ERP Implementation: A Corporate Governance Perspective

Abstract

The authors investigate corporate governance characteristics of companies that implement the Enterprise Resource Planning system (ERP). ERP implementation enhances information flow for internal managers and outside stakeholders, helps resolve principal-agency problems, and improves corporate governance. The authors hypothesize that companies that have poor corporate governance will be more strongly motivated to implement ERP. A study of data for public companies in China reveals strong motivation for ERP implementation in state-owned companies, companies that have fewer independent directors, companies that have higher ownership concentration in state-owned companies, and companies that have lower ownership concentration in non-state-owned companies. The authors conclude that enterprises that have poor corporate governance are more willing to implement ERP