The efficient use of enterprise information for strategic advantage: A data envelopment analysis

A majority of manufacturers make use of some form of enterprise systems (ES), yet on average, the financial impact of ES adoption is essentially neutral. We propose that in an ES environment of easy information access, competitive success depends, in part, on the policies regulating enterprise information use. To explore this proposition, we examine the efficient use of different types of enterprise information in the realization of strategic performance. Efficient firms will devote fewer resources to information use to achieve the same strategic performance as less efficient firms.We employ data envelopment analysis (DEA) using data collected from Enterprise Resource Planning (ERP) system adopters at two different points in time in order to calculate a measure of efficient information use. This information efficiency metric is validated as a strong predictor of Compustat profitability. Additional analyses suggest that the most efficient users of information tend to emphasize information related to operational excellence. Regardless of information emphasis, however, efficient manufacturers – in contrast to their less efficient counterparts – were more likely to exhibit a better match between the most emphasized type of information and the corresponding dimension of strategic performance.