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ERP systems and operational efficiency: comparison of the effectiveness of implementing foreign and domestic systems
Purpose
This study examines the effectiveness of enterprise resource planning (ERP) system implementation in Russian companies, considering the vendor’s country of origin and the context of sanctions.
Design/methodology/approach
To estimate the impact of implementation, the event study method is employed, with a control group selected using propensity scores matching to address the issue of systematic self-selection. Operational efficiencies are calculated using the Stochastic Frontier Estimation method. The impact of the vendor’s country and the sanctions context is evaluated using regression analysis. The dataset comprises large manufacturing companies in Russia that adopted ERP systems between 2007 and 2021.
Findings
The results show that Russian companies benefit in operational efficiency even during the preparation phase for ERP implementation, and this effect persists up to a year post-implementation, after which it diminishes. Additionally, companies implementing ERP systems of foreign vendors gain more from the implementation. Moreover, the sanctions context drives an increase in operational efficiency. Furthermore, initially less efficient firms receive greater benefits from the implementation of ERP systems, while efficient firms receive smaller gains in operational efficiency.
Originality/value
This study offers new insights into how the choice of domestic or foreign vendor influences the impact of ERP adoption on operational efficiency in emerging economies. Our methodological contribution lies in extending the framework for analyzing operational efficiency to include firms with negative operating income, which is important in the context of emerging markets and turbulent environments.