Performance Effects of Enterprise Application Software: New Insights into the Mediating Role of Innovation

Despite the ubiquitous proliferation of Enterprise Application Software (EAS), there exists little research on their performance effects, especially in Europe. This paper provides large-sample, economy-wide evidence on the differential effects of enterprise systems adoption on performance of European enterprises. It also differentiates between the direct and indirect effects of these applications and provides new insights into the mediating role of innovation. This study uses data on the adoption of Jive groups of enterprise application software, i.e. ERP, SCM, CRM, KMS, and DMS in 15 sectors, 30 countries, and a 5-year period. The results show that ERP, CRM, and DMS significantly contribute to revenue growth while all the EAS categories except ERP significantly affect productivity and market share growth. As to a very important finding of this research, innovation seems to act as a full mediator in linking enterprise systems adoption to corporate performance. The paper recommends some areas for future research.