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Omega 32 (2004) 361 – 371

www.elsevier.com/locate/dsw

National dierences and ERP implementation: issues and

challenges
Chwen Sheua;∗ , Bongsug Chaea , Chen-Lung Yangb
a Department of Management, College of Business Administration, Kansas State University, Manhattan, KS 66506, USA
b Department of Industrial Management, Comprehensive Research Center, Chung-Hua University, Taiwan
Received 5 April 2003; accepted 3 February 2004

Abstract
Multinational ERP implementation introduces another dimension of complexity—national dierences—into the already
complex nature of ERP implementation in the context of global information management. This study reviewed several issues
critical to the success of international ERP implementation. Using both case research and secondary data, we examined
ERP implementation at several multinational companies in the US, Taiwan, China, and Europe. Our primary purpose was
to investigate the dimensions of national dierences and how they aect ERP implementation practices across nations. Our
9ndings suggest that language, culture, politics, government regulations, management style, and labor skills impact various
ERP implementation practices at dierent countries. Understanding such eects will enable companies to be more proactive
in planning project budget and duration.
? 2004 Elsevier Ltd. All rights reserved.

Keywords: ERP implementation; Supply chain management; International operations management; Global information technology and
information management; Case research

1. Introduction a competitive advantage [3]. Take a simple ERP function

An ERP is an information system that manages, through
integration, all aspects of a business including production
planning, purchasing, manufacturing, sales, distribution,
accounting, and customer service [1]. In the past few years,
ERP has become a “must have” system for many 9rms to
improve competitiveness. More than 60% of US companies
have installed or planned to install a packaged ERP system
[2]. The popularity of ERP systems is also evidenced by its
sales exceeding $30 billion in 2002, an increase of 300%
since the late 1990s.
Information managed by ERP systems can play an
active role in international supply chain systems to gain
∗ Corresponding author. Tel.: +1-785-532-4363; fax: +1-785-
532-7024.
E-mail addresses: csheu@ksu.edu (C. Sheu), bchae@ksu.edu
(B. Chae), clyang@chu.edu.tw (C.-L. Yang).
as an example. When a sales person for a multinational
company enters an order from a customer in any location
in the world, the transaction data can permeate the en-
tire supply chain’s (including suppliers’) information sys-
tem. The system updates the inventory of parts and supplies
automatically, changing the production schedules of over-
seas facilities and balance sheets at headquarters as well.
Thus, the employees of dierent departments in various
countries quickly have the information needed to complete
the processing of their jobs. Feedback is fast and eKcient.
From this information the sales person can inform customers
of updated delivery dates, and the managers can receive
accurate inventory status immediately. ERP facilitates the
enterprise-wide integration of information by tying together
suppliers, distributors, and customers without geographical
restrictions. To summarize, an ERP system provides multi-
national organizations with extensive information and coor-
dination of supply chain functions. In this vein, Davenport
[43] notes, “for the 9rst time ever, information will Now

