Critical Factors of ERP Adoption for Small- and Medium- Sized Enterprises: An Empirical Study

Small and Medium-sized Enterprises SMEs play a vital and pervasive role in the current development of Taiwan's economy. Recently, the application of Enterprise Resource Planning ERP systems have enabled large enterprises to have direct contact with their clients via e-commerce technology, which has led to even fiercer competition among the SMEs. This study develops and tests a theoretical model including critical factors which influence ERP adoption in Taiwan's SMEs. Specifically, four dimensions, including CEO characteristics, innovative technology characteristics, organizational characteristics, and environmental characteristics, are empirically examined. The results of a mail survey indicate that the CEO's attitude towards information technology IT adoption, the CEO's IT knowledge, the employees' IT skills, business size, competitive pressure, cost, complexity, and compatibility are all important determinants in ERP adoption for SMEs. The authors' results are compared with research on IT adoption in SMEs based in Singapore and the United States, while implications of the results are also discussed.

[1]  K. Ramamurthy,et al.  Determinants of EDI adoption in the transportation industry , 1997 .

[2]  Vinod Kumar,et al.  An investigation of critical management issues in ERP implementation: emperical evidence from Canadian organizations , 2003 .

[3]  Thomas H. Davenport,et al.  Mission Critical: Realizing the Promise of Enterprise Systems , 2000 .

[4]  Prashant Palvia,et al.  Determinants of computing in very small businesses , 1994, Inf. Manag..

[5]  William R. King,et al.  An Empirical Assessment of Information Systems Planning and the Role of Information Systems in Organizations , 1992, J. Manag. Inf. Syst..

[6]  T. Davenport.  Putting the enterprise into the enterprise system. , 1998, Harvard business review.

[7]  Suprateek Sarker,et al.  Using a case study to test the role of three key social enablers in ERP implementation , 2000, Inf. Manag..

[8]  Paul B. Cragg,et al.  End user computing sophistication and success in small firms , 1996 .

[9]  Nancy H. Bancroft.  Implementing SAP R/3 (2nd ed.): how to introduce a large system into a large organization , 1996 .

[10]  Kin-Nam Lau,et al.  Information System usage within Small Business Firms , 1990 .

[11]  Munirpallam A. Venkataramanan,et al.  Enterprise resource planning: Managing the implementation process , 2003, Eur. J. Oper. Res..

[12]  Peter A. Todd,et al.  Perceived Usefulness, Ease of Use, and Usage of Information Technology: A Replication , 1992, MIS Q..

[13]  Aleda V. Roth,et al.  Enterprise Resource Planning (ERP) Competence Constructs: Two-Stage Multi-Item Scale Development and Validation , 2002, Decis. Sci..

[14]  Donatella Sciuto,et al.  Factors affecting ERP system adoption: A comparative analysis between SMEs and large companies , 2005, J. Enterp. Inf. Manag..

[15]  Guy G. Gable,et al.  Government initiatives for IT adoption in small businesses: experiences of the Singapore Small Enterprise Computerization Program , 1992 .

[16]  Cynthia K. Riemenschneider,et al.  Understanding it adoption decisions in small business: integrating current theories , 2003, Inf. Manag..

[17]  Jacqueline L. Reck,et al.  Enterprise resource planning systems: comparing firm performance of adopters and nonadopters , 2003, Int. J. Account. Inf. Syst..

[18]  Mary Sumner,et al.  Seeking strategic advantage in the post-net era: viewing ERP systems from the resource-based perspective , 2004, J. Strateg. Inf. Syst..

[19]  Bernard C. Williams,et al.  The Impact of Electronic Data Interchange (EDI) on SMEs: Summary of Eight British Case Studies , 1998 .

[20]  L. G. Tornatzky,et al.  Innovation characteristics and innovation adoption-implementation: A meta-analysis of findings , 1982, IEEE Transactions on Engineering Management.

[21]  J. Hair.  Multivariate data analysis , 1972 .

[22]  Judy E. Scott,et al.  Enhancing functionality in an enterprise software package , 2000, Inf. Manag..

[23]  Elisabeth J. Umble,et al.  Enterprise resource planning: Implementation procedures and critical success factors , 2003, Eur. J. Oper. Res..

[24]  Delilah Jones,et al.  Managing local area networks , 1987 .

[25]  V. Grover.  An Empirically Derived Model for the Adoption of Customer‐based Interorganizational Systems* , 1993 .

[26]  L. D. Neidleman.  Computer usage by small and medium sized European firms: An empirical study , 1979, Inf. Manag..

[27]  Palaniswamy Rajagopal,et al.  An innovation-diffusion view of implementation of enterprise resource planning (ERP) systems and development of a research model , 2002 .

[28]  P. Powell,et al.  Evaluating information systems in small and medium-sized enterprises: issues and evidence , 1998 .

[29]  Koen Vanhoof,et al.  A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises , 1999, Decis. Support Syst..

[30]  J. Thong.  Resource Constraints and Information Systems Implementation in Singaporean Small Businesses , 2001 .

[31]  J. Thong,et al.  CEO characteristics, organizational characteristics and information technology adoption in small businesses , 1995 .

[32]  Chee-Sing Yap,et al.  Top Management Support, External Expertise and Information Systems Implementation in Small Businesses , 1996, Inf. Syst. Res..

[33]  Nabeel Al-Qirim,et al.  Personas of E-Commerce Adoption in Small Businesses in New Zealand , 2006, J. Electron. Commer. Organ..

