The research in this paper challenges conventional beliefs about the relationship
between enterprise resource planning (ERP) systems and business process innovation.
While common views of ERP systems as constraining and inflexible (‘‘like cement, the critics
say – highly flexible in the beginning, but rigid later’’ (Davenport, 2000, p. 16) seem
incommensurate with the notion of innovation, the analysis presented in this paper reveals
a different picture. Rather than focusing exclusively on the structural constraints that these
systems impose, we direct attention to the impacts of an ERP system on the knowledge
capabilities of the organization. In contrast to prevailing views, a knowledge-based perspective
reveals that ERP systems have the potential to significantly enhance the capabilities
of a firm for sustained innovation of its business processes. The implication of our
analysis is that ERP systems present dialectical contradictions, both enabling and constraining
business process innovation. The theoretical model presented in this paper makes
several important contributions. First, the model provides a foundation for understanding
the dialectical and often complex relationship between ERP systems and innovation.
Moreover, the model highlights the ways that organizations can cultivate and leverage
the enabling elements to create enhanced business process innovation capabilities. Finally,
the model provides a foundation for future empirical investigations to further explore
these relationships.