0305-0483/$ - see front matter ? 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2004.02.001
362 C. Sheu et al. / Omega 32 (2004) 361 – 371
seamlessly across diverse business functions, business units
and geographic boundaries”.
While companies worldwide have made substantial in-
vestments in the installation of ERP systems, implementa-
tion has proven to be unexpectedly diKcult, and 9nal bene-
9ts have been uncertain. Several researchers have concluded
that failures are usually the result of business problems in-
stead of technical diKculties [4–6]. The technical aspect of
installing ERP systems is undoubtedly critical, but the man-
agement aspect of ERP systems could have an even greater
impact on the success of the system or use. Davenport [4],
Bowersox et al. [7], and Jacobs and Whybark [8] asserted
that ERP was not only a software package but also “a way
of doing business”. There is no single “best process” to do
business as ERP systems assume. “Mis9ts”, the gap between
the functionality oered by ERP systems and that required
by the adopting company, would arise from country-speci9c
or company-speci9c requirements [9]. These mis9ts can
be related to data format, operating procedures, and out-
put format, which force companies to make package
and/or organizational adaptation during the implementa-
tion process. Studies indicate that no ERP implementation
can succeed without resolving those mis9ts [9,10]. Even
worse, 9rms can lose their source of competitive advantage
by adopting ERP systems that do not 9t their business
strategies [4].
2. Multinational and multi-site ERP implementation
In practice, the magnitude and impact of such mis9ts
will be even stronger when ERP is implemented across
multiple facilities with national dierences. Multisite ERP
implementation costs more, takes longer, and fails more
often due to the emergent technical as well as to organiza-
tional elements (complexity of module integration among
multiple sites, organizational conNict, politics, etc.). Using
the furniture industry as a reference, Jacobs and Why-
bark [8] illustrated how ERP implementation at multiple
facilities could lead to disaster unless the dierences in cor-
porate culture, production methods, and customer demand
could be reconciled. Markus et al. [11] also recognized
the complexities of multisite ERP implementation. When
organizations are geographically dispersed, implementing
ERP systems involves unique technical and managerial
challenges.
If facilities are located in dierent countries, national
dierences such as national culture, language, manage-
ment style, politics, regulations, customs, etc. can aect
“the way of doing business” [12,13]. Previous studies have
already suggested that these national dierences have an
impact on dierent areas of information technology such
as technology transfer between dierent countries [14],
global information infrastructure building [15,16], global
information management [17], the role of technology [18],
global technology planning, adoption and implementation
[19], and others [18,20,21]. In line with these studies, we
contend that no universal ERP system can be implemented
in dierent countries successfully without resolving mis9ts
resulting from national dierences. The business models,
including operating processes underlying most ERP soft-
ware packages, reNect European and US industry practices.
Such operating processes are likely to be dierent in Asian
countries, having evolved in a dierent cultural, economic,
and regulatory environment. As an example, Soh et al. [9]
studied ERP implementation practices in a hospital in Sin-
gapore and cautioned about potential cultural incongruence
in implementing ERP in Asia. Potential mis9ts could arise
from areas including data format, operational procedures
(e.g., billing and collection), and output format. Resolv-
ing such mis9ts has required extra implementation time
and expense.
Recently several major POM and IS journals such as
Communications of the ACM (e.g., [22]), European Jour-
nal of Operational Research (e.g., [23]), The DATA
BASE for Advances in Information Systems (e.g., [24]),
and Information Systems Frontier (e.g., [25]) have dealt
with ERP implementation issues, but none of the arti-
cles from the special issues directly addresses national
dierences and cultural issues in their studies. The lit-
erature has not oered comprehensive studies of dimen-
sions of national dierences and how they aect the ERP
implementation. Without resolving national dierences,
organizations are unlikely to apply ERP successfully in
integrating the international supply chain systems. Under-
standing such eects will enable companies to be more
proactive in planning for multinational ERP implementa-
tion. Speci9cally we are interested in the following research
questions:
1. Which aspect of multinational ERP implementation is
aected by national dierences? How and why is it
aected?
2. What factors of national dierences aect multinational
ERP implementation practices? How and why do they
aect the implementation?
The next section describes the research methodology used
to collect data from six companies that have implemented
ERP in multiple countries including US, Taiwan and China,
Norway, and several European countries.
3. Research design
We used both case study [26,27] and secondary data
research method [28,29] to collect necessary data in this
project. Case research involves the integration of data
gained from organizations of similar nature which have
implemented ERP, while the secondary data analysis uses
literature review on multinational ERP implementation in
Europe.
 C. Sheu et al. / Omega 32 (2004) 361 – 371
A case study is “an empirical inquiry that investigates a
contemporary phenomenon within its real-life context, es-
pecially when the boundaries between the phenomenon and
context are not clearly evident” [27, p. 13]. Case studies are
the preferred strategy when “how” and “why” questions are
being posed, and the researcher has little control over events
[27]. Case study research can be used to achieve various re-
search aims: to provide descriptions of phenomenon [27],
develop theory [26], and test theory [48]. It provides evi-
dence for hypothesis generation and for exploration of areas
for areas where existing knowledge is limited [49].
The case study research method has become the most
widely used qualitative research method in information sys-
tems research [50], and in operations management (OM) re-
search there is an increasing interest and application of the
method among OM researchers [37,47,51–53]. For exam-
ple, Ellram [53] placed cases study on the logistics scienti9c
agenda. Meredith [51] points out the unfamiliarity with the
nature of theory building using case and 9eld study meth-
ods in the OM 9eld. In a recent article, Voss et al. [37]
claim that “case research has consistently been one of the
most powerful research methods in operations management”
(p. 195). Some studies [e.g., 37,52] provide guidelines for
conducting case study research in OM.
Our study employs multiple cases to increase generality
[27]. First, we identi9ed four manufacturing companies in
the United States, Taiwan, and China for the purpose of
on-site interviews, observation, and data collection. Three of
the four facilities interviewed are located in Taiwan, though
their headquarters may be located in another country, and the
fourth plant is in the United States. Three companies have
implemented ERP systems across nations, while another is
in the process of its overseas implementation. We collected
information regarding the “cross-national” ERP implemen-
tation based on archival documentation and interviews with
managers who were involved in overseas ERP implementa-
tion. Three companies are from the high-tech industry, and
the remaining one is from the personal care industry.
In addition to case study method we also performed sec-
ondary data analysis [28,29] based on the literature review
on multinational ERP implementation in Europe. Secondary
data can be de9ned as data collected by others and archived
in some form, not speci9cally for the research question at
hand [28]. It has been contended that secondary data analysis
can oer a number of bene9ts to a researcher [30,44,45,47].
For instance, Hakim [30, p. 16] suggests that relying on
secondary data rather than gathering primary data can ac-
tually bene9t the development of theory. Secondary data
analysis enables researchers to focus more closely about the
theoretical aims and substantive issues of the study rather
than on the practical and methodological problems of col-
lecting new data. According to Larsson [46] potentially
this type of research methodology can bridge the nomoth-
etic–idiographic research gap using prior empirical studies.
Jarvenpaa [44] recognized that secondary data in the IS and
POM 9eld can provide a potential ‘gold mine’ of empirical
363
research. Lewis [47] calls for greater employment of exist-
ing case studies by OM researchers. Existing case studies
oer a potentially eective and eKcient means for compar-
ing complex and disparate operations settings [47]. There
are two general methodological issues for conducting a sec-
ondary analysis of a qualitative data set: (1) the degree to
which the data generated by individual qualitative methods
are amenable to a secondary analysis, and (2) the extent to
which the research purpose of the secondary analysis can
dier from that of the primary study without invalidating
the eort and the 9ndings [45]. To address these two issues
in this study, the ERP cases of two Norwegian 9rms, Sta-
toil [31–33] and Hydro Agri Europe (HAE) [34–36], were
identi9ed and analyzed.
With six ERP cases from dierent countries and con-
tinents we attempt to use the replication logic through
multiple cases [26,27] and consequently improve the gen-
eralization of the 9ndings. Table 1 summarizes company
pro9les consisting of industry, products, 9rm size, time
after ERP implementation, ERP software, facilities loca-
tions, etc. In general, all companies have the following
characteristics:
1. they are all multinational corporations with facilities
located in more than one country;
2. they all have a clear and long-term vision; and
3. they have implemented ERP for 2 years or longer.
For those companies that involved case study method,
a case study protocol was designed and used to guide the
structured interview and data collection. The protocol was
reviewed and pre-tested by a group of researchers and senior
managers. On-site interviews and observations were con-
ducted after the pilot case study was concluded. Multiple
sources of evidence were used to enhance the reliability and
validity of this study [27,37].
4. Data analysis and results
Once data were collected, Miles and Huberman’s [38]
tabular method was also used to guide the data analysis.
Patterns between national dierences and ERP implemen-
tation practices were identi9ed for each individual case. To
ensure quality of research design and our 9ndings, we care-
fully conducted several validity tests indicated as necessary
by previous studies [27,37] (Table 2). In the remaining part
of this section we review the information collected in rela-
tion to the background of the six cases and present the in-
Nuence of various national dierence variables on their ERP
implementation practices.
4.1. Background information
Company NCQ is a notebook manufacturer for seve-
ral large US computer companies such as Dell, Hewlett
364 C. Sheu et al. / Omega 32 (2004) 361 – 371

