The Impact of ERP Systems on Organizational Performance

Abstract

Research on the link between investments in ERP systems and organizational performance has often led to mixed results. Besides internal organizational factors, many external contextual factors come into play. This study examined the role of firm size, industry, and duration of ERP system's use in influencing the performance impact of ERP systems through moderating the relationships between antecedent variables, ERP-induced benefits, and improvement in overall organizational performance. Using a sample of 200 participant firms, and structural equation modeling (SEM) analysis, the author confirmed the significant role of business process re-engineering and organizational fit and alignment as antecedents to ERP-induced benefits in information quality, and coordination/integration. Data and information quality was in turn confirmed as a significant predictor of organizational performance. Furthermore, the roles of industry, firm size, and time elapsed were also confirmed as significant moderators to the influence of the antecedent variables on ERP benefits and organizational performance.