Productivity Paradox

03-011

An Empirical Study of Operational Performance Convergence Following Enterprise-IT Implementation
Mark J. Cotteleer Harvard Business School Boston, MA 02163 mcotteleer@hbs.edu October 2002

Keywords: Enterprise-Level Information Technology, Software Packages, Enterprise Resource Planning, Information Technology Performance, Convergence, Empirical Research

Copyright © 2002 Mark J. Cotteleer Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. The author is grateful for the generous financial support of the Harvard Business School Division of Research.

Abstract This paper presents an empirical investigation into the influence of enterpriselevel software package implementation on operational performance. It seeks to

determine whether, as some suggest, the implementation of these technologies leads to convergence in operational performance. The potential for performance convergence is important because if it occurs, then the use of packaged software applications may act as a leveler of competitive performance, rather than as a tool to promote competitive differentiation.

This paper investigates operational performance change and convergence within three geographically defined operating regions of a single firm. Operational performance is measured using order lead-time – the elapsed time between when an order is received and when it is shipped to the customer. The firm implemented Enterprise Resource Planning (ERP) across its global operations, simultaneously in all regions, using single installation of the applications.

Findings suggest that convergence may be an initial characteristic of initial operating performance following ERP deployment. However differences in rates of performance change following deployment led to divergence in operating performance.... [continues]

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