ERP and E-Business Systems Development, Innovation and Business Performance--An Empirical Investigation

There has been extensive theoretical work on the potential of information and communication technologies (ICT) to drive significant innovations, which can dramatically enhance firms' performance. However, this potential has not been sufficiently investigated empirically. This paper investigates empirically and compares i) the effects of the two most widely used types of information systems (IS), the ERP and the e-business ones, on innovation, and also ii) to what extent their effects on business performance are through (i.e. mediated by) the innovation they drive. It is concluded that both ERP and e-business IS have positive impact on innovation, with the former being a stronger driver of innovation than the latter. However, most of their positive impact on business performance is mainly through automation and support of existing processes, and only a smaller part of it (20% for the ERP and 30% for the e-business IS) is through innovation.