Table 1
Company pro9le

NCQ CareM NoteF MoniP Statoil Hydro Agri Europe

(a division of
Norsk Hydro)

Industry Computer Consumer Computer Computer Oil and Gas Petrochemicals

(Products) (notebook, personal care, (notebook, PC) (monitor) (fertilizer)
PCB) cosmetics

Annual Sales ∼US$ ∼US$ ∼US$ ∼US$ ∼NOK ∼NOK

4.0 billions 0.6 billions 1.5 billions 2.2 billions 64 billions 30 billions
(approx. 7 (approx. 3.2
billion USD) billion USD)

No. of 10,000 4300 5400 5000 16,000 7000

employees

Facility Taiwana , USAa Taiwana , Netherlandsa , Norwaya , Norwaya ,

locations China (production), USA, China, Taiwan other European eight other
Taiwan Czech Rep. Taiwan countries European countries
(telemarking)

Languages Mandarin English,Mandarin Mandarin, Dutch, Norwegian & English, Norwegian &
used English, Czech Mandarin other languages many other languages

Facilities Taiwan USA Taiwan Taiwan Secondary data Secondary

visited data

Time after 3 years 2 years 4 years 3 years 2 years 3 years

implementation

ERP software SAP J.D. Edwards Magic or SAP SAP SAP SAP
a Corporate headquarters.

