Application of multiple output data envelopment analysis in interpreting efficiency improvement of enterprise resource planning in integrated circuit firms

This paper is the first to employ multiple outputs, patents and net sales, in our data envelopment analysis (DEA) to examine whether operational efficiency improves after enterprise resource planning (ERP) installations. The ANOVA analysis results show that granted patent number significantly increases after ERP installations. ERP implementation indeed stimulates integrated circuit firms to concentrate on innovation activities. Also, the DEA results show that firm efficiency significantly increases after the third year subsequent to ERP implementations. The Tobit regression results further prove that the curtailing of receivable turnover days and inventory turnover days are attributed to efficiency elevation through ERP installations.