Enterprise Resource Planning Diffusion: Measuring the Impact of Network Exposure and Power

Observations in industrial sectors indicate that companies that evolve in an industry in which a specific ERP system has been adopted by a number of members are more likely to adopt the same software. In this paper, we investigate two main effects influencing this diffusion pattern: the exposure of a firm in the network to its neighbours and the power of a firm within the network. To perform this analysis, we propose two models: a direct model that characterized the influence of immediate related ties, as well as an indirect model that characterized the influence of ties of ties. Network ties are here defined by interlock between board directorates. The statistical analysis of Canadian firm's data suggests that network ties, especially indirect exposure, influence the diffusion of ERP systems. The influence of direct and indirect exposure and firm power also appear to differ significantly from one ERP system to another.