Packard, IBM, and Gateway. As an original equipment man-
ufacturer, it faces frequent order changes in volume, deliv-
ery and product speci9cations. The company has an excel-
lent R& D department, able to quickly respond to various
customization orders. With a well-established supplier net-
work, it eectively uses outsourcing and overtime to adapt
to changes of production volume and delivery. As requested
by its US clients, the company implemented ERP system in
Taiwan headquarters in 1999 and extended the implemen-
tation to its facilities in China the following year. A project
team consisting of CEOs, plant managers, and IT managers
was involved in the implementation.
CareM is known for high-quality personal care and cos-
metics products. It has three manufacturing facilities located
in the US and has more than 10 overseas telemarketing of-
9ces. The decision to implement ERP was driven from forces
within the organization. Managers wanted reasonable access
to data to make good decisions, and ERP was believed to be
the tool to achieve this goal. All three manufacturing facili-
ties implemented ERP systems prior to 2000. Several over-
seas telemarketing oKces such as Japan, Taiwan and Korea
are currently implementing the systems.
NoteF manufactures notebook computers. Its product de-
sign and sales functions are located in Taiwan, and key com-
ponents such as CPU and motherboard are manufactured in
China. Depending on customer location, 9nal assembly is
performed in either US or Czech plants in order to speed up
delivery. The company also owns small assembly facilities
in Brazil and Netherlands. Similar to NCQ, NoteF was asked
by its US clients to implement ERP systems in 1998. Dier-
ent ERP o shelf software (SAP, Oracle, and Magic) were
used in three dierent facilities (US, Czech, and China).
Each facility formed its own project team to implement the
ERP system, while the headquarters in Taiwan coordinated
the eort between facilities.
MoniP is one of the largest monitor manufacturers in the
world. Its headquarters is located in The Netherlands, while
the facilities in Taiwan are responsible for R& D and for
coordinating the purchasing and production in nearby Asian
countries. MoniP initiated ERP in 1999 with the intention
of improving its internal integration and reducing manufac-
turing cycle time. The implementation was independently
performed in Taiwan facilities with minimum coordination
with The Netherlands headquarters.
 C. Sheu et al. / Omega 32 (2004) 361 – 371 365

Table 2
Research validity tests

Test Approach/tactic used

1. Construct validity
Develop suKcient set of
operational measures to reduce
subjective judgment
(a) Reviewed multiple sources of evidence so that the 9ndings
were based on the convergence of both qualitative and
quantitative information
(b) Established a chain of evidence with suKcient citations to
relevant portions of the case study database
(c) Asked participants and informants to review draft case study
reports

2. External validity Applied multiple-case replication. Each company was selected

Ensure generalization of and studied so that it either predicted similar results or
the 9ndings produced contrasting results

3. Reliability (a) Used case study protocol to document the procedures

Demonstrate that repetition (b) Created a case study database including case study notes,
of the data collection documents and narratives for future reviews and analysis
procedures will result in
the same conclusions

All tests were conducted based on Yin’s (1994) guidelines.

Statoil is an integrated oil and gas company with busi- National Differences
Multi-National ERP
Implementation Practices
ness operations in 25 countries. The company is the largest
producer in Norway and is the second largest exporter of Socio-Psychological Group

oil worldwide. The company launched the SAP ERP project ERP Adaptation
Culture&Language
in 1996 and 9nished in 2001. The goal was to develop a
comprehensive, versatile, and well-aligned global IT infras-
tructure through ERP. The project team consisted of over Management Style Centralization of
Implementation Decisions
300 people from multibusiness units on the Norwegian con-
tinental shelf. The team was delegated the responsibility by Economic/Political Group

corporate management for the success of the project. Information Sharing

HAE [34–36] is the largest division in a diversi9ed Government/Corporate
Politics
Norwegian company Norsk Hydro. In the 1990s it was
decided that more centralized control and governance were Regulations/Legal
Implementation Approach
required, and the development of a global corporate infor- Requirements

mation infrastructure was needed. As part of this strategic

Demographic Group
IT initiation, Hydro has implemented SAP applications at
multinational business units, representing nine European Internal Technical Project Duration

countries. The project started in early 1995 at 29 locations,

Personnel Resource/Labor
Skills

representing nine dierent countries and was planned to be

9nished by mid-1999. The ERP project was managed by a Geography/Time Zone Training Program
(Content & Time)
multicultural group of project managers and team leaders,
representing seven dierent nationalities. The project team
visited several sites and produced a set of best practice Fig. 1. National dierences and multinational ERP implementation
processes. practices.

