This document discusses national differences and their impact on implementing enterprise resource planning (ERP) systems across multiple countries. It reviews issues critical to the success of international ERP implementations based on case studies of multinational companies. The findings suggest that factors like language, culture, politics, regulations, management styles, and labor skills affect ERP implementation practices in different countries. Understanding how national differences influence various implementation aspects can help companies better plan budgets and schedules for multinational ERP projects.

1. Available online at www.sciencedirect.com
Omega 32 (2004) 361 – 371
www.elsevier.com/locate/dsw
National di erences 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 di erences—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 di erences and how they a ect ERP implementation practices across nations. Our
ÿndings suggest that language, culture, politics, government regulations, management style, and labor skills impact various
ERP implementation practices at di erent countries. Understanding such e ects 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
as an example. When a sales person for a multinational
An ERP is an information system that manages, through company enters an order from a customer in any location
integration, all aspects of a business including production in the world, the transaction data can permeate the en-
planning, purchasing, manufacturing, sales, distribution, tire supply chain’s (including suppliers’) information sys-
accounting, and customer service [1]. In the past few years, tem. The system updates the inventory of parts and supplies
ERP has become a “must have” system for many ÿrms to automatically, changing the production schedules of over-
improve competitiveness. More than 60% of US companies seas facilities and balance sheets at headquarters as well.
have installed or planned to install a packaged ERP system Thus, the employees of di erent departments in various
[2]. The popularity of ERP systems is also evidenced by its countries quickly have the information needed to complete
sales exceeding $30 billion in 2002, an increase of 300% the processing of their jobs. Feedback is fast and e cient.
since the late 1990s. From this information the sales person can inform customers
Information managed by ERP systems can play an of updated delivery dates, and the managers can receive
active role in international supply chain systems to gain accurate inventory status immediately. ERP facilitates the
enterprise-wide integration of information by tying together
suppliers, distributors, and customers without geographical
∗ Corresponding author. Tel.: +1-785-532-4363; fax: +1-785- restrictions. To summarize, an ERP system provides multi-
532-7024. national organizations with extensive information and coor-
E-mail addresses: csheu@ksu.edu (C. Sheu), bchae@ksu.edu dination of supply chain functions. In this vein, Davenport
(B. Chae), clyang@chu.edu.tw (C.-L. Yang). [43] notes, “for the ÿrst time ever, information will ow
0305-0483/$ - see front matter ? 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2004.02.001

2. 362 C. Sheu et al. / Omega 32 (2004) 361 – 371
seamlessly across diverse business functions, business units [19], and others [18,20,21]. In line with these studies, we
and geographic boundaries”. contend that no universal ERP system can be implemented
While companies worldwide have made substantial in- in di erent countries successfully without resolving misÿts
vestments in the installation of ERP systems, implementa- resulting from national di erences. The business models,
tion has proven to be unexpectedly di cult, and ÿnal bene- including operating processes underlying most ERP soft-
ÿts have been uncertain. Several researchers have concluded ware packages, re ect European and US industry practices.
that failures are usually the result of business problems in- Such operating processes are likely to be di erent in Asian
stead of technical di culties [4–6]. The technical aspect of countries, having evolved in a di erent cultural, economic,
installing ERP systems is undoubtedly critical, but the man- and regulatory environment. As an example, Soh et al. [9]
agement aspect of ERP systems could have an even greater studied ERP implementation practices in a hospital in Sin-
impact on the success of the system or use. Davenport [4], gapore and cautioned about potential cultural incongruence
Bowersox et al. [7], and Jacobs and Whybark [8] asserted in implementing ERP in Asia. Potential misÿts could arise
that ERP was not only a software package but also “a way from areas including data format, operational procedures
of doing business”. There is no single “best process” to do (e.g., billing and collection), and output format. Resolv-
business as ERP systems assume. “Misÿts”, the gap between ing such misÿts has required extra implementation time
the functionality o ered by ERP systems and that required and expense.
