Level of Harmonization and ERP Architecture in Multinational Corporations

While one-site, one-instance implementation was the common practice during the infancy of ERP systems, the growing business trend towards globalization and the advancement of ERP and telecommunication technology have increased the popularity of centralized single-instance ERP systems among multinational corporations. The ERP distribution decision in MNCs has been mainly associated with the corporate strategy and governance structure. As global ERP deployment benefits mainly come from business consolidation, and as there are significant costs and risks associated with centralized ERP implementations, this paper investigates the influence of level of harmonization in the choice of ERP architecture in MNCs. Though the findings indicate a negative relation between the level of harmonization and a centralized ERP systems’ effectiveness, the study identifies the choice of ERP architecture to be more directly affected by the factors prohibiting further divergence, namely the corporate business process governance structure and the degree of similarity of its business models.