Beyond Implementation: A Critical Review of the Literature on ERP Systems and the Financial Performance of SMEs

Abstract

This paper provides a critical review of the literature exploring the relationship between Enterprise Resource Planning (ERP) systems and the financial performance of Small and Medium-sized Enterprises (SMEs). While substantial research exists on ERP in large enterprises, the SME context is distinct and fraught with unique challenges. The review synthesizes findings into three dominant narratives: the "Productivity Paradox," the "Integrated Value Proposition," and the "Contextual Mediation" perspective. A critical analysis reveals significant methodological limitations, including a reliance on perceptual data, short-term financial metrics, and a lack of consensus on the definition of "financial performance." Furthermore, the literature often under-theorizes the complex mediating role of organizational and external factors. The paper concludes by identifying critical research gaps and proposing a framework for future studies to move beyond simplistic cause-and-effect models towards a more nuanced understanding of how, when, and why ERP systems influence the financial health of SMEs.