by the adopting company, would arise from country-speciÿc Recently several major POM and IS journals such as
or company-speciÿc requirements [9]. These misÿts can Communications of the ACM (e.g., [22]), European Jour-
be related to data format, operating procedures, and out- nal of Operational Research (e.g., [23]), The DATA
put format, which force companies to make package BASE for Advances in Information Systems (e.g., [24]),
and/or organizational adaptation during the implementa- and Information Systems Frontier (e.g., [25]) have dealt
tion process. Studies indicate that no ERP implementation with ERP implementation issues, but none of the arti-
can succeed without resolving those misÿts [9,10]. Even cles from the special issues directly addresses national
worse, ÿrms can lose their source of competitive advantage di erences and cultural issues in their studies. The lit-
by adopting ERP systems that do not ÿt their business erature has not o ered comprehensive studies of dimen-
strategies [4]. sions of national di erences and how they a ect the ERP
implementation. Without resolving national di erences,
organizations are unlikely to apply ERP successfully in
2. Multinational and multi-site ERP implementation integrating the international supply chain systems. Under-
standing such e ects will enable companies to be more
In practice, the magnitude and impact of such misÿts proactive in planning for multinational ERP implementa-
will be even stronger when ERP is implemented across tion. Speciÿcally we are interested in the following research
multiple facilities with national di erences. Multisite ERP questions:
implementation costs more, takes longer, and fails more
often due to the emergent technical as well as to organiza- 1. Which aspect of multinational ERP implementation is
tional elements (complexity of module integration among a ected by national di erences? How and why is it
multiple sites, organizational con ict, politics, etc.). Using a ected?
the furniture industry as a reference, Jacobs and Why- 2. What factors of national di erences a ect multinational
bark [8] illustrated how ERP implementation at multiple ERP implementation practices? How and why do they
facilities could lead to disaster unless the di erences in cor- a ect the implementation?
porate culture, production methods, and customer demand
could be reconciled. Markus et al. [11] also recognized The next section describes the research methodology used
the complexities of multisite ERP implementation. When to collect data from six companies that have implemented
organizations are geographically dispersed, implementing ERP in multiple countries including US, Taiwan and China,
ERP systems involves unique technical and managerial Norway, and several European countries.
challenges.
If facilities are located in di erent countries, national
di erences such as national culture, language, manage- 3. Research design
ment style, politics, regulations, customs, etc. can a ect
“the way of doing business” [12,13]. Previous studies have We used both case study [26,27] and secondary data
already suggested that these national di erences have an research method [28,29] to collect necessary data in this
impact on di erent areas of information technology such project. Case research involves the integration of data
as technology transfer between di erent countries [14], gained from organizations of similar nature which have
global information infrastructure building [15,16], global implemented ERP, while the secondary data analysis uses
information management [17], the role of technology [18], literature review on multinational ERP implementation in
global technology planning, adoption and implementation Europe.

3. C. Sheu et al. / Omega 32 (2004) 361 – 371 363
A case study is “an empirical inquiry that investigates a research. Lewis [47] calls for greater employment of exist-
contemporary phenomenon within its real-life context, es- ing case studies by OM researchers. Existing case studies
pecially when the boundaries between the phenomenon and o er a potentially e ective and e cient means for compar-
context are not clearly evident” [27, p. 13]. Case studies are ing complex and disparate operations settings [47]. There
the preferred strategy when “how” and “why” questions are are two general methodological issues for conducting a sec-
being posed, and the researcher has little control over events ondary analysis of a qualitative data set: (1) the degree to
[27]. Case study research can be used to achieve various re- which the data generated by individual qualitative methods
search aims: to provide descriptions of phenomenon [27], are amenable to a secondary analysis, and (2) the extent to
develop theory [26], and test theory [48]. It provides evi- which the research purpose of the secondary analysis can
dence for hypothesis generation and for exploration of areas di er from that of the primary study without invalidating
for areas where existing knowledge is limited [49]. the e ort and the ÿndings [45]. To address these two issues
The case study research method has become the most in this study, the ERP cases of two Norwegian ÿrms, Sta-
widely used qualitative research method in information sys- toil [31–33] and Hydro Agri Europe (HAE) [34–36], were
tems research [50], and in operations management (OM) re- identiÿed and analyzed.
