A Principal-Agent Perspective on ERP Implementation Decisions: An Empirical Analysis Based on Chinese Listed Companies

This study attempt to find the motivation of ERP implementation based on the principal-agent theory. From the view of information resource sharing and communication, which is a critical characteristic of ERP, this paper investigates whether the decision of ERP implementation is affected by the principal-agent mechanism. Method study used economics technology to design an empirical study based on data from China’s capital market. Findings reveal that Chinese companies try to resolve information asymmetry problems from principal-agent mechanism by implementing ERP. ERP adopters have lower shareholding proportion of managers and higher distance between concentration of ownership and managerial ownership than ERP non-adopters. State-owned companies which have serious information asymmetry problems from principle-agent mechanism are more willing to implement ERP. Study contributes to the ERP research literatures and information system research. The study provides a new perspective on the information system research.