Importance of Improved Innovation Capabilities as an ERP System Selection Criterion: a Comparative Analysis of Slovakia and Slovenia

Enterprise resource planning (ERP) systems have become the de facto standard for large and medium companies to run all their major functional and process operations. Some even describe ERP systems as the price of entry for running a business. ERP system per se cannot be perceived as a source of competitive advantage anymore, since a significant percentage of companies already implemented them. On the other hand, innovation plays an increasingly important role in sustaining competitiveness. Although ERP systems could be perceive as constraining and inflexible, i.e. ERP systems may seem incommensurate with the notion of innovation, this is not the case in real life. It may be argued that innovation capabilities can be improved by ERP systems because of improved transparency and better information flow. The paper addresses two research questions: 1) What does academic literature says about the combination of ERP systems and innovations? 2) How important are improved innovation capabilities in the ERP system selection process? The first research question is answered based on literature review of relevant articles from Web of Science journals. The main findings are that the articles discuss (1) ERP system (implementation) as innovation (implementation), (2) ERP system driven innovation (impact of ERP systems in the postimplementation phase on innovation), and (3) ERP system innovation (i.e. innovation of ERP system). A large part of (2) perceives ERP system also as innovation. The second research question is rather practical and it cannot be approached from a strictly theoretical point of view. We try to answer this question using the results of the questionnaire research conducted in Slovak and Slovenian companies in May and June 2007. The main finding is that the importance of improved innovation capabilities is significantly higher in Slovakia than in Slovenia.