4.2. National di7erences and implementation practices
Six categories (culture and language, government/
corporate politics, management style, government regula-
tions, time zone, and labor skills) of national dierences
emerged from the data. Those six categories are presented
with the framework developed by Ein-Dor et al. [39]. The
framework contains a list of national cultural variables
aecting global information technology. Ein-Dor et al. [39]
suggest that these variables are diKcult to change in global
IT implementation. Those variables can be classi9ed into
three main groups, socio-psychological, economic and de-
mographic. Fig. 1 assigns the six categories discovered in
our study into the three groups of national cultural variables.
366 C. Sheu et al. / Omega 32 (2004) 361 – 371

Table 3
Summary of major 9ndings

Category of national Impacts on implementation practices

dierences

1. Culture/ • Technical problems in entering data

language • Cultural resistance
• Communication barriers between facilities due to
dierent languages
• Localized implementations
• Alteration of training programs in dierent site

2. Management • Dierences in priority setting

style • Implementation style: either “big bang” or “piecemeal”
approach to the implementation
• Project duration

3. Government/ • Trans-border information sharing and money transaction

corporate politics • Problems in information sharing between facilities;
information hiding
• Political conNicts between facilities; mistrust between
facilities (host and subsidiaries)

4. Regulations/legal • DiKculty in developing standardization or

requirements universalization due to dierence in forms, tax policy,
procedures and others
• Substantial customization of ERP packages

5. Internal technical • DiKculty in exercising decentralized ERP

personnel resource/ implementation due to lack of local personnel resources
labour skills • Alteration of training programs in dierent sites
• Complexity into training and use support

