Effect of Enterprise Resource Planning Systems and Forms of Management Control on Firm’s Competitive Advantage

Abstract

In the brick of digitalization industry revolution era, this study signifies the pertinent role of Enterprise Resource Planning Systems (ERPs) towards assisting the organization towards attaining the firm's mission and goal. This study extends the knowledge by exploring the relationship between ERPs and management control (MC), which in turn enhances firm's competitive advantage. Realizing the limited empirical work on ERPs from management accounting and control perspective, the discussion would be drawn from business stakeholder's perspective, instead of from information technology standpoint. The study views ERPs as an important resource in creating the capability to control the business operations and combination of both factors creates the firm's competitive advantage. Survey questionnaires were administered via email to 972 randomly selected manufacturing firms listed in Federation of Malaysian Manufacturer Directory. Based on the 114 usable responses, the data was analyzed using a structural equation modeling (SEM) approach through partial least square (PLS) software. The findings provide empirical evidence on the significance of ERPs in determining firm's MC approaches, both technocratic and socio-ideological forms of control. Evidently, these variables do associate positively with competitive advantage. Additionally, the analysis demonstrates that only technocratic form of MC mediates the relationship between ERPs and competitive advantage, but not for socio-ideological control. These findings provide an insight on the relationship among ERPs, form of MC and firm's competitive advantage, which may be an input for businesses in facing the industrial digitalization era.

Performance, farmer perception, and the routinisation (RO) moderation on ERP post-implementation

“…For routinisation the KM activities are: knowledge accumulation, knowledge sharing, knowledge creation and the application of new KM tools. Alomari et al., (2018) consider the ERP system measurements based on the combination of four attributes of the business process that are integration, standardization, routinisation and centralization of the business process. We believed that the hypotheses H5, H5a, H5c and H5d would be validated, but only the hypothesis H5b was validated, showing that routinisation moderates the relations among the internal operations and the performance in the farm.…”

ERP Business Process Attributes to Create Competitive Advantage

“…Based on a longitudinal case study conducted in the European department of a great United States multinational, Scapens and Jazayeri [13] established four attributes which are deemed necessary in facilitating changes in organization through ERP implementation. Recently, Alomari et al [29] maintained that the single-instance ERP rolling out was not only about the standardization of technology, but also consisted of the integration of data as well as standardization of business process. Consequently, the current study will look into ERP systems using business process attributes following Scapens and Jazayeri [13] and Sanchez and Spraakman [15].…”

“…Investment in ERP systems in companies comes with the expectation of obtaining the aims in increasing some assets and abilities along with technical and managerial competencies in order for the firm to develop opportunities and values for differential long term major benefits [27]. The implementation of ERP system would directly bring operational advantages through innovation capacity building and stimulation involving the technology that subsequently provide the long-term benefits opportunities and lead to the creation of value [27] which in the long run lead to competitive advantage [28,29]. Previous studies put emphasis on the significance of creating integration which leads to improvement of firm's competitive advantage.…”

“…Previous studies put emphasis on the significance of creating integration which leads to improvement of firm's competitive advantage. Alomari et al [29] showed that ERP integration system leads to improvement of competitive advantage. Similarly, Mirzaee & Ghaffari [52] argued that implementing effective ERP systems (standardized, centralized, routinized and integrated) can accelerate the speed of information exchange among the personnel and the improvement of their capabilities, the results gained in this study revealed that ERP systems play a positive significant role in competitive advantage.…”

The Role of ERP Capabilities in Achieving Competitive Advantage: An Empirical Study on Dakahlia Governorate Companies, Egypt

“…Therefore, Alomari, Amir, Aziz, and Auzar () conducted a research to explore the relationship between ERP systems and management control (MC), represented by technocratic and socio‐ideological, enhancing an organization's competitive advantage. They found that both technocratic and socio‐ideological associated positively with competitive advantage.…”