Effects of knowledge capabilities on the post-implementation benefits of enterprise resource systems within South African firms

Abstract

This study recognized as a research problem that the size and complexity of enterprise resource planning (ERP) systems makes their implementation a specialized discipline with a number of reported failures. Valuable insights have emerged from studies into factors critical for a successful ERP implementation, however it has been noted that the successful implementation of an ERP system does not necessarily translate to sustained business performance. Literature has explored some of the ERP factors which are necessary for sustaining benefits post-implementation. This literature points to the importance of ERP knowledge as well as the role of other organizational, contextual, and contingency factors in the realization of post-implementation benefits. However, empirical studies of the role of ERP knowledge capabilities in sustaining the post-implementation effects of ERP systems still remains under-explored. Therefore, the aim of this research study was to contribute to this gap. Specifically, it developed and tested a research model underpinned by the Resource and Knowledge-Based View of the Firm, Contingency Theory, and Transaction Cost Theory. A systematic literature review was conducted to gauge the state of the field, and thereafter the research model was developed. This model investigated the role of internal ERP knowledge capabilities, namely business process knowledge and ERP module knowledge, in sustaining the Operational Benefits of an ERP system. The model also investigated the conditions under which it is necessary for organisations to develop an internal ERP knowledge capability. Lastly, the model investigated the role of two contingency factors (structural complexity and environmental turbulence) in moderating the relationship between an internal ERP capability and the operational benefits obtained from ERP systems. The research model was tested using a survey methodology. This involved operationalizing the variables hypothesized in the research model and collecting data through a questionnaire instrument. The self-administered online questionnaire was administered to 900 key informants representing large organisations that have implemented ERP systems in South Africa of which 198 returned responses. Following initial screening, 130 usable responses were retained for analysis. The usable data passed through reliability and validity tests which confirmed that the construct measures provided consistent and reproducible results (reliability) and accurately represented the constructs they were intended to measure (validity). After reliability and validity was demonstrated, correlation and regression was used to test the hypothesized research model. The results of the study indicate ERP module knowledge is an important internal ERP capability for sustaining the post-implementation benefits of ERP systems. The results also found business process knowledge to be more important to realization of post-implementation benefits for firms with higher levels of structural complexity. ERP firm specificity was found to have no influence on the building of internal ERP knowledge capabilities, and the question as to why some firms seek to develop stronger internal ERP capabilities remains a question for future research. The study of post-implementation benefits from ERP systems still remains a topic of interest for both academics and practitioners. Through the application of the Resource and Knowledge- Based View of the Firm, Contingency Theory, and the Transaction Cost Theory this study has advanced our understanding of the importance of ERP knowledge capabilities and contributed results that offer practical implications for vendors and for organisations that have implemented or are considering implementing ERP systems.