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Measuring the impact of enterprise integration on firm performance using data envelopment analysis
KTH Royal Institute of Technology, Sweden.
RISE - Research Institutes of Sweden, ICT, SICS. KTH Royal Institute of Technology, Sweden.ORCID iD: 0000-0003-2017-7914
2018 (English)In: International Journal of Production Economics, ISSN 0925-5273, E-ISSN 1873-7579, Vol. 200, p. 119-129Article in journal (Refereed) Published
Abstract [en]

Today, with rapidly developing technology and changing business models, organizations face rapid changes in both internal and external environments. To be able to rapidly respond to such changing environments, integration of software systems has become a top priority for many organizations. However, despite extensive use of software systems integration, quantitative methods for estimating the business value of such integrations are still missing. Using Data Envelopment Analysis (DEA) and the microeconomic concept of marginal rates, this study proposes a method for quantifying the effects of enterprise integration on the firm performance. In the paper, we explain how DEA can be used to evaluate the marginal benefits of enterprise integration. Our proposed method is to measure and compare the productive efficiency of firms using enterprise integration, specifically by relating the benefits produced to the resources consumed in the process. The method is illustrated on data collected from 12 organizations. The defined method has a solid theoretical foundation, eliminating the need for a priori information about the relationship between different measures. Furthermore, the framework could be used not only to quantify the business value of enterprise integration, but also to estimate trade-offs and impacts of other subjective managerial goals on the results. The major limitation of the proposed method is the absence of a comprehensive theory relating IT architecture changes to organizational outcomes. The underlying model is strongly dependent on the relevancy and accuracy of the included variables, as well as number of data units, introducing uncertainties to the outcomes of the model.

Place, publisher, year, edition, pages
2018. Vol. 200, p. 119-129
Keywords [en]
Business value, Data envelopment analysis, Enterprise integration, Firm performance, Information technology, Productivity, Computer software, Economic and social effects, Integration, Changing environment, External environments, Organizational outcomes, Productive efficiencies, Theoretical foundations, Data integration
National Category
Natural Sciences
Identifiers
URN: urn:nbn:se:ri:diva-33971DOI: 10.1016/j.ijpe.2018.02.011Scopus ID: 2-s2.0-85045540193OAI: oai:DiVA.org:ri-33971DiVA, id: diva2:1230369
Available from: 2018-07-03 Created: 2018-07-03 Last updated: 2018-08-16Bibliographically approved

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Franke, Ulrik

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