6. Geography/time • Complexity and technical problems in ERP adaptation

zone due to dierent currencies and exchange rates

Additionally, the speci9c relationships between the six cat-
egories and various implementation practice items are dis-
played. The next section discusses the major 9ndings of such
relationships. Table 3 summarizes the inNuences of the six
categories of national dierences on ERP implementation
practices.
5. Major "ndings
5.1. Socio-psychological factors
The socio-psychological group includes several variables
such as values, beliefs, symbols, tradition, life style, and
attitudes toward technological progress, to name a few. Two
categories from our study belong to this group of variables.
5.1.1. Culture and language (in8uence adaptation,
centralization, and training)
We found that language dierence aects the implementa-
tion practices in both technical and managerial aspects. First,
some ERP packages only support one single bite language
(e.g., English) and one double bite language (e.g., Japanese
or Mandarin). Therefore, if English is in the ERP system,
then only one double bite language can be used at a time.
This technical limitation forced the data entry into the ERP
system to use primarily English, so all overseas facilities
must know English based on the system. The use of English
increased employee resistance to ERP implementation.
While technical problems were relatively easier to re-
solve, communication barriers resulting from language dif-
ferences were far more diKcult to overcome. In this study,
since the facilities that NCQ has are located in either Tai-
wan or China, there is little diKculty communicating with
facilities in China because language and culture are simi-
lar. Therefore, it 11 was easy for NCQ to centralize its ERP
implementation decisions without getting undue resistance
from overseas facilities. In contrast, since the headquarters
of NoteF (located in Taiwan) and MoniP (located in the
Netherlands) do not speak the same languages as their over-
seas facilities, communication becomes very challenging.
As a result, many implementation decisions, including the
selection of ERP software and other implementation prac-
tices, were largely decentralized to local facilities. Each site
 C. Sheu et al. / Omega 32 (2004) 361 – 371
purchased, installed and maintained its own ERP software
without consulting the other.
Language dierence also has a compounding eect with
internal personnel resources on a training program. In the
HAE case, all user documentation and training material
delivered by the project was prepared in English only.
Local instructors were educated to train employees from
their own countries, and local resources had to be devel-
oped. The project team had to make sure that the instructors
had the country-speci9c knowledge necessary to tailor the
training courses to local needs, using local master data and
site-speci9c SAP structures.
The diKculties of centralizing ERP implementation were
due not only to language and communication barriers but
also to cultural dierence. Operating processes in Taiwanese
organizations are likely to be dierent from their US facil-
ities, each having evolved in a dierent cultural and reg-
ulatory environment. As expected, resistance to adopt the
same operating processes was very high at overseas facil-
ities. For instance, the US facilities of NoteF refused to
adopt the same ERP software packages and con9gurations
the headquarters requested, claiming that this software was
inconsistent with its current operating processes. Several US
employees threatened to resign if they were forced to adjust
their culture to the business practices of NoteF.
The inNuence of dierent culture on ERP implementation
was also found signi9cant in Europe. In the case of Norsk
Hydro, for example, initially the company and the project
team sought a high degree of centrally de9ned, standardized
solutions. Neither decentralization nor locally adopted solu-
tion would be tolerated. It turned out that all business units
at dierent countries had their own way of doing things be-
cause of dierent business processes and local requirements
generated by national and local dierences. Thus, the ini-
tial plan had to be altered by allowing localized solutions
and decentralized ERP implementations. HAE faced similar
problems due to language dierences and cultural conNicts
among business units.
5.1.2. Management style (in8uences implementation
approach and project duration)
We refer to management style as the attitude toward set-
ting a priority for implementing an ERP system. This style
directly aects the approach and duration of implementation.
The three Taiwanese 9rms (NCQ, MoniP, and NoteF) took
approximately 8 months to complete the implementation in
Taiwanese and Chinese facilities. The length was signi9-
cantly shorter than that of CareM, a US 9rm that took almost
23 months, and the two European companies that took over
3 years. Mabert et al. [2] found that most US 9rms took more
than 13 months to implement their ERP systems. Several
possible factors contribute to shorter implementation time in
Taiwan and China. First, managers in these countries were
highly pressured by severe international competition, and
they were extremely committed to implementing an ERP
367
system to increase their competitiveness in the global mar-
ketplace. The pressure also came from their US customers
such as Dell, Compaq, IBM, Hewlett-Packard, etc.
Other than the pressure factor, management personality
is another possible factor aecting the implementation du-
ration. Yen et al. [40] asserted that managers in Taiwan
have the personality type that takes extra care with techni-
cal details and are more determined to complete short-term
projects. In NCQ, the ERP project was lead by the CEOs,
and all project members were completely removed from their
primary responsibilities in order to dedicate themselves to
the project. Additionally, all three Taiwanese 9rms took a
“big bang” approach and implemented all ERP modules at
one time. In contrast, CareM, like many US 9rms, took the
“phase by module” approach in its implementation [6]. Its
management adopted the attitude of “playing by the rules”,
“following the manual” and made no compromise with all
required preparation during the implementation. While the
eectiveness of these two management styles remains to be
studied, 9rms in Taiwan apparently completed the imple-
mentation in less time.
The dierence in implementation approach can also be
explained by Hofstede’s [12] study in cultural dimensions.
Hofstede characterized China and Taiwan as low uncertainty
avoidance and high collectivism and US as medium uncer-
tainty and high individualism. These national characteristics
imply a more aggressive approach to the ERP implementa-
tion in China and Taiwan, as observed in this study.
In both European cases, management style was more like
“piecemeal” than “big bang”. Thus, both projects took much
longer than that of three Taiwanese 9rms. This style was the
compounding eect of several factors such as the inNuential
role of unions in Europe [31], the size of the projects in both
cases and local resistance.
5.2. Economic/political factors
In Ein-Dor et al.’s [39] framework the economic group in-
cludes variables such as scope of internal trade, encourage-
