Adoption of Enterprise Application Software and Firm Performance

Adoption of Enterprise Application Software and Firm Performance Due to the rapidly changing business and IT environments, firm-level adoption of IT shifted from in-house development to purchasing EA software. This paper analyzes the effects of EA (Enterprise Application) software – ERP, CRM, SCM, Groupware, KM, EAI – on SMEs’ productivity. The distinct feature of this paper is that I use a formal econometric approach with combined data of SMEs’ accounting and IT usage aspects, while case studies have been mostly used in the previous works. The empirical results show that Groupware and SCM significantly raise the SMEs’ productivity, and the manufacturing sector has stronger effects than the service sector. From these results, the following implications are derived. First, the adoption rate and the real benefits of EA software are not closely related domestically. Second, in SMEs, EA software facilitating the inter-firm relationship is more effective than EA software focusing on the internal efficiency. Third, easy-to-understand, and relatively long-experienced enterprise applications are more effective than hard-to-understand and brand-new applications. Finally, the government IT policy on SMEs should focus on the process coordination and standardization of the manufacturing sector with upstream and downstream firms. Small Business Economics Springer Journals

Adoption of Enterprise Application Software and Firm Performance

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Kluwer Academic Publishers
Copyright © 2006 by Springer
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
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