search there is an increasing interest and application of the With six ERP cases from di erent countries and con-
method among OM researchers [37,47,51–53]. For exam- tinents we attempt to use the replication logic through
ple, Ellram [53] placed cases study on the logistics scientiÿc multiple cases [26,27] and consequently improve the gen-
agenda. Meredith [51] points out the unfamiliarity with the eralization of the ÿndings. Table 1 summarizes company
nature of theory building using case and ÿeld study meth- proÿles consisting of industry, products, ÿrm size, time
ods in the OM ÿeld. In a recent article, Voss et al. [37] after ERP implementation, ERP software, facilities loca-
claim that “case research has consistently been one of the tions, etc. In general, all companies have the following
most powerful research methods in operations management” characteristics:
(p. 195). Some studies [e.g., 37,52] provide guidelines for
conducting case study research in OM. 1. they are all multinational corporations with facilities
Our study employs multiple cases to increase generality located in more than one country;
[27]. First, we identiÿed four manufacturing companies in 2. they all have a clear and long-term vision; and
the United States, Taiwan, and China for the purpose of 3. they have implemented ERP for 2 years or longer.
on-site interviews, observation, and data collection. Three of
the four facilities interviewed are located in Taiwan, though For those companies that involved case study method,
their headquarters may be located in another country, and the a case study protocol was designed and used to guide the
fourth plant is in the United States. Three companies have structured interview and data collection. The protocol was
implemented ERP systems across nations, while another is reviewed and pre-tested by a group of researchers and senior
in the process of its overseas implementation. We collected managers. On-site interviews and observations were con-
information regarding the “cross-national” ERP implemen- ducted after the pilot case study was concluded. Multiple
tation based on archival documentation and interviews with sources of evidence were used to enhance the reliability and
managers who were involved in overseas ERP implementa- validity of this study [27,37].
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- 4. Data analysis and results
ondary data analysis [28,29] based on the literature review
on multinational ERP implementation in Europe. Secondary Once data were collected, Miles and Huberman’s [38]
data can be deÿned as data collected by others and archived tabular method was also used to guide the data analysis.
in some form, not speciÿcally for the research question at Patterns between national di erences and ERP implemen-
hand [28]. It has been contended that secondary data analysis tation practices were identiÿed for each individual case. To
can o er a number of beneÿts to a researcher [30,44,45,47]. ensure quality of research design and our ÿndings, we care-
For instance, Hakim [30, p. 16] suggests that relying on fully conducted several validity tests indicated as necessary
secondary data rather than gathering primary data can ac- by previous studies [27,37] (Table 2). In the remaining part
tually beneÿt the development of theory. Secondary data of this section we review the information collected in rela-
analysis enables researchers to focus more closely about the tion to the background of the six cases and present the in-
theoretical aims and substantive issues of the study rather uence of various national di erence variables on their ERP
than on the practical and methodological problems of col- implementation practices.
lecting new data. According to Larsson [46] potentially
this type of research methodology can bridge the nomoth- 4.1. Background information
etic–idiographic research gap using prior empirical studies.