ment of economic ties and balance of trade, to name a few.
We modify this group by combining political factors into the
economic group and identify two major categories below:
government/corporate politics and regulatory requirements.
5.2.1. Government/corporate politics (in8uence
adaptation and information sharing)
We discovered a unique variable aecting the ERP im-
plementation involving both Taiwan and China, namely
their current diplomatic relationship. These two govern-
ments have imposed strict regulations on transporting
goods, exchanging information, and transferring money be-
tween each other. Without formal diplomatic relationships,
many business operations between these two countries are
currently conducted in a way that packaged ERP software
does not permit. Consequently, companies are forced to
368 C. Sheu et al. / Omega 32 (2004) 361 – 371
make substantial eorts to modify ERP software according
to their use.
This 9nding is consistent with Palvia et al.’s study [20].
Palvia et al. pointed out that political/economic/regulatory
factors directly or indirectly inNuence dierent IT-related ar-
eas such as transborder data Now restrictions and trade and
customs regulations. These political forces are rather diK-
cult to overcome. Government politics may be inNuential in
global ERP implementations including countries in dierent
economic systems (e.g., socialism and capitalism) and/or
political and governance philosophy (e.g., dictatorship and
democracy).
Another example of how the political factor aects ERP
implementation was found at the corporate level. Political
concerns at this level seemed to attribute to current low in-
formation sharing between facilities in all companies. All
companies expressed concerns over sharing too much in-
formation, fearing that individual facilities would compare
and argue for getting better or equal treatment (in materi-
als, customer orders or any form of resource support) than
other facilities. If so, the corporate headquarters would have
more diKculties allocating resources to the whole organiza-
tion considering the global bene9ts. As a result, companies
have purposely limited information sharing between facili-
ties, resulting in diminished bene9ts of ERP systems.
5.2.2. Government regulations/legal requirements
(in8uence adaptation)
The process of importing/exporting materials and goods
diers from country to country. Countries that have mu-
tual tari preferential treatments would have a dierent set
of custom forms, import/export tax rates, and custom clear-
ing procedures than those countries that do not. No ERP
package handles these variations, and the resolution of such
“mis9ts” requires substantial modi9cation in ERP packages.
Both NCQ and NoteF had to rewrite the ERP software source
code to ensure a 9t with their businesses, an eort unfortu-
nately never anticipated.
We also found that tax policies dramatically increased the
complexities of multinational ERP implementation due to
more complicated operating procedures. Dierent tax rates
produced extra work in entering sales orders from dierent
countries into the ERP system. Furthermore, tax rate dier-
entials encouraged companies to develop complex business
procedures for saving tax expenses. For instance, NoteF in-
vested in a company located in a country (e.g., British Vir-
gin Islands) where the tax rate is lower than that of Taiwan.
NoteF resold its sales orders to this company at a price low
enough to avoid paying income taxes. The invested com-
pany then found a country with low production cost (e.g.,
China), which resulted in high pro9t but low income taxes.
This tax-saving approach created unique operating proce-
dures and required complicated accounting procedures to
deal with transactions between the three regions. A substan-
tial amount of adaptation was made for NCQ to customize
ERP packages to its use.
Dierent legal requirements among dierent countries
were a signi9cant challenge for European cases. In the HAE
case, a seemingly simple factor like the diversity in the local
letter formats was an important issue, since the project team
had to ensure that the common and legal standards for each
of the countries were met. Dierences in legal documents,
such as the need for continuous number ranges for invoices
belonging to the same company in Italy and Spain, also led
to exceptions in how the system could be implemented for
the dierent countries.
5.3. Demographic factors
In Ein-Dor et al.’s [39] framework, the demographic
group includes variables such as geography, internal tech-
nical personnel resources, and average educational level. In
this group, we identify two major categories: internal tech-
nical personnel resources/labor skills and geography/time
zone.
5.3.1. Internal technical personnel resources/labor skills
(in8uence training and centralization)
A typical ERP project requires much internal technical
personnel resources for the project completion. Lack of such
resources often emerges as an important issue. Nonetheless,
levels of labor skill vary from country to country, which
could disrupt ERP implementation in dierent countries.
This disruption was quite noticeable in two Asian coun-
tries. For example, most employees in Taiwan have at least
a technical college degree, while the majority of workers in
China are high school graduates. When NCQ implemented
an ERP system in its Chinese facilities, it discovered that the
same training program took twice as much time to complete
as at its headquarters in Taiwan. The lack of IT knowledge
and skills in Chinese facilities forced NCQ to centralize its
implementation decisions. The headquarters had to send a
project team to the Chinese facilities to help during the en-
tire implementation period.
In the HAE case, the company concluded that it did not
have the resources to take responsibility for the required
data processing and operation services. Several tasks such as
the required network services, site management and support
were outsourced to a company in UK. The company orga-
nized its business in independent national subsidiaries and
was not able to carry out the required coordination across
national borders. In addition, some problems were related
to the fact that users had to call the help desk in UK when
they needed support. The threshold for doing this was quite
high for large user groups not speaking English.
5.3.2. Geography/time zone (in8uence adaptation)
Depending on speci9c geographical locations, there can
be as many as 14 h time dierence between two nations
in this study. This time dierence could aect international
trade operations from the aspect of exchange rates for cur-
rency. Even though many of the European countries have
 C. Sheu et al. / Omega 32 (2004) 361 – 371
joined the European Union, some (such as Denmark) do
not use the Euro dollar. Denmark’s reluctance requires ex-
tra consideration for exchange rates. This example is am-
pli9ed when considering involvement with the rest of the
world. Anticipated rates used to calculate transactions can
be greatly dierent than expected once the “next day” rate
is provided for the transaction.
6. Suggestions and conclusions
Our 9ndings con9rm that national dierences aect multi-
national ERP implementation practices. Six speci9c cate-
