Enterprise resource planning and efficiency: Evidence from the Korean Property/Casualty insurance companies

Abstract

Purpose

The purpose of this paper is to investigate the efficiency of Korean insurers that have adopted enterprise resource planning (ERP) system to improve their efficiency.

Design/methodology/approach

The study uses Data Envelopment Analysis (DEA) with several inputs and outputs to measure both technical and scale efficiency. With the efficiency measures and using the ordinary least square with the hetereoscedacity consistent standard errors, the study further investigates the factors affecting efficiency, and the association between ERP and efficiency.

Findings

This study finds a strong positive association between ERP implementation and the insurers’ efficiency and profitability. However, firms may experience a decrease in efficiency and profitability during the first and second year after ERP implementation.

Research limitations/implications

Although the findings of this study are consistent with extant studies, the study’s findings may lack generalizability because the samples are limited small Korean Property/Casualty (P/C) insurers.

Originality/value

This study investigates the impact of ERP implementation on P/C insurers in an emerging market.

Citation

Park, J. and Park, J. (2015), "Enterprise resource planning and efficiency: Evidence from the Korean Property/Casualty insurance companies", Managerial Finance, Vol. 41 No. 4, pp. 405-415. https://doi.org/10.1108/MF-07-2014-0182