Jarvenpaa [44] recognized that secondary data in the IS and Company NCQ is a notebook manufacturer for seve-
POM ÿeld can provide a potential ‘gold mine’ of empirical ral large US computer companies such as Dell, Hewlett

4. 364 C. Sheu et al. / Omega 32 (2004) 361 – 371
Table 1
Company proÿle
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- NoteF manufactures notebook computers. Its product de-
ufacturer, it faces frequent order changes in volume, deliv- sign and sales functions are located in Taiwan, and key com-
ery and product speciÿcations. The company has an excel- ponents such as CPU and motherboard are manufactured in
lent R& D department, able to quickly respond to various China. Depending on customer location, ÿnal assembly is
customization orders. With a well-established supplier net- performed in either US or Czech plants in order to speed up
work, it e ectively uses outsourcing and overtime to adapt delivery. The company also owns small assembly facilities
to changes of production volume and delivery. As requested in Brazil and Netherlands. Similar to NCQ, NoteF was asked
by its US clients, the company implemented ERP system in by its US clients to implement ERP systems in 1998. Di er-
Taiwan headquarters in 1999 and extended the implemen- ent ERP o shelf software (SAP, Oracle, and Magic) were
tation to its facilities in China the following year. A project used in three di erent facilities (US, Czech, and China).
team consisting of CEOs, plant managers, and IT managers Each facility formed its own project team to implement the
was involved in the implementation. ERP system, while the headquarters in Taiwan coordinated
CareM is known for high-quality personal care and cos- the e ort between facilities.
metics products. It has three manufacturing facilities located MoniP is one of the largest monitor manufacturers in the
in the US and has more than 10 overseas telemarketing of- world. Its headquarters is located in The Netherlands, while
ÿces. The decision to implement ERP was driven from forces the facilities in Taiwan are responsible for R& D and for
within the organization. Managers wanted reasonable access coordinating the purchasing and production in nearby Asian
to data to make good decisions, and ERP was believed to be countries. MoniP initiated ERP in 1999 with the intention
the tool to achieve this goal. All three manufacturing facili- of improving its internal integration and reducing manufac-
ties implemented ERP systems prior to 2000. Several over- turing cycle time. The implementation was independently
seas telemarketing o ces such as Japan, Taiwan and Korea performed in Taiwan facilities with minimum coordination
are currently implementing the systems. with The Netherlands headquarters.

5. C. Sheu et al. / Omega 32 (2004) 361 – 371 365
Table 2
Research validity tests
Test Approach/tactic used
1. Construct validity (a) Reviewed multiple sources of evidence so that the ÿndings
Develop su cient set of were based on the convergence of both qualitative and
operational measures to reduce quantitative information
subjective judgment (b) Established a chain of evidence with su cient 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 ÿndings 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 ÿnished 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 diversiÿed 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 di erent countries and was planned to be
ÿnished 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 di erent nationalities. The project team
visited several sites and produced a set of best practice Fig. 1. National di erences and multinational ERP implementation
processes. practices.
4.2. National di erences and implementation practices framework contains a list of national cultural variables
a ecting global information technology. Ein-Dor et al. [39]
Six categories (culture and language, government/ suggest that these variables are di cult to change in global
corporate politics, management style, government regula- IT implementation. Those variables can be classiÿed into
tions, time zone, and labor skills) of national di erences three main groups, socio-psychological, economic and de-
emerged from the data. Those six categories are presented mographic. Fig. 1 assigns the six categories discovered in
with the framework developed by Ein-Dor et al. [39]. The our study into the three groups of national cultural variables.

6. 366 C. Sheu et al. / Omega 32 (2004) 361 – 371
Table 3
Summary of major ÿndings
Category of national Impacts on implementation practices
di erences
1. Culture/ • Technical problems in entering data
language • Cultural resistance
• Communication barriers between facilities due to
di erent languages
• Localized implementations
• Alteration of training programs in di erent site
2. Management • Di erences 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 con icts between facilities; mistrust between
facilities (host and subsidiaries)
4. Regulations/legal • Di culty in developing standardization or
requirements universalization due to di erence in forms, tax policy,
procedures and others
• Substantial customization of ERP packages
5. Internal technical • Di culty in exercising decentralized ERP
personnel resource/ implementation due to lack of local personnel resources
labour skills • Alteration of training programs in di erent sites
• Complexity into training and use support
6. Geography/time • Complexity and technical problems in ERP adaptation
zone due to di erent currencies and exchange rates
Additionally, the speciÿc relationships between the six cat- (e.g., English) and one double bite language (e.g., Japanese
egories and various implementation practice items are dis- or Mandarin). Therefore, if English is in the ERP system,
played. The next section discusses the major ÿndings of such then only one double bite language can be used at a time.
