Investment in Enterprise Resource Planning: Business Impact and Productivity Measures

“In the financial cycle, companies have invested in ERP systems to seamlessly integrate information across the breadth and depth of the organization, and to achieve better timeliness in financial reporting (Benchmarking Parterners, 1998; Brazel and Dang, 2008; Glover et al., 1999; Hitt et al., 2002; Jacobs and Bendoly,…”

“In order to get the best out of ERP system the implementation must be managed as a program of wide ranging organizational change initiative rather than as a software installation effort [13] Many business organizations that adopted ERP systems attained the benefits they sought [14].”

“Evaluation of the impact of ERP systems on organizational effectiveness is difficult (Hitt et al., 2002; Irani, 2002; Jones, 2001; Murphy & Simon, 2001; Skok & Legge, 2001; Stefanou, 2001a, 2001b).”

“On the other hand, implementing an ERP system increases the ability of the management to manipulate information, making the information easy to be tampered with, causing information loss or damage, and reducing the quality of earnings [75–77].”

“While a number of studies (e.g., Gangwar, 2017; Hitt et al., 2002; Shin, 2006; Son et al., 2011) already link cloud computing adoption to firm performance, the mechanism through which firms can attain positive performance is yet to be adequately addressed.”

“This is confirmed by the thriving economics of Enterprise Resource Planners (ERPs) [26].”

“…2000; Petter et al. 2008]), with various intents (e.g., predicting empirical relationships [Devaraj and Kohli 2003] versus explaining theoretical phenomena [Rai et al. 2002]), or using various data collection methods (e.g., panel data [Hitt et al. 2002] versus perceptual data [Gable et al. 2008]).”

“Sometimes, despite huge investments, many ERP implementation projects fail (Karimi et al., 2007; Hitt et al., 2002).”

“If firms invest more in IT, their performances correspondingly increase (Aral and Weill, 2007; Bharadwaj, 2000; Bharadwaj et al., 1999; Brynjolfsson and Hitt, 2003; Dewan and Min, 1997; Diewert and Smith, 1994; Hitt et al., 2002; Li and Ye, 1999; Menon et al., 2000; Mukhopadhyay et al., 1997; Rai et al., 1997; Ravicha…”

“New processes that are valuable for firms to pursuit [6,14,21-24,44].”

“Due to high upfront and continued investments coupled with high risk of failure the decision to purchase and implement an ERP is one of the most important and difficult decisions management has to make (Bryce and Bryce, 1987; Dowlatshahi, 2005; Goldenberg, 1991; Hitt et al., 2002; Johannsen, 1980; Montazemi et al., 19…”

“…for the overall costs because an IS introduction requires a high level of user training (Jiang et al , 2000), additional hardware and software to develop the new IT infrastructure, and may cause high productivity losses as existing processes are temporarily interrupted (Hitt et al , 2002).”

“(Qing and Plant, 2001; Krishnan and Sriram, 2000; Ryan and Harrison, 2000; Thatcher and Oliver, 2001), market share and cost (Gurbaxani and Mendelson, 1990; Railing and Housel, 1990), productivity analysis (Qing and Plant, 2001; Hitt et al., 2002; Grover et al., 1998) and profitability (King, 1998; Hitt and Brynjolfss…”

“…Ryan and Harrison, 2000, Thatcher and Oliver 2001), the market share and the cost study (Gurbaxani and Mendelson, 1990, Railing and Housel, 1990), the productivity analysis (Qing and Plant, 2001, Hitt et al., 2002, Grover et al.,1998), the profitability (King 1998, Hitt and Brynjolfsson, 1996).”

“So, it would be interesting to examine full-fledged research on how 3PL investments in chosen WMSs influence activities using financial metrics analogous to [148] for measuring ERP systems' contribution to firms' performance and extend WMS selection reasoning and justification studies [149].”

“The empirical findings reveal the necessity and utility of enterprise information systems for facilitating the organizational data-driven decision-making (Hitt et al., 2002).”

“As past research on the financial impact of enterprise systems shows, it can take several years before ROI is fully achieved and contextual factors can interfere with IT adoption and implementation [52, 100].”

“Hitt et al. (2002) found ERP adoption to be associated with higher sales, return on assets, inventory turnover, profit margin and financial market valuation.”

“(2008) report that while some studies have shown a positive relationship between IT spending and firm performance (Hitt et al., 2002), others have reported more mixed or negative associations (Nevo and Wade, 2010, Lin, 2009).”

“Hitt et al (2002) and Ranganathan & Brown (2006) also showed that implementations with greater functional scope and/or physical scope resulted in higher levels of firm performance.”

“…research on firm-level performance suggests that adoption of enterprise systems is associated with improvements to productivity (Aral et al. 2008, Hitt et al. 2002), market value (Hendricks et al. 2007, Hitt et al. 2002), profitability (Hendricks et al. 2007) and operational performance…”

“Primarily, previous studies focused on identifying critical success factors of the ERP implementation process (e.g. Davenport, 1998; Hitt et al., 2002; Robey et al., 2002).”

“In line with this idea, prior studies suggest that IT systems have a payoff over an extended period (e.g., three years) (Hitt et al., 2002).”