[34]  A. F. Salam,et al.  An extension of the technology acceptance model in an ERP implementation environment , 2004, Inf. Manag..

[35]  Margi Levy,et al.  Information systems strategy for small and medium sized enterprises: an organisational perspective , 2000, J. Strateg. Inf. Syst..

[36]  László A. Pook,et al.  Evaluation of Information Infrastructures and Social Development Among the Visegrad-Four Countries of Central Europe , 2004, J. Glob. Inf. Manag..

[37]  Robert D. Galliers,et al.  Assessing information systems strategy development frameworks in SMEs , 1999, Inf. Manag..

[38]  K. Ramamurthy,et al.  The Role of Interorganizational and Organizational Factors on the Decision Mode for Adoption of Interorganizational Systems , 1995 .

[39]  William H. DeLone.  Determinants of Success for Computer Usage in Small Business , 1988, MIS Q..

[40]  Berend Wierenga,et al.  Intra-firm Adoption Decisions:: Role of Inter-firm and Intra-firm Variables , 2002 .

[41]  Adel M. Aladwani.  A Deeper Look at the Attitude-Behavior Consistency Assumption in Information Systems Satisfaction Research , 2003, J. Comput. Inf. Syst..

[42]  She-I Chang,et al.  A Comparative Analysis of Major ERP Life Cycle Implementation, Management and Support Issues in Queensland Government , 2002, J. Glob. Inf. Manag..

[43]  E. Rogers.  Diffusion of Innovations , 1962 .

[44]  Khalid S. Soliman,et al.  An exploratory study to identify the critical factors affecting the decision to establish Internet-based interorganizational information systems , 2004, Inf. Manag..

[45]  R. Calantone,et al.  Small Firm Information Seeking as a Response to Environmental Threats and Opportunities , 1997 .

[46]  Guy G. Gable,et al.  Consultant engagement for computer system selection: A pro-active client role in small businesses , 1991, Inf. Manag..

[47]  Xiaorui Hu,et al.  Cultural Adaptation on the Web: A Study of American Companies' Domestic and Chinese Websites , 2003, J. Glob. Inf. Manag..

[48]  John A. Welsh,et al.  A Small Business is not a Little Big Business Harvard Business Review, Vol. 59, No. 4, July/August, 1981, pp.18 (9 pages , 1982 .

[49]  M. Lynne Markus,et al.  Learning from adopters' experiences with ERP: problems encountered and success achieved , 2000, J. Inf. Technol..

[50]  Marianne Bradford,et al.  Examining the role of innovation diffusion factors on the implementation success of enterprise resource planning systems , 2003, Int. J. Account. Inf. Syst..

[51]  Clyde W. Holsapple,et al.  ERP plans and decision-support benefits , 2005, Decis. Support Syst..

[52]  Paul B. Cragg,et al.  Small-Firm Computing: Motivators and Inhibitors , 1993, MIS Q..

[53]  J. Lees,et al.  Successful development of small business information systems , 1987 .

[54]  Chee-Sing Yap,et al.  Distinguishing characteristics of organizations using computers , 1990, Inf. Manag..

[55]  Izak Benbasat,et al.  Research Report: Empirical Test of an EDI Adoption Model , 2001, Inf. Syst. Res..

[56]  Louis Raymond,et al.  Organizational Characteristics and MIS Success in the Context of Small Business , 1985, MIS Q..

[57]  Cs Yap,et al.  Information systems success factors in small business , 1992 .

[58]  Michelle L. Kaarst-Brown.  Doing Business in Paradise: How Small, Information Intensive Firms Cope with Uncertain Infrastructure in a Developing Island Nation (TCI) , 2003, J. Glob. Inf. Manag..

[59]  Conghua Li.  Erp Packages: What's Next? , 1999, Inf. Syst. Manag..

[60]  Prasad Bingi,et al.  Critical Issues Affecting an ERP Implementation , 1999, Inf. Syst. Manag..

[61]  Ben Light,et al.  A Critical Success Factors Model for ERP Implementation , 1999, IEEE Softw..

[62]  E. Waarts,et al.  The dynamics of factors affecting the adoption of innovations , 2002 .

[63]  Stephen P. Laughlin.  AN ERP GAME PLAN , 1999 .

[64]  Izak Benbasat,et al.  Electronic Data Interchange and Small Organizations: Adoption and Impact of Technology , 1995, MIS Q..

[65]  J. Michael Pearson,et al.  Electronic commerce adoption: an empirical study of small and medium US businesses , 2004, Inf. Manag..

[66]  D. Fink,et al.  Guidelines for the Successful Adoption of Information Technology in Small and Medium Enterprises , 1998 .

[67]  E. Rogers.  Diffusion of Innovations, Fourth Edition , 1982 .

[68]  Michael Rosemann,et al.  What is ERP? , 2000, Inf. Syst. Frontiers.

[69]  James Y. L. Thong,et al.  An Integrated Model of Information Systems Adoption in Small Businesses , 1999, J. Manag. Inf. Syst..

[70]  G. Premkumar,et al.  Adoption of new information technologies in rural small businesses , 1999 .

[71]  Helen Kelley,et al.  Information Systems Effectiveness in Small Businesses: Extending a Singaporean Model in Canada , 2005, J. Glob. Inf. Manag..

[72]  Wen-Hsien Tsai,et al.  Critical management issues in implementing ERP: empirical evidences from Taiwanese firms , 2005, Int. J. Serv. Stand..

[73]  Gary Klein,et al.  ERP Misfit: Country of Origin and Organizational Factors , 2006, J. Manag. Inf. Syst..