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Article: How Do Enterprise Resource Planning Systems Affect Firm Risk? A Study of Post-Implementation Impact

TitleHow Do Enterprise Resource Planning Systems Affect Firm Risk? A Study of Post-Implementation Impact
Authors
KeywordsERP systems
Firm risk
Performance volatility
Post-implementation
Environmental uncertainty
Issue Date2015
Citation
MIS Quarterly, 2015 How to Cite?
AbstractManaging firm risk, or firm performance volatility, is a key task for contemporary firms. Although information technology (IT) has been generally viewed as an effective information processing tool that enables firms to better cope with uncertainty, thus holding the potential to mitigate firm performance volatility, evidence to support this view is lacking in the literature. We theorize that enterprise resource planning (ERP) systems, a major type of enterprise IT applications, can help reduce firm risk and, in particular, we argue that, to uncover the risk reduction effect of ERP systems, a research focus on the post-implementation stage is needed. Based on a sample of 2,127 firm-year observations, we found that ERP systems in the post-implementation stage were associated with reduced firm risk, and that the risk reduction effect was stronger for ERP systems with a greater scope of functional and operational modules, especially functional modules. We further found that, on average, the risk reduction effect of ERP systems became greater when firms’ operating environments feature higher uncertainty, while the risk reduction associated with fully deploying ERP system modules seemed to level off as the environmental uncertainty increases. These findings extend our understanding of the business value of ERP systems by shedding light on the risk reduction benefit of ERP systems.
Persistent Identifierhttp://hdl.handle.net/10722/203541

 

DC FieldValueLanguage
dc.contributor.authorTian, Fen_US
dc.contributor.authorXu, SXen_US
dc.date.accessioned2014-09-19T15:26:59Z-
dc.date.available2014-09-19T15:26:59Z-
dc.date.issued2015en_US
dc.identifier.citationMIS Quarterly, 2015en_US
dc.identifier.urihttp://hdl.handle.net/10722/203541-
dc.description.abstractManaging firm risk, or firm performance volatility, is a key task for contemporary firms. Although information technology (IT) has been generally viewed as an effective information processing tool that enables firms to better cope with uncertainty, thus holding the potential to mitigate firm performance volatility, evidence to support this view is lacking in the literature. We theorize that enterprise resource planning (ERP) systems, a major type of enterprise IT applications, can help reduce firm risk and, in particular, we argue that, to uncover the risk reduction effect of ERP systems, a research focus on the post-implementation stage is needed. Based on a sample of 2,127 firm-year observations, we found that ERP systems in the post-implementation stage were associated with reduced firm risk, and that the risk reduction effect was stronger for ERP systems with a greater scope of functional and operational modules, especially functional modules. We further found that, on average, the risk reduction effect of ERP systems became greater when firms’ operating environments feature higher uncertainty, while the risk reduction associated with fully deploying ERP system modules seemed to level off as the environmental uncertainty increases. These findings extend our understanding of the business value of ERP systems by shedding light on the risk reduction benefit of ERP systems.-
dc.languageengen_US
dc.relation.ispartofMIS Quarterlyen_US
dc.subjectERP systems-
dc.subjectFirm risk-
dc.subjectPerformance volatility-
dc.subjectPost-implementation-
dc.subjectEnvironmental uncertainty-
dc.titleHow Do Enterprise Resource Planning Systems Affect Firm Risk? A Study of Post-Implementation Impacten_US
dc.typeArticleen_US
dc.identifier.emailTian, F: ftian@hku.hken_US
dc.identifier.authorityTian, F=rp01098en_US
dc.identifier.hkuros232994en_US

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