The Effect of ERP System Adoption on the Profitability of Manufacturing Firms in Plateau State, Nigeria

This study investigates the effect of Enterprise Resource Planning (ERP) system adoption on the
profitability of manufacturing firms in Plateau State. Employing a quasi-experimental research design and panel regression analysis, the research analyzes financial data spanning 12 years, including pre- and post-implementation periods. In general, the results indicate that ERP adoption has a beneficial effect on the profitability of manufacturing firms, particularly through improved operational efficiency and strategic decision-making. The descriptive analysis showed general improvements in all profitability metrics post-ERP adoption. The paired sample t-tests confirmed that these differences were statistically significant, suggesting that ERP implementation had a notable impact on the firms' profitability. The fixed effects panel regression further validated these findings, indicating a strong causal effect of ERP adoption and improvements in profitability across the four metrics. Findings indicate a significant positive effect of ERP systems on key profitability indicators such as Return on Assets (ROA), Return on Equity (ROE), and Return on Investment (ROI). Based on the findings, it can be concluded that ERP adoption significantly enhances the profitability of manufacturing firms in Plateau State, particularly in terms of ROA, ROE, and ROI. It was recommended that Manufacturing firms that have not yet adopted ERP systems should be encouraged to do so, as the long-term benefits outweigh the initial investment and implementation challenge. Also, ERP systems should be tailored to suit the operational needs and scale of the manufacturing firms.