The Impact of ERP Implementation on Organizational Capabilities and Firm Performance

Benchmarking: the International Journal, Vol. 19, 2012

16 Pages Posted: 28 Oct 2011 Last revised: 24 Jan 2012

See all articles by Hassan R. Hassabelnaby

Hassan R. Hassabelnaby

Northern Kentucky University

David

Bowling Green State University

Mark A Vonderembse

University of Toledo - College of Business Administration

Date Written: October 26, 2011

Abstract

Purpose – This paper examines whether the implementation of ERP impacts both business strategy and organizational capabilities which in turn enhance firm performance. Specifically, the paper investigates the mediating effect of business strategy and organizational capabilities on the relationship between ERP implementation and firm performance.

Design/Methodology/Approach – Using secondary data collected from more than 400 firms, this study tests the relationships among these variables.

Findings – ERP implementation has a positive impact when a firm employs a prospector business strategy. A prospector business strategy enhances the firm’s ability to achieve organizational capabilities and enables the firm to achieve higher levels of financial performance.

Practical Implications – ERP implementation encourages and supports a prospector strategy. ERP not only supports cost control, but also support new product development and introductions. The prospector firm seeks better information to support decision making, develop new and innovative products that drive revenue growth, and build efficient and effective operations that enhance return on assets.

Originality/Value – This paper reports the mediating effect of business strategy and organizational capabilities on the relationship between ERP implementation and firm performance. This study use cybernetic control, resource-based view of firm, and dynamic capabilities theories to develop and integrate this research.

Suggested Citation

Hassabelnaby, Hassan R. and Hwang, David W. and Vonderembse, Mark A, The Impact of ERP Implementation on Organizational Capabilities and Firm Performance (October 26, 2011). Benchmarking: the International Journal, Vol. 19, 2012, Available at SSRN: https://ssrn.com/abstract=1950002

Hassan R. Hassabelnaby

Northern Kentucky University ( email )

Nunn Drive// BC 305D
Highland Heights, KY 41099
United States
859-572-7720 (Phone)

HOME PAGE: http://https://www.nku.edu/academics/cob.html?

David W. Hwang (Contact Author)

Bowling Green State University ( email )

Bowling Green, OH 43403
United States
419-372-3416 (Phone)

Mark A Vonderembse

University of Toledo - College of Business Administration ( email )

2801 W. Bancroft
Toledo, OH 43606
United States

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