Start Date
11-12-2016 12:00 AM
Description
We examine how information risk affects firms’ implementation of enterprise systems (ES). We differentiate between firms’ implementation of accounting enterprise systems (AES) that are directly associated with the integration and processing of financial information and their implementation of complementary enterprise systems (CES) that provide operational activity information to AES. We investigate the relationship between information risk and the prioritization of AES and CES and consider two important contextual characteristics: firm’s internal controls, and environmental uncertainty. We test our hypothesis using a five year panel data of 883 firms. We find that with an increase in information risk, firms prioritize implementation of AES when faced with weak internal controls, and prioritize implementation of CES in complex and dynamic environments. The results expand our understanding of how firms’ IS resource allocation is influenced by information risk and how internal controls and external environments affect resource allocation to ES under different conditions.
Recommended Citation
Sambhara, Chaitanya; Rai, Arun; and Xu, Sean Xin, "Enterprise System Implementations: Role of Information Risk, Internal Controls and Environmental Uncertainty" (2016). ICIS 2016 Proceedings. 2.
https://aisel.aisnet.org/icis2016/ITImplementation/Presentations/2
Enterprise System Implementations: Role of Information Risk, Internal Controls and Environmental Uncertainty
We examine how information risk affects firms’ implementation of enterprise systems (ES). We differentiate between firms’ implementation of accounting enterprise systems (AES) that are directly associated with the integration and processing of financial information and their implementation of complementary enterprise systems (CES) that provide operational activity information to AES. We investigate the relationship between information risk and the prioritization of AES and CES and consider two important contextual characteristics: firm’s internal controls, and environmental uncertainty. We test our hypothesis using a five year panel data of 883 firms. We find that with an increase in information risk, firms prioritize implementation of AES when faced with weak internal controls, and prioritize implementation of CES in complex and dynamic environments. The results expand our understanding of how firms’ IS resource allocation is influenced by information risk and how internal controls and external environments affect resource allocation to ES under different conditions.