ERP Usage and Firm Performance: Evidence from Chinese SMEs

Enterprise resource planning (ERP) systems are popular and associated with increased organizational performance, but the channels by which ERP utilization affects firm performance are not fully known. This study investigates how ERP use relates to the performance of Chinese SMEs and examines customer relationship management (CRM), knowledge management (KM), and top management commitment (TMC) as parallel mediators. The analysis further tests the hypothesis that technophobia undermines the positive association between ERP use and knowledge management. PLS-SEM was used to analyze cross-sectional survey data of 600 ERP users. ERP usage was positively associated with firm performance, and CRM, KM, and TMC mediated this relationship. Technophobia significantly weakened the ERP-KM relationship. These results indicate that ERP systems improve the performance of firms not only through the integration of operations but also through customer- and knowledge-related processes and leadership processes. The findings emphasize the role of managers in complementing ERP investments with robust CRM practices, management support, and knowledge-sharing systems, as they deal with employee anxiety about technology. This study contributes to ERP research by demonstrating that the performance results associated with ERP in SMEs are contingent on the alignment of customer, managerial, and knowledge-based processes and that technophobia is a boundary condition that selectively limits the processes facilitated by ERP.