ERP Integration as a Strategic Capability: The Role of National Innovation Ecosystems in Europe

The current research aims to examine the reasons behind the higher ERP system integration in some European countries compared to others. This research conceptualizes ERP system integration not merely as a technological phenomenon but also as a strategic organizational capability. This research is based on the existing literature on Strategic Information Systems, digital transformation, and IT-Business alignment. This research aims to explore the impact of the external innovation ecosystem on ERP system diffusion and assimilation. This research utilizes a mixed research method that combines panel data analysis with machine learning algorithms and cluster analysis. This research utilizes panel data analysis by combining the ERP system integration data from the EUROSTAT database with the European Innovation Scoreboard. This research identifies that countries with higher innovation ecosystem maturity exhibit higher ERP system integration. This research also identifies different patterns of ERP system integration in various clusters of countries. This research has managerial implications that highlight the strategic importance of ERP system integration. This research also has implications for policymakers that highlight the importance of investing in the innovation ecosystem. This research contributes to the existing literature on Strategic Information Systems by combining macro-level data analysis with strategic insights on ERP system integration.Keywords: ERP integration, Strategic information systems, Innovation ecosystem, IT–business alignment, Digital transformation