Impact of enterprise resource planning systems on company performance and management control systems

Abstract

Enterprises are facing significant challenges due to the excessive costs associated with accessing a vast market of potential customers. It is essential for organisations to adopt an ERP system to maintain control of their operations and to compete globally. An ERP implementation is expensive and risky for all organisations, but it is still more challenging for organisations, which have particular characteristics. We investigate the role of CRM, formal and informal management control systems as mechanisms which mediate the effect of enterprise resource planning systems adoption on firm performance. Our analyses are based on survey data drawn from 210 industrial organisations in Iran. Our analysis of the formal types of management control systems act as intervening variables mediating the positive lagged effect between enterprise systems adoption and non-financial performance but informal types of management control systems, do not show similar mediating effects. We find a significant relationship between non-financial and financial firm performance. These results are showing the evidence on the joint roles of enterprise systems and management control systems on improving the company performance is very limited. Our results show that the use of enterprise systems results in improved company performance in the long run.