relationships. Table 3 summarizes the in uences of the six This technical limitation forced the data entry into the ERP
categories of national di erences on ERP implementation system to use primarily English, so all overseas facilities
practices. 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-
5. Major ÿndings solve, communication barriers resulting from language dif-
ferences were far more di cult to overcome. In this study,
5.1. Socio-psychological factors since the facilities that NCQ has are located in either Tai-
wan or China, there is little di culty communicating with
The socio-psychological group includes several variables facilities in China because language and culture are simi-
such as values, beliefs, symbols, tradition, life style, and lar. Therefore, it 11 was easy for NCQ to centralize its ERP
attitudes toward technological progress, to name a few. Two implementation decisions without getting undue resistance
categories from our study belong to this group of variables. from overseas facilities. In contrast, since the headquarters
of NoteF (located in Taiwan) and MoniP (located in the
5.1.1. Culture and language (in uence adaptation, Netherlands) do not speak the same languages as their over-
centralization, and training) seas facilities, communication becomes very challenging.
We found that language di erence a ects the implementa- As a result, many implementation decisions, including the
tion practices in both technical and managerial aspects. First, selection of ERP software and other implementation prac-
some ERP packages only support one single bite language tices, were largely decentralized to local facilities. Each site

7. C. Sheu et al. / Omega 32 (2004) 361 – 371 367
purchased, installed and maintained its own ERP software system to increase their competitiveness in the global mar-
without consulting the other. ketplace. The pressure also came from their US customers
Language di erence also has a compounding e ect with such as Dell, Compaq, IBM, Hewlett-Packard, etc.
internal personnel resources on a training program. In the Other than the pressure factor, management personality
HAE case, all user documentation and training material is another possible factor a ecting the implementation du-
delivered by the project was prepared in English only. ration. Yen et al. [40] asserted that managers in Taiwan
Local instructors were educated to train employees from have the personality type that takes extra care with techni-
their own countries, and local resources had to be devel- cal details and are more determined to complete short-term
oped. The project team had to make sure that the instructors projects. In NCQ, the ERP project was lead by the CEOs,
had the country-speciÿc knowledge necessary to tailor the and all project members were completely removed from their
training courses to local needs, using local master data and primary responsibilities in order to dedicate themselves to
site-speciÿc SAP structures. the project. Additionally, all three Taiwanese ÿrms took a
The di culties of centralizing ERP implementation were “big bang” approach and implemented all ERP modules at
due not only to language and communication barriers but one time. In contrast, CareM, like many US ÿrms, took the
also to cultural di erence. Operating processes in Taiwanese “phase by module” approach in its implementation [6]. Its
organizations are likely to be di erent from their US facil- management adopted the attitude of “playing by the rules”,
ities, each having evolved in a di erent cultural and reg- “following the manual” and made no compromise with all
ulatory environment. As expected, resistance to adopt the required preparation during the implementation. While the
same operating processes was very high at overseas facil- e ectiveness of these two management styles remains to be
ities. For instance, the US facilities of NoteF refused to studied, ÿrms in Taiwan apparently completed the imple-
adopt the same ERP software packages and conÿgurations mentation in less time.
the headquarters requested, claiming that this software was The di erence in implementation approach can also be
inconsistent with its current operating processes. Several US explained by Hofstede’s [12] study in cultural dimensions.
