Joint impact of ERP systems and non financial performance indicators on corporate financial performance: Evidence from French listed companies

Abstract

This paper aims to examine the joint impact of Enterprise Resource Planning systems (ERP systems) and Non Financial Performance Indicators (NFPI) on corporate financial performance. Our study is based on a comparative analysis between firms that adopt ERP only, firms that use NFPI only and firms that combining both strategies (ERP and NFPI) during the period from 2001 to 2006.The implementation process remains highly uncertain. In fact, the use of Non Financial performance indicators is an important determinant of corporate financial performance. At the operational level, combining ERP systems with NFPI reflects a long-term business strategy to improve business process. In summary, the ERP and NFPI literatures demonstrate the vital importance of aligning business process, information technologies and key performance indicators with the strategic objectives of the firm. Results support the hypothesis in which firms that combining ERP and NFPI have significantly higher ROA than either ERP-only or NFPI-only firms.Growing Science Ltd. All rights reserved. 4

Enterprise Resource Planning Systems Implementation and Firm Performance: An Empirical Study

“…Nicolaou and Bajot (2004) show significant improvements for ROS and COGS, but not ROA and ITO. Hendricks et al (2007), Kouki (2015), Zhang and Zheng (2019) show statistically significant improvement in ROA for at least one post-implementation period. Zhang and Zheng (2019) also found evidence for improvement of ROS.…”

“…ERP improves the time needed to fulfill customer orders, facilitating stock reduction thus enhancing ITO. ERP deployment injects efficiency through reducing coordination cost by ensuring tighter coordination among departments, although mostly in combination with more formal management control (Galy & Sauceda, 2014;Kallunki et al, 2011;Kouki, 2015;Wieder et al, 2006). Zhang and Zheng (2019) also found a significant positive effect on ITO in the first two years after adoption.…”

“…ERP adoption has a significant positive effect on financial and non-financial performance, which is strengthened by the use of formal controls. Kouki (2015) using GLS analyzed 106 French listed firms, 31 of which adopted ERP, 33 did not -but implemented nonfinancial performance indicators-, and 38 that implemented both. Kouki (2015) found a significant positive effect of ERP implementation as well as of non-financial performance indicators on ROA, which becomes much stronger when ERP usage is combined with the use of non-financial performance indicators.…”

“…Kouki (2015) using GLS analyzed 106 French listed firms, 31 of which adopted ERP, 33 did not -but implemented nonfinancial performance indicators-, and 38 that implemented both. Kouki (2015) found a significant positive effect of ERP implementation as well as of non-financial performance indicators on ROA, which becomes much stronger when ERP usage is combined with the use of non-financial performance indicators. That combining ERP implementation with various managerial techniques has a significant positive effect on ROA and ROI is supported by the findings of Galy and Sauceda (2014), who linked survey data to actual financial data of 55 companies that implemented ERP between 1993 and 2001.…”

“…Thus, it is expected that, when the investment is substantial enough, implementing ERP negatively affects an adopter's DER compared to that of non-adopting matching firms. Kouki (2015) includes DER in its analysis of ERP adoption, but it had no significant effect. When an implementation is risky Hitt et al (2002) expect firms to utilize less debt financing before and during implementation.…”