“…(AlMuhayfith & Shaiti, 2020; Anderson et al., 2011; Bialas et al., 2023a; Elsayed et al., 2021; Galy & Sauceda, 2014; Hendricks et al., 2007; Hitt et al., 2002; Hunton et al., 2003; Kallunki et al., 2011; Madapusia & D’Souza, 2012; Matolcsy et al., 2005; Nicolaou et al., 2003; Nicolaou,…”

“…been explored the relationship between ERP implementation and firm performance and investigated the factors that influence ERP implementation (Poston & Grabski,2001;Hitt et al.,2002;Hong & Kim,2002;Hunton et al.,2003; Umble, Haft & Umble, 2003; Nicolaou, 2004; Hendricks, Singhal & Stratman, 2007).”

“1.1 ERP investments as Real Options – not only revenues, but costs Conventional wisdom regarding the evaluation of ERP investment has been based mainly on NPV (Dixit and Pindyck 1994, Hitt et al. 2002, Ho 2008), which measures expected benefits and costs.”

“ERPs serve many industries and numerous functional areas in an integrated fashion, attempting to automate operations from supply chain management, inventory control, manufacturing scheduling and production, sales support, customer relationship management, financial and cost accounting, human resources and almost any o…”

“Having this opposed expectations in mind, we propose a careful first hypothesis: 7See for example Hitt et al. (2002), Aral et al. (2006), Engelstätter (2009).”

“Hitt, Wu, and Zhou (2001) showed that greater operational improvements occurred for firms that had implemented ERP earlier and more thoroughly.”

“A third approach is to evaluate the benefits of a particular type of IT systems such as ERP systems [20] or data analytics applications [42].”

“[4-7].”

“As for the Information Systems discipline, researchers typically utilize Tobin’s q to examine the role of IT investments on firm performance (e.g., Bharadwaj et al., 1999; Hitt et al., 2002; Kohli et al., 2012; Otim and Grover, 2012).”

“Articles on ERP implementation are mainly focused on an Anglo-Saxon environment (eg, Bradford & Florin, 2003 ; Hitt, Wu, & Zhou, 2002 ; Mabert et al, 2003a , 2003b ).”

“The business value of information technology to the enterprise has been a topic of interest in the literature for the last 15–20 years with more recent literature focusing on the value of specific applications such as ERP systems (Hitt et al. 2002).”

“According to the literature, larger companies with more resources enjoy potential advantages in regard to proper management of the relationship (Hitt et al., 2002; Klein and Rai, 2009; Patnayakuni et al., 2006).”

“Hitt, Wu, and Zhou (2002) found that “firms that invest in ERP tend to show a higher performance across a wide variety of financial metrics.””

“External IT expertise may facilitate not only the implementation of information systems (Hitt, Wu, and Zhou 2002; Thong 2001), but also the effectiveness of information systems in small businesses (Thong,Yap, and Raman 1996).”

“[3] demonstrate that firms which invest in ERP have higher performance.”

“(1) Time savings and improvement (2) Cost savings (3) HRIS Effectiveness (4) Information Effects.”

“Such an environment puts the manufacturer in a better position to exploit the resource endowments of the supplier (Hitt et al., 2002).”

“This result matches with the previous research conclusions (Hitt et al. 2002).”

“Since the seminal work of Brynjolfsson and Hitt [12], Information Systems researchers have used similar approaches to study IT productivity [44]–[53].”

“Hitt et al [11] using multiyear multi-firm ERP implementation and financial data concluded that firms that invest in ERP tend to show higher business performance in several financial performance indices, though there is a slowdown in business performance and productivity shortly after the implementation.”

“An additional problem of software customisation is often cited (Hitt et al., 2002) as a major issue.”

“…(1999) Bradford y Florin (2003) Avital y Vandenbosch (2000) Boon et al. (2003) Duplaga y Astani (2003) Brown y Vessey (1999) Buckhout et al. (1999) Hitt et al. (2002) Gardiner et al. (2002) Gupta (2000) Hong y Kim (2002) Hirt y Swanson (1999) Krumbholz y Maiden (2000) Hunton et al. (2003) Hislop…”

“It improves coordination between di(cid:27)erent units of the (cid:28)rm, increases e(cid:30)ciency in the business process, and decreases costs of coordination (Hitt et al. 2002, Nicolaou & Bhattacharya 2006).”

“The sample mean (median) value are 0.051 (0.027) for IT, 5.323 (5.063) for ITO, 0.075 (0.089) for R&D, and 0.193 (0.155) for SV, do not differ significantly from 0.”

“influenced more by internal organizational change processes and business requirements that are independent of financial concerns (Aral et al. 2012b; Hitt et al. 2002).”

“Da das IAB Betriebspanel allerdings nur vage Angaben zur Arbeitszeit ent- hält, beschränkt sich die vorliegende Arbeit auf die Betrachtung dieser Größe, operationalisiert über den Umsatz pro Beschäftigten (Dietz et al., 2011; Altinkemer et al., 2011; Hitt et al., 2002).”

“The research literature recognizes that IT investments are inherently risky due to uncertainty concerning their economic impact, technological complexity, rapid obsolescence and implementation challenges (Dedrick, Gurbaxani, and Kraemer, 2003; Hitt, Wu, and Zhou, 2002).”

“Furthermore, a study of ERP implementation examined the number of modules of a given ERP system that were implemented and how this degree of implementation impacted performance and productivity [Hitt et al., 2002].”