notion that these systems can enable significant improvements in firm performance upon deployment.”

“Hitt et al. (2002) demonstrate that firms which invest in ERP show “higher performance across a wide variety of financial metrics.””

“As the duration since going live increases, more categories of project benefits tend to be realized (Markus et al., 2000a; Hitt et al., 2002; McAfee, 2002; Gattiker and Goodhue, 2005; Weider et al., 2006,).”

“Enterprise resource planning (ERP) software represents one of such state-of-the-art information technologies that integrate managerial and operational processes within and beyond the traditional boundaries (Ahituv et al., 2002; Hitt et al., 2002; Shiau et al., 2009).”

“…of the difficulty lies in the fact that researchers have attempted to link broad IT implementations to broad financial measures of either stock market reaction (e.g., Hayes et al. 2001; Dehning et al. 2003) or firm profitability (e.g., Hitt et al. 2002; Hunton et al. 2003; Kobelsky et al. 2008).”

“We note that our representation of CPC as a dummy variable is similar to the approach proposed by Hitt et al. (2002) where ERP implementation was modeled as a dummy variable.”

“The study by Hitt et al. (2002), which was the largest published statistical analysis of the productivity and performance implications of ERP adoption, examines 350 publicly traded U.”

“Empirical evidence also suggests that ERP assimilation improves availability of information and integration of business operations (32) and organizations making investments in ERP tend to have higher financial performance as well as higher market valuation than those that do not invest in ERP (25).”

“Second, we contribute to the literature on the business value of IT (e.g., Aral and Weill, 2007; Bardhan et al., 2013; Hitt and Brynjolfsson, 1996; Hitt et al., 2002; Mithas et al., 2012) by theorizing and testing the distinct effects of OUIC-enabled ideation capability and OUIC-enabled…”

“…share growth Technology use 50.00 *Bresnahan et al. (2002) L-P Value added IT stock 100.00 Davis et al. (2002) C-P Cycle time Role of Strategic IT 100.00 Hitt et al. (2002) L-S Market value, value added, COGS, Sales, Output, Pretax income ERP implementation 100.00 Konings & Roodhooft (2002) C-P…”

“Enterprise software consolidates the diverse information needs of an enterprise’s departments together into a single, integrated software program that operates on a shared database (Hitt et al. 2002).”

“Following Hitt et al. (2002), who evaluated the impact of ERP systems on company performance for companies that implemented SAP during this time period, we included a number of alternative earnings based performance measures.”

“, number of employees) as a control variable as it affects organizational ability in developing information integration because larger firms tend to enjoy scale efficiency in information sharing [38] and they have more resources to support the development of intra- and interorganizational information integration [101].”

“Prior empirical studies examining the benefits of ES primarily focus on broad operating performance measures and provide mixed evidence (e.g., Poston and Grabski 2001; Hitt et al. 2002; Hunton, Lippincott, and Reck 2003; Nicolaou 2004; Chapman and Kihn 2009).”

“The potential advantages of ERP systems (e.g., assisting business process reengineering, reducing complications with Sarbanes-Oxley Act compliance) have made them the system of choice among many corporations (O’Leary 2000; Bradford and Roberts 2001; Winters 2004).”

“Recent studies in the IS literature have posited and found that IT reduces internal coordination costs [36, 60, 61], enables effective knowledge transfer across business units, and generally helps create synergies across business units [123].”

“…enterprise resource planning system; misalignment; organizational change; cascading effect Introduction Enterprise resource planning (ERP) software has received much attention from both practitioners and academics (Hitt et al., 2002; Robey et al., 2002; Stratman & Roth, 2002).”

“One of the main purposes in introducing ICTs in organisations is process automation, i.e. deploying technology to standardise and improve processes (Davenport 1993, Grover and Malhotra 1997, Hitt et al. 2002).”

“Third, as ERP system scope increases, more value chain processes can adapt in concert, on an ERP system platform, to address changes in the firm's operating environment (Hitt et al. 2002; Ranganathan and Brown 2006).”

“[Brynjolfsson & Hitt; 1996 Hitt et al, 2002].”

“Enterprise software products are highly businessprocess oriented and usually need to be customized to fit specific business practices, where idiosyncratic local needs tend to drive complementary user innovations in workplaces (Hitt et al. 2002; Von Hippel 2005).”

“…Mollenkopf, 2004; Byrd and Davidson, 2003; Gunasekaran et al., 2004) or by confirming the relationship between ERP implementation and firm performance (Hendricks et al., 2007; Mabert et al., 2001, 2003a; McAfee, 2002; Hitt et al., 2002; Gupta and Kohli, 2006; Ehie and Madsen, 2005; Kalling, 2003).”

“Such studies are becoming common in the literature; e.g., the effect of CIO changes [12], IT infrastructure investments, IT investments [18,28], ERP systems [26] and E-commerce [51].”

“Along these lines, the market may delay bestowing value solely based upon announcements to mitigate the potential risk, especially for expenditures (e.g., ERP) that have had mixed results (Hitt et al. 2002; Im et al. 2001).”

“training and other internal staff costs – 10 percent (Hitt et al., 2002).”

“Hitt et al. (2002) find that ERP adoption is positively related to production output and sales, yet negatively related to the cost of goods sold.”

“Showing such a positive relationship is important because it affects MIS Still, whether investment in ERP systems pays off remains a controversial question (Hitt et al. 2002; Sarkis and Sundarraj 2003; Kalling, 2003).”

“However, the benefits of ERP cannot be easily acquired and inconsistent ERP outcomes have been reported (Hayes et al., 2001; Hitt et al., 2002; Hunton et al., 2002; Mandal and Gunasekaran, 2002; Palaniswamy and Frank, 2000; Vogt, 2002).”

“Such a specification has been used in past research as it provides flexibility in the relationship between the numerator and the denominator, while still retaining the interpretation as a performance measure [51].”

“…quantitative empirical evidence, it was quite apparent that ERP users perceived system success to be relatively low, which, as such, is not surprising taking into account that the case division was going through the shakedown phase (cf. Nah et al ., 2001; Hitt et al ., 2002; Yusuf et al ., 2004).”

“These include initiatives such as implementation of enterprise or related IT systems (e.g., ERP, CRM, or SCM systems), the IT-enabled outsourcing of business processes, and many other marketing or strategic actions (Hitt et al. 2002, Mithas et al. 2005, Ray et al. 2005).”

“…and Wu 2006; Banker et al. 2006; Choudhury, Hartzel, and Konsynski 1998; Cotteleer 2006; Cotteleer and Bendoly 2006; Dibbern et al. 2004; Hitt, Wu, and Zhou 2002; McAfee 2002; Mithas and Jones 2007; Whitaker, Mithas, and Krishnan 2007), none of these studies have investigated the role…”

“Recent research has focused on the complementary nature of IT [51], investments in enterprise systems [19], and managerial perceptions of IT [44].”