Introduction
Enterprise resource planning (ERP) systems integrate business processes and information technologies into a synchronized suite of procedures, applications and metrics that span intra and inter-firm boundaries. ERP systems are expected to improve firm performance primarily due to redesigned business processes, integrated managerial functions, accelerated reporting cycles and expanded information capabilities (O’Leary, 2000).
Regarding the latter, ERP systems not only provide decision makers with traditional financial metrics, but are capable of capturing and delivering non-financial performance indicators (NFPI) as well (Dechow and Mouritsen, 2005). Economic theory suggests that the inclusion of NFPI in managerial compensation contracts should enhance corporate performance, relative to financial measures only, because the combined performance indicators better align managers’ actions with investors′ objectives (e.g., Banker and Datar, 1989; Ittner et al., 1997).
Context & Background to the Study
Research findings on the performance effects of ERP systems are equivocal, yet some studies find positive outcomes; for instance, one study suggests significantly higher stock returns (SR) upon the announcement of ERP implementations (Hayes et al., 2001) and another study indicates significantly greater long-term return on assets (ROA) for ERP adopters relative to non-adopters (Hunton et al., 2003). Regarding the use of NFPI in compensation contracts, a recent empirical study indicates that the adoption, as compared to non-adoption, of NFPI improves short-term and long-term SR, and long-term ROA (Said et al., 2003). The current study complements and extends these two lines of research by examining the extent to which the joint adoption of ERP and NFPI enhances corporate performance, as reflected by ROA and SR.
Statement of Purpose
The purpose of the current study is to examine the extent to which the joint use of ERP and NFPI improves firm performance over either strategy alone.
Scope of the Study
The study shall not only allow light to be shed on Enterprise resource planning systems and financial performance incentives in the case of the performance of Saudi listed companies but shall serve as an exemplary analysis of the role of Enterprise resource planning systems and financial performance incentives in a rapidly developing market.
Literature Review
The literature review for the study shall incorporate peer reviewed publications and shall delve into an investigative analysis of the subject of the research.
Findings from a large number of previous researches shall be incorporated into the research through the literature review. These shall include A balanced scorecard based framework for assessing the strategic impacts of ERP systems (Chand Hachey Hunton Owhoso and Vasudevan 2005), Assessing the benefits of using an enterprise system in accounting information and management (Spathis and Ananiadis 2005), Enterprise Resource Planning and a contest to limit the role of management accountants: A strong structuration perspective (Jack and Kholeif 2008), Enterprise Resource Planning systems and accountants: towards hybridization? (Cagiio 2003), Enterprise resource planning systems and non-financial performance incentives: The joint impact on corporate performance (Wier Hunton and Hassab Elnaby 2007), Enterprise resource planning systems: comparing firm performance of adopters and non-adopters (Huntona Lippincottb and Reck 2003), Enterprise systems and the re-shaping of accounting systems: A call for research (Sutton 2006), and ERP systems adoption: An exploratory study of the organizational factors and impacts of ERP success (Law and Ngai 2007).
The research shall also incorporate analysis and inferences from Implementing enterprise resource planning and knowledge management systems in tandem: fostering efficiency and innovation complementarities (Newell Huang Galliers and Pan 2003), Implementing enterprise resource planning systems with total quality control and business process reengineering (Schniederjans and Kim 2003), Management based critical success factors in the implementation of Enterprise Resource Planning systems (Bradley 2008), Measuring the effects of business intelligence systems: The relationship between business process and organizational performance (Elbashir Collier and Davern 2008), Organizational performance effects of ERP systems usage: The impact of post-implementation changes (Nicolaou and Bhattacharya 2006), and Sustainability of ERPS performance outcomes: The role of post-implementation review quality (Nicolaou and Bhattacharya 2008).
Objectives of research
The research shall be carried out while keeping the following objectives in sight. However the establishment of these objectives is not meant to limit the scope of the research.
- The study shall seek to examine the impact of ERP system on financial performance of Saudi listed companies.
- The study shall also examine the impact of ERP system on Saudi stock exchange.
