An agency theory model of ERP implementation

Abstract

Enterprise resource planning (ERP) systems are becoming rapidly indispensable in order for large and medium sized organizations to run their operations. Therefore, management needs to know the factors that drive successful ERP implementation, a product of the continuous interaction between the implementation consultants and client firms. Agency theory has been successfully used by different researchers to explain relationships between two parties seeking a common outcome. This paper develops a model of testable propositions for applying agency theory to study the relationship between implementation consultants and client organizations deploying the ERP systems, and to consequently evaluate how the relationship affects the implementation success.