Investment in Enterprise Resource Planning: Business Impact and Productivity Measures

“Moreover, given that management tends to be more understanding of hiccups in the system rollout stage (Hitt et al. 2002), extrinsic motivation or pressure to drive users to engage in task-technology adaptation in SRP is less.”

“…is similarly divided as the general ICT literature, i.e. there are many studies extensively examining the performance impacts of the systems (Hitt, Wou, and Zhou 2002; Aral, Brynjolfsson, and Wu 2006; Hendricks, Singhal, and Stratman 2007) and nearly no analysis examining potential…”

“…outcome. basis for the conditions in which EIT value creation takes an inverted-U form, and thus provide theoretical underpinnings for recent empirical findings about EIT value creation associated with EIT project management (e.g., Aral et al. 2006, Bouhdary and Comes 2008, Hitt et al. 2002).”

“For each firm, therefore, the values of IT applications (sum of the number of applications) represent the extent of implementation (Hitt et al. , 2002).”

“Consistent with prior RBV research on the business value of IT systems, we find that system quality is a critical mediator of the impact of the firms ’ strategic-and project-level IT capabilities on organizational performance (Gu & Jung, 2013; Hitt, Wu, & Zhou, 2002; Stratopoulos & Dehning, 2000).”

“Hitt et al. (2002) likewise suggest that although there is an improved financial performance during the implementation stage, there is no sustainable long-term impact.”

“Studies conducted by Park et al. (2007), Chang et al. (2011) Hitt et al. (2002) and Cotteleer and Bendoly (2006) found that individual productivity is the main business value of ERP.”

“It is mainly used to integrate, automate and support day-to-day business operations (Hitt et al ., 2002).”

“Organizations seek bene fi ts from such systems, such as increased ef fi ciency and productivity improvements (Aral et al ., 2006; Hitt et al ., 2002), increased innovative performance (Engelstätter, 2012), improved communication across the enterprise (Akkermans & Van Helden, 2002), and cost and data…”

“…studies found that ERP system implementation has positive associations with firm performance, including better productivity (Aral et al. 2005, 2006; Hitt et al. 2002), greater shareholder returns (Ranganathan and Brown 2006), decreased lead-time (Cotteleer and Bendoly 2006), and improved…”

“Hitt et al .”

“On one hand, research has shown that ERP systems can provide substantial benefits to organisations, including inventory and lead time reductions, improved on-time deliveries, increased return on assets and enhanced customer relationships (Hitt et al., 2002).”

“At the same time, evaluation requires the use of measurements (Venkatraman and Ramanujam, 1986), but “figures never are facts” (Hoebeke, 1990). So, while Strassmann (1985) stresses that: “You cannot measure what is not defined.”

“In the IS literature, the performance implications of IT investments are frequently evaluated using Tobin’s q [2, 11, 18, 79, 80, 138, 139].”

“As Hitt, Wu, and Zhou (2002) stated, “the standardized and integrated ERP software environment provides a degree of interoperability that was difficult and expensive to achieve with stand-alone, custom-built systems” [2].”

“However, although the scale of ERP projects suggests that ERP deployment should have a significant and measurable effect on firm performance (Hitt et al. 2002), there is conflicting empirical evidence regarding the benefits of ERP investments (Hayes et al. 2001, Poston and Grabski 2001, Hitt et al.…”

“For example, an enterprise resource planning (ERP) or customer relationship management (CRM) system integration would require high service costs because it is typically a time-consuming project involving extensive customization (Hitt et al. 2002).”

“Despite the reported problems, it is unquestionable that, when properly implemented, ERP systems can and do provide a number of tangible and intangible operational and strategic benefits for both enterprise and SMEs [7, 10, 16].”

“can simply be added to the production function in its log-log form ( Hitt et al. (2002) ).”

“As a result, ERP systems collect and distribute information more timely and, thus, help managers improve their ability to process and analyze information (Hitt, Wu, and Zhou 2002).”

“Information systems are often used as a tool to improve customer service, shorten cycle times and reduce cost [1].”

“One substream evaluates IT as a factor of production and assesses its economic impact through aggregate measures like the return on IT capital (Brynjolfsson and Hitt 1996, Dewan and Min 1997, Lehr and Lichtenberg 1999, Menon et al. 2000, Hitt et al. 2002).”

“Purchasers of multiple ERP modules have greater financial benefits and better process outcomes than purchasers of single modules (Ranganathan and Brown 2006, Hitt 2002, Karimi 2007).”

