Do National Culture and Organizational Development Affect the Effectiveness of ERP Implementation? A Tale of Two Cultures: US versus China

ABSTRACT As many US and European companies have implemented Enterprise Resource Planning (ERP) Systems, most of the previous implementation studies have tended to focus on companies from more developed countries. This research points out that there is need for academics and practitioners to "take stock," to examine what is happening in broad terms across organizations in the ERP implementation process, and to consider whether cultural differences in the U.S. when compared to another culture can impact the process. In this study, we are concerned with several issues surrounding current ERP implementation status and report initial findings from managers in a wide variety of organizations in the U.S. and China on their experiences with ERP implementation and attempt to suggest implications. Our findings center upon cultural differences, especially in the reported context surrounding ERP implementation in the two cultures. Moreover, we report that there is evidence for differences in ERP complexity and implementation extensiveness in the two cultures. Finally, we find some evidence for differences in reported outcomes. We include suggestions for future research. KEYWORDS: US, China, ERP, implementation, Cultures INTRODUCTION As global economic competition becomes more intense, companies all over the world have to find ways to become more productive and profitable. In many U.S. companies, Enterprise Resource Planning (ERP) Systems have been implemented in order to gain operational effectiveness (Ifinedo & Nahar, 2006; Stedman, 1999c; Zviran, Pliskin & Levin, 2005). These systems are viewed as a means to integrate the different functions within the organizations so the speed of response to the market can be increased. In Europe, many European Union manufacturers are increasingly trying to be more innovative and flexible using ERP (Powell, Riezebos, & Strandhangen, 2013). In both U.S. and Europe, it is commonly known that implementation of such systems have not all been successes. Many reported implementations have encountered huge cost overruns, and some of them even consumed so much in the way of resources from the organizations that the promised benefits of these systems never materialized. As an extreme example, companies have gone bankrupt after implementation, because adhering to the system forced the companies to modify their existing ways of doing business, even when it may have been precisely that way of operating which had previously made the organizations successful (Beatty & Williams, 2006; Lotta & Olli-Pekka, 2008; Osei-Bryson, Dong & Ngwenyama, 2008; Scarbrough, Robertson & Swan, 2008; Vilpola, Vaananen-Vanio-Mattila, 2006). China surpassed Japan as the world second largest economy in 2010; its impressive growth was arguably enabled by abundant inexpensive labor. This competitive advantage has since, however, eluded as labor costs in many part of China have increased significantly in recent years. Many companies in China have begun to look for other means to remain competitive. It is also commonly known that before the World Trade Organization (WTO), most Chinese companies were funded and influenced by the central government. In many cases, these companies were driven by the political decisions made by the central government instead of driven by profitability. After WTO, many of these companies became more independently profit driven and as such, will have to find ways to become more efficient and cost effective. Productivity became the main focus. Looking towards the west, many Chinese companies have also begun to look for concepts and systems employed by its U.S. or European counterparts to boost productivity. They are, however, quite new to these systems and philosophies. In fact, concepts such as management by objective (MBO), total quality management (TQM), or lean manufacturing (Lean), including ERP, are quite unknown to many Chinese companies before the 1980s. …