- The study shall incorporate an examination of the impact of ERP system on non financial performance of Saudi listed companies.
- The research shall be directed towards the examination of the impact of ERP system on accounting information system of Saudi listed companies.
- Through the above mentioned objectives, the research shall investigate the impact of ERP systems on management accounting, control, quality management of Saudi listed companies.
Research Methodology
The research shall be carried out in a manner such that it involves the use of both primary and secondary data and both the data types while available data accumulation, handling and analysis techniques shall be evaluated and selected in the Research Methodology chapter of the research.
Importance / implication of the study.
Chapter Distribution
The thesis shall constitute a total of five chapters which have been outlined as under.
- Chapter 1: Introduction – The first chapter shall serve to provide the background to the research and shall serve to establish the aims, objectives and scope of the research.
- Chapter 2: Literature Review – The second chapter shall provide an exploratory analysis of the subject of the research and shall contribute to the development of the research methodology.
- Chapter 3: Research Methodology – The third chapter shall identify the primary and secondary sources while providing rationale, justification and limitations for the same and identifying data collection, handling and analysis techniques.
- Chapter 4: Findings – The fourth chapter shall constitute the findings acquired upon the implementation of the research methodology.
- Chapter 5: Conclusions & Recommendations – The last chapter shall present inferences and proposals in light of the findings discussed in the previous chapter.
Time line
The following chart represents the approximate dates for the submission of each chapter.
List of References
Bradley, J. (2008) Management based critical success factors in the implementation of Enterprise Resource Planning systems. International Journal of Accounting Information Systems , 175–200.
Cagiio, A. (2003) Charalambos Spathis; John AnaniadisEnterprise Resource Planning systems and accountants: towards hybridization? European Accounting Review , 123-153.
Chand, D., Hachey, G., Hunton, J., Owhoso, V. and Vasudevan, S. (2005) A balanced scorecard based framework for assessing the strategic impacts of ERP systems. Computers in Industry , 558–572.
Elbashir, M. Z., Collier, P. A. and Davern, M. J. (2008) Measuring the effects of business intelligence systems: The relationship between business process and organizational performance. International Journal of Accounting Information Systems , 135–153.
Huntona, J. E., Lippincottb, B. and Reck, J. L. (2003) Enterprise resource planning systems: comparing firm performance of adopters and nonadopters. International Journal of Accounting Information Systems , 165–184.
Jack, L. and Kholeif, A. (2008) Enterprise Resource Planning and a contest to limit the role of management accountants: A strong structuration perspective. Accounting Forum , 30–45.
Law, C. C. and Ngai, E. W. (2007) ERP systems adoption: An exploratory study of the organizational factors and impacts of ERP success. Information & Management , 418–432.
Newell, S., Huang, J., Galliers, R. and Pan, S. (2003) Implementing enterprise resource planning and knowledge management systems in tandem: fostering efficiency and innovation complementarity. Information and Organization , 25–52.
Nicolaou, A. I. and Bhattacharya, S. (2006) Organizational performance effects of ERP systems usage: The impact of post-implementation changes. International Journal of Accounting Information Systems , 18– 35.
Nicolaou, A. and Bhattacharya, S. (2008) Sustainability of ERPS performance outcomes: The role of post-implementation review quality. International Journal of Accounting Information Systems , 43-60.
Schniederjans, M. J. and Kim, G. C. (2003) Implementing enterprise resource planning systems with total quality control and business process reengineering. International Journal of Operations & Production Management , 418-429.
Spathis, C. and Ananiadis, J. (2005) Assessing the benefits of using an enterprise system in accounting information and management. The Journal of Enterprise Information , 195-210.
Sutton, S. G. (2006) Enterprise systems and the re-shaping of accounting systems: A call for research. International Journal of Accounting Information Systems , 1-6.
Wier, B., Hunton, J. and HassabElnaby, H. R. (2007) Enterprise resource planning systems and non-financial performance incentives: The joint impact on corporate performance. International Journal of Accounting Information Systems , 165–190.