gories of national dierences that can aect the implemen-
tation were identi9ed and presented with Ein-Dor et al.’s
framework [39]. National dierences aect multinational
ERP implementation with regard to the type and amount of
ERP adaptation, centralization of implementation decisions,
information sharing, project duration, project approach, and
training program. The relationships shown in Fig. 1 are im-
portant to both managers and researchers. From a manage-
ment point of view, there is a need to recognize each unique
national context when adopting an ERP system in dierent
countries. Early identi9cation of the relationship between
ERP implementation and relevant national dierence vari-
ables provides a more accurate basis to budget for contin-
gency implementation funds and allows adequate planning
for related implementation practices. Realizing the potential
eects of national dierences can also be carefully thought
through and is likely to be less reactive.
Our results suggest that management should consult and
negotiate with ERP software vendors prior to implementa-
tion to obtain additional help or to reduce expenses. NoteF
clearly learned an expensive lesson by having a 40% over-
run on its original budget to complete the implementation.
CareM did work with its vendor in the early stages of imple-
mentation to reduce cost and risk in its US companies. The
company, however, feels it has learned enough to implement
ERP in other countries without the need for further assis-
tance from the ERP vendor. Based on our research 9ndings,
this could become a costly mistake. Failing to recognize the
impact of national dierences on multinational ERP imple-
mentation was proven costly by the other 9ve companies.
Another suggestion is that of the organization of project
teams. We suggest that global ERP implementation projects
should be managed by a multi-cultural group of project man-
agers and team leaders. It is important to maintain this di-
versity within the project team. Cases in this study show that
communication between dierent nationalities is restricted
due to national dierences such as languages, cultural con-
Nicts, and politics. Lack of communication between host
and subsidiaries often results in mistrust, project delay and
over budget. For example, in the HAE case [34] the two
countries—Spain and Italy—were not represented among
the project team leaders and managers. As the result, these
two countries had a greater share of change requests and
369
errors reported than their size and business activities. This
information is in accordance with a general impression in
the project that people from local units would rather con-
tact people from their own country in the central team than
the correct person from an organizational point of view. In-
formal communication among nationalities, critical for the
success of ERP projects, was limited, and people tended to
use formal documentation channels when dealing with peo-
ple of other nationalities.
Both European cases suggest that ERP implementation
in Europe is a very challenging task due to national dier-
ences between countries in Europe. Speci9cally, ERP im-
plementation in Europe is more complex because compa-
nies have diverse national cultures that inNuence corporate
culture, thereby making the implementation of multinational
ERP solutions diKcult. This study supports previous evi-
dence that ERP implementation in the US has been more
eective that in Europe because of the more complex Euro-
pean corporate and national cultures [41,42].
Finally, some earlier studies (e.g., [54,55]) suggest geo-
graphical dispersion of manufacturing facilities and partners
as the source of international OM problems including culture
and language dierences, dierences in local policies and
regulations and lack of communication. This study shows
that while Taiwan and China have the geographical prox-
imity, manufacturing facilities in two countries exhibit very
dierent ERP implementation patterns. In other words, geo-
graphical distance may not always account for dierences
in various cultural dimensions. Further studies are necessary
to investigate this issue.
6.1. Future research and limitations
For future multinational ERP research we suggest revis-
ing and testing the relationships displayed in Fig. 1. This
study examined only four multinational companies from
two industries, high tech and personal care products, and
two secondary cases from two industries, oil and gas and
petrochemicals (fertilizers). Although the eects of national
dierences on ERP implementation are clearly con9rmed,
other countries and industries need to be examined in the
future to revise the model in Fig. 1. In line with our sug-
gestion for an international team for a multinational ERP
project, another natural extension of this study is investi-
gating what and how strategies can be applied to resolve
mis9ts in multinational ERP environment. Knowing the
eectiveness of various resolution strategies in dealing with
national dierences should help multinationals manage their
international supply chain systems more eectively.
A factor that does not fall into the theme of national dier-
ences but could also aect global ERP implementation is a
9rm’s competitive environment. Shore and Venkatachalam
[14] suggested that a 9rm’s global business strategy and or-
ganizational structures are the result of its competitive envi-
ronment. They also argued that 9rms in a highly competitive
market would have little room to accommodate local and
370 C. Sheu et al. / Omega 32 (2004) 361 – 371
national culture. There is a possible relationship between
competitive environment, business strategy, and global ERP
implementation. For example, 9rms in a highly competitive
market are likely to and able to pursue more “centralized”
ERP implementation, and such radical approaches would be
more acceptable to subsidiaries and users than those in a less
competitive market. Future research should conduct more
in-depth analysis of the eects of competitive environment
and business strategy.
To ensure the quality of this case study, we carefully fol-
lowed previous prescriptions in case study research. For ex-
ample, we selected theoretically useful cases, used multi-
ple investigators and respondents, conducted reliability and
validity tests, collected multiple sources of evidence and
systematically searched for cross-case patterns. However,
in order to generalize the 9ndings, more case data need to
be collected. Finally, due to logistical issues in the compa-
nies we studied, we did not interview their overseas loca-
tions. Even though we collected necessary information and
interviewed those managers who participated in their over-
seas ERP implementation projects, there still may be pos-
sible bias. Regardless of these potential shortcomings, this
exploratory study raises several issues that should be con-
sidered in future ERP, global information management and
technology, and supply chain management research. At the
same time, along with others [3] this study has responded
to Gallupe and Tan’s call to investigate the impact of IT on
the global supply chain [18].
Acknowledgements
The authors wish to thank Mr. C.T. Yang for his valuable
suggestions and assistance in preparing this paper.
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