Accounting

The purposes of the article are to investigate the longitudinal impact of ERP adoption on firm performance and to investigate the interactive effect of firm size and financial health on the performance of ERP adopters.

The author’s main findings are as follows. The first one is that firm performance would be greater for adopters than non-adopters, primarily because the financial performance of non-adopters would decline by comparison. The second one is that there is a significant interaction between size and health for three of the financial measures (ROA, ROI and ROS). Specifically, larger and unhealthy adopters experience better ROI than large and healthy adopters. However, large and unhealthy firms have more room to improve the performance than its large and healthy counterparts. Small and healthy firms that adopt ERP systems demonstrate better performance (ROA, ROI and ROS) than small and unhealthy firms. Also, for small and unhealthy ones, the disadvantages may reduce in the future, since ERP suppliers develop more affordable ERP software for small and medium sized entities. Thirdly, improvements in firm performance are the result of the combined efficiency and profitability gains. Exactly, efficiency gains arising from ERP adoption may be passed on to customers in the form of lower prices.

I agree with the author in following main aspects. From the method used in this article, it uses hypothesis-testing approach. When analysis financial performance, it use four measures of performance, return on assets (ROA), return on sales (ROS), asset turnover (ATO) and return on investment (ROI). ROA is frequently used as a measure of firm performance by researchers and it incorporates firm profitability and efficiency, ROA is an overall performance indicator. And ROA can be separated into ROS and ATO, ROS represent as firm’s profitability and ATO represent as asset efficiency. ROI reflects the wellbeing of EPR implementation. Using these four factors measure the...