Impact of Enterprise Systems on Mergers and Acquisitions

This paper examines the relationship between Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Supply Chain Management (SCM) systems and mergers and acquisitions (M&A). We also investigate how any such relationships are contingent on the characteristics of the focal firm and its industry environment. The key argument is since ERP, CRM and SCM systems can reduce agency cost associated with internal coordination, they may be related with more horizontal, vertical and conglomerate M&A; and that since CRM and SCM systems can reduce the transaction cost of coordinating activities with downstream partners and suppliers, they may be related with fewer vertical M&A. Using a sample of 707 Fortune 1000 firms that made 1,973 M&A deals from 2009 to 2014, the empirical analysis suggests that ERP systems are positively related with horizontal and conglomerate acquisitions, and more so for larger firms; CRM systems are negatively related with vertical M&A, especially when downstream industry dynamism is low; and SCM systems are negatively related with vertical M&A, and more so when supplier industry concentration is low. (177 words)