employees threatened to resign if they were forced to adjust Hofstede characterized China and Taiwan as low uncertainty
their culture to the business practices of NoteF. avoidance and high collectivism and US as medium uncer-
The in uence of di erent culture on ERP implementation tainty and high individualism. These national characteristics
was also found signiÿcant in Europe. In the case of Norsk imply a more aggressive approach to the ERP implementa-
Hydro, for example, initially the company and the project tion in China and Taiwan, as observed in this study.
team sought a high degree of centrally deÿned, standardized In both European cases, management style was more like
solutions. Neither decentralization nor locally adopted solu- “piecemeal” than “big bang”. Thus, both projects took much
tion would be tolerated. It turned out that all business units longer than that of three Taiwanese ÿrms. This style was the
at di erent countries had their own way of doing things be- compounding e ect of several factors such as the in uential
cause of di erent business processes and local requirements role of unions in Europe [31], the size of the projects in both
generated by national and local di erences. Thus, the ini- cases and local resistance.
tial plan had to be altered by allowing localized solutions
and decentralized ERP implementations. HAE faced similar
problems due to language di erences and cultural con icts 5.2. Economic/political factors
among business units.
In Ein-Dor et al.’s [39] framework the economic group in-
cludes variables such as scope of internal trade, encourage-
5.1.2. Management style (in uences implementation ment of economic ties and balance of trade, to name a few.
approach and project duration) We modify this group by combining political factors into the
We refer to management style as the attitude toward set- economic group and identify two major categories below:
ting a priority for implementing an ERP system. This style government/corporate politics and regulatory requirements.
directly a ects the approach and duration of implementation.
The three Taiwanese ÿrms (NCQ, MoniP, and NoteF) took 5.2.1. Government/corporate politics (in uence
approximately 8 months to complete the implementation in adaptation and information sharing)
Taiwanese and Chinese facilities. The length was signiÿ- We discovered a unique variable a ecting the ERP im-
cantly shorter than that of CareM, a US ÿrm that took almost plementation involving both Taiwan and China, namely
23 months, and the two European companies that took over their current diplomatic relationship. These two govern-
3 years. Mabert et al. [2] found that most US ÿrms took more ments have imposed strict regulations on transporting
than 13 months to implement their ERP systems. Several goods, exchanging information, and transferring money be-
possible factors contribute to shorter implementation time in tween each other. Without formal diplomatic relationships,
Taiwan and China. First, managers in these countries were many business operations between these two countries are
highly pressured by severe international competition, and currently conducted in a way that packaged ERP software
they were extremely committed to implementing an ERP does not permit. Consequently, companies are forced to

8. 368 C. Sheu et al. / Omega 32 (2004) 361 – 371
make substantial e orts to modify ERP software according Di erent legal requirements among di erent countries
to their use. were a signiÿcant challenge for European cases. In the HAE
This ÿnding is consistent with Palvia et al.’s study [20]. case, a seemingly simple factor like the diversity in the local
Palvia et al. pointed out that political/economic/regulatory letter formats was an important issue, since the project team
factors directly or indirectly in uence di erent IT-related ar- had to ensure that the common and legal standards for each
eas such as transborder data ow restrictions and trade and of the countries were met. Di erences in legal documents,
customs regulations. These political forces are rather di - such as the need for continuous number ranges for invoices
cult to overcome. Government politics may be in uential in belonging to the same company in Italy and Spain, also led
global ERP implementations including countries in di erent to exceptions in how the system could be implemented for
economic systems (e.g., socialism and capitalism) and/or the di erent countries.
political and governance philosophy (e.g., dictatorship and
democracy). 5.3. Demographic factors
Another example of how the political factor a ects ERP
implementation was found at the corporate level. Political In Ein-Dor et al.’s [39] framework, the demographic
concerns at this level seemed to attribute to current low in- group includes variables such as geography, internal tech-
formation sharing between facilities in all companies. All nical personnel resources, and average educational level. In
companies expressed concerns over sharing too much in- this group, we identify two major categories: internal tech-
formation, fearing that individual facilities would compare nical personnel resources/labor skills and geography/time
and argue for getting better or equal treatment (in materi- zone.
