Taxonomy of ERP integrations and performance outcomes: an exploratory study of manufacturing firms

Abstract

Building and deploying network capabilities of firms are crucial for sustaining competitive advantage. Enterprise resource planning (ERP) systems are useful to enhance such network capabilities thorough effective information flows. Their intended goals are measured in terms of production costs, operational flexibility and supply chain performance outcomes. However, the impact of ERP system implementation on firm performance has been reported as somewhat inconclusive. This study contends that a missing link in the story is the scope and extent of ERP system implementation after investigating how the extent of ERP integration is associated with the performance outcomes of manufacturing firms. The study also posits that restructuring in the organisation and supply chains are positively associated with manufacturing performance. Since ERP often entails restructuring in an organisation and supply chains, it is anticipated that restructuring plays an important role in inducing positive impact of ERP implementation to the firm. Using a global sample of 641 manufacturers, this research identifies four distinct ERP systems integration patterns, epitomised by different extents and directions of integration, and finds a significant association among the broadest degree of ERP systems integration, restructuring and plant performance improvement. The empirical results also show that restructuring takes place most actively in a firm that implement ERP with widest scope and scale.

Keywords:

• ERP integration
• cluster analysis
• multivariate analysis
• exploratory study
• performance outcomes
• manufacturing firms

Acknowledgements

We would like to thank the IMSS IV research partners around the world who endeavored to collect the data. The research was partially supported by the Department of Management & Entrepreneurship, Rohrer College of Business, Rowan University. We also appreciate Dr. Dong-Kyoon Yoo's helpful feedbacks to the study.