“…of business relationship with an OEM as control variables because larger suppliers could benefit due to their size and because they have already been working intensively with the OEM for a long time and have more resources to invest in information technologies (Hitt et al. , 2002; Zhu, 2004).”

“That is, while CRM applications extract customer information from customer facing processes, ERP applications leverage the information to configure product offerings, scheduling, and fulfilment processes (Hitt et al., 2002).”

“…2003); the critical success factors involved in ERP implementation (Al-Mashari, Al-Mudimigh, and Zairi 2003); business productivity levels (Hitt, Wu, and Zhou 2002); innovative diffusion views of ERP implementation (Rajagopal 2002); players and activities (Somers and Nelson 2004); ERP…”

“The resultant ERP system is considered a firm asset and can affect a firm ’ s stock valuation (Hitt et al. 2002).”

“Yet even with these opposing viewpoints about IT as a source of competitive advantage (e.g., Strassmann, 1999; Dehning and Richardson, 2002; Hitt et al., 2002), relatively little empirical evidence is available to guide managers’ IT investment decisions.”

“Seemingly, organizations that invest in ERP systems enjoy higher performance across a wide variety of financial metrics [59].”

“Nevertheless, Hitt, Wu, and Zhou [39] have implied that an enterprise system can affect firm size with a lagged time of two years.”

“In accordance with the same, the market may delay bestowing value solely based upon announcements to mitigate the potential risk, especially for expenditures (e.g., ERP) that have mixed results (Hitt, Wu, & Zhou, 2002; Im, Dow, & Grover, 2001).”

“Indeed, organizational performance and productivity often suffer right after ERP implementation (Hitt et al. 2002).”

“Conversely, internal coordination is the central goal of Enterprise Resource Planning (ERP) software (Hitt et al. 2002, Nguyen and Atrostic 2006, Bai et al. 2018).”

“Starting from Davenport (1993), several researchers have highlighted that ICT can lead towards processes’ improvement because their implementation requires a BPR (Grover and Malhotra 1997; Hitt, Wu, and Xiaoge 2002; Nousala et al. 2008; Reijers and Liman man-sar 2005; da Silva et al. 2014).”

“…few studies fi nd that fi rms suffer fi nancial dif fi culty until after the fi rst and second years of the implementation but then starts reaping the bene fi ts of the adoption (Poston and Grabski 2001; Hitt, Wu, and Zhou 2002; Nicolaou, Dehning, and Stratopoulos 2003; Matolcsy, Booth, and Wieder 2005).”

“In supply chain networks, the interaction between trust and innovation becomes particularly visible if collaborating parties are composed of the organizations of different size, strength and power [34; 54].”

“Hitt et al. collect multi-year data from firms that implement ERP systems, and demonstrate that ERP adopters have performed consistently better across a variety of performance measures [28].”

“Our data consist of 75 monthly observations (2001:1 to 2007:3) and roughly 45 % of observations are post implementation.”

“Nevertheless, longitudinal firm-level research has shown improvements in operational performance (McAfee, 2002; Cotteleer and Bendoly, 2006) and productivity (Hitt et al., 2002) can result from the adoption of ERP.”

“Numerous studies have looked at IT investments in conjunction with business process reengineering efforts [4, 6, 8, 27].”

“…have acknowledged that the literature on post-implementation ERP environments is limited, such as Al-Mashari (2003), Brehm et al. (2001), Hitt, Wu, and Zhou (2002), Ifinedo (2007), and Ifinedo and Nahar (2006), despite the fact that the post-implementation phase is an important component…”

“[35] present positive impacts of ERP on firm performance during the 1986–1998 period, Aral et al.”

“The most common benefits attributed to ERPs include improved information flow across subunits, the centralisation of administrative functions, a reduction in information systems maintenance costs and the transformation from inefficient business processes to best practices (Hitt et al., 2002).”

“…1987; Petter et al. 2013; Srinivisan 1985) Inadequate integration of information systems across functional departments (Bailey and Pearson 1983; Hitt et al. 2002; Ludlum 1990) r30 Low organizational position of the IS function (Grover et al. 1993) r31 Unduly high user expectations about…”

“Sistem perangkat lunak ERP memuat cakupan yang luas dari produk perangkat lunak yang mendukung operasi bisnis sehari-hari dan proses pengambilan keputusan (Hitt et al. 2002).”

“Although some studies have already presented IT to the relation between firm performance and firm value and adopt these two types of indicators to measure the contributions of IT at the same time (Hitt et al., 2002; Ravichandran and Lertwongsatien, 2005; Tanriverdi, 2006), they cannot differentiate these two concepts…”