als, customer orders or any form of resource support) than
other facilities. If so, the corporate headquarters would have 5.3.1. Internal technical personnel resources/labor skills
more di culties allocating resources to the whole organiza- (in uence training and centralization)
tion considering the global beneÿts. As a result, companies A typical ERP project requires much internal technical
have purposely limited information sharing between facili- personnel resources for the project completion. Lack of such
ties, resulting in diminished beneÿts of ERP systems. resources often emerges as an important issue. Nonetheless,
levels of labor skill vary from country to country, which
5.2.2. Government regulations/legal requirements could disrupt ERP implementation in di erent countries.
(in uence adaptation) This disruption was quite noticeable in two Asian coun-
The process of importing/exporting materials and goods tries. For example, most employees in Taiwan have at least
di ers from country to country. Countries that have mu- a technical college degree, while the majority of workers in
tual tari preferential treatments would have a di erent set China are high school graduates. When NCQ implemented
of custom forms, import/export tax rates, and custom clear- an ERP system in its Chinese facilities, it discovered that the
ing procedures than those countries that do not. No ERP same training program took twice as much time to complete
package handles these variations, and the resolution of such as at its headquarters in Taiwan. The lack of IT knowledge
“misÿts” requires substantial modiÿcation in ERP packages. and skills in Chinese facilities forced NCQ to centralize its
Both NCQ and NoteF had to rewrite the ERP software source implementation decisions. The headquarters had to send a
code to ensure a ÿt with their businesses, an e ort unfortu- project team to the Chinese facilities to help during the en-
nately never anticipated. tire implementation period.
We also found that tax policies dramatically increased the In the HAE case, the company concluded that it did not
complexities of multinational ERP implementation due to have the resources to take responsibility for the required
more complicated operating procedures. Di erent tax rates data processing and operation services. Several tasks such as
produced extra work in entering sales orders from di erent the required network services, site management and support
countries into the ERP system. Furthermore, tax rate di er- were outsourced to a company in UK. The company orga-
entials encouraged companies to develop complex business nized its business in independent national subsidiaries and
procedures for saving tax expenses. For instance, NoteF in- was not able to carry out the required coordination across
vested in a company located in a country (e.g., British Vir- national borders. In addition, some problems were related
gin Islands) where the tax rate is lower than that of Taiwan. to the fact that users had to call the help desk in UK when
NoteF resold its sales orders to this company at a price low they needed support. The threshold for doing this was quite
enough to avoid paying income taxes. The invested com- high for large user groups not speaking English.
pany then found a country with low production cost (e.g.,
China), which resulted in high proÿt but low income taxes. 5.3.2. Geography/time zone (in uence adaptation)
This tax-saving approach created unique operating proce- Depending on speciÿc geographical locations, there can
dures and required complicated accounting procedures to be as many as 14 h time di erence between two nations
deal with transactions between the three regions. A substan- in this study. This time di erence could a ect international
tial amount of adaptation was made for NCQ to customize trade operations from the aspect of exchange rates for cur-
ERP packages to its use. rency. Even though many of the European countries have

9. C. Sheu et al. / Omega 32 (2004) 361 – 371 369
joined the European Union, some (such as Denmark) do errors reported than their size and business activities. This
not use the Euro dollar. Denmark’s reluctance requires ex- information is in accordance with a general impression in
tra consideration for exchange rates. This example is am- the project that people from local units would rather con-
pliÿed when considering involvement with the rest of the tact people from their own country in the central team than
world. Anticipated rates used to calculate transactions can the correct person from an organizational point of view. In-
be greatly di erent than expected once the “next day” rate formal communication among nationalities, critical for the
is provided for the transaction. success of ERP projects, was limited, and people tended to
use formal documentation channels when dealing with peo-
ple of other nationalities.
6. Suggestions and conclusions Both European cases suggest that ERP implementation
in Europe is a very challenging task due to national di er-
Our ÿndings conÿrm that national di erences a ect multi- ences between countries in Europe. Speciÿcally, ERP im-
national ERP implementation practices. Six speciÿc cate- plementation in Europe is more complex because compa-
gories of national di erences that can a ect the implemen- nies have diverse national cultures that in uence corporate
tation were identiÿed and presented with Ein-Dor et al.’s culture, thereby making the implementation of multinational
framework [39]. National di erences a ect multinational ERP solutions di cult. This study supports previous evi-
ERP implementation with regard to the type and amount of dence that ERP implementation in the US has been more
ERP adaptation, centralization of implementation decisions, e ective that in Europe because of the more complex Euro-
information sharing, project duration, project approach, and pean corporate and national cultures [41,42].
training program. The relationships shown in Fig. 1 are im- Finally, some earlier studies (e.g., [54,55]) suggest geo-
portant to both managers and researchers. From a manage- graphical dispersion of manufacturing facilities and partners
ment point of view, there is a need to recognize each unique as the source of international OM problems including culture
national context when adopting an ERP system in di erent and language di erences, di erences in local policies and
countries. Early identiÿcation of the relationship between regulations and lack of communication. This study shows
ERP implementation and relevant national di erence vari- that while Taiwan and China have the geographical prox-
ables provides a more accurate basis to budget for contin- imity, manufacturing facilities in two countries exhibit very
gency implementation funds and allows adequate planning di erent ERP implementation patterns. In other words, geo-
for related implementation practices. Realizing the potential graphical distance may not always account for di erences
e ects of national di erences can also be carefully thought in various cultural dimensions. Further studies are necessary
through and is likely to be less reactive. to investigate this issue.
Our results suggest that management should consult and
negotiate with ERP software vendors prior to implementa- 6.1. Future research and limitations
tion to obtain additional help or to reduce expenses. NoteF
clearly learned an expensive lesson by having a 40% over- For future multinational ERP research we suggest revis-
run on its original budget to complete the implementation. ing and testing the relationships displayed in Fig. 1. This
CareM did work with its vendor in the early stages of imple- study examined only four multinational companies from
mentation to reduce cost and risk in its US companies. The two industries, high tech and personal care products, and
company, however, feels it has learned enough to implement two secondary cases from two industries, oil and gas and
ERP in other countries without the need for further assis- petrochemicals (fertilizers). Although the e ects of national
tance from the ERP vendor. Based on our research ÿndings, di erences on ERP implementation are clearly conÿrmed,
this could become a costly mistake. Failing to recognize the other countries and industries need to be examined in the
impact of national di erences on multinational ERP imple- future to revise the model in Fig. 1. In line with our sug-
mentation was proven costly by the other ÿve companies. gestion for an international team for a multinational ERP
Another suggestion is that of the organization of project project, another natural extension of this study is investi-
teams. We suggest that global ERP implementation projects gating what and how strategies can be applied to resolve
should be managed by a multi-cultural group of project man- misÿts in multinational ERP environment. Knowing the
agers and team leaders. It is important to maintain this di- e ectiveness of various resolution strategies in dealing with
versity within the project team. Cases in this study show that national di erences should help multinationals manage their
communication between di erent nationalities is restricted international supply chain systems more e ectively.
due to national di erences such as languages, cultural con- A factor that does not fall into the theme of national di er-
icts, and politics. Lack of communication between host ences but could also a ect global ERP implementation is a
and subsidiaries often results in mistrust, project delay and ÿrm’s competitive environment. Shore and Venkatachalam
over budget. For example, in the HAE case [34] the two [14] suggested that a ÿrm’s global business strategy and or-
countries—Spain and Italy—were not represented among ganizational structures are the result of its competitive envi-
the project team leaders and managers. As the result, these ronment. They also argued that ÿrms in a highly competitive
two countries had a greater share of change requests and market would have little room to accommodate local and

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