UNDERSTANDING FUTURE ADOPTERS OF ADVANCED MANUFACTURING TECHNOLOGY: EVIDENCES FROM MALAYSIAN SMES AZMAWANI ABD RAHMAN, MURALI SAMBASIVAN,

SYAIRAH AIMI SHAHRON Faculty of Economics and Management, Universiti Putra Malaysia ABSTRACT
Advanced manufacturing technology is a computer-based technology or can simply be any technology which is advanced to a firm when compared to its previous or current manufacturing technology. These technologies include technologies that can be used to support designing, processing, packaging, and supply chain activities. This research investigates why firms do not adopt AMT although they have the intention to adopt (we term them as the future adopters). This paper highlights what future adopters perceive as benefits of AMT adoption. As they have the intention to adopt, but yet to adopt, the paper also unveils their major obstacles towards the technology adoption. Based on survey results of 140 SMEs, the study found that finance and lack of knowledge as the top two obstacles of AMT adoption. Further statistical analysis indicates, these hold true for both performing and less performing SMEs. Meanwhile, competitive benefits were found as a major driver for their intention to have the technology. This study contributes in terms of understanding the underlying dimensions of perceived benefits and obstacles of technology adoption within the context of the future adopters. Perhaps, a new perspective from which many more studies could be developed. The results of the study can serve as guidelines to the practitioner and the policy makers.

Keyword: manufacturing technology; implementation benefits; implementation obstacles; SME; Malaysia.

INTRODUCTION
The usage of advanced technology in manufacturing firms impacts not only the manufacturing processes but the whole business operations. The business world today demands every organization to adopt advanced manufacturing technology (AMT) in their daily operations. The failure to adopt and absorb the benefits of advanced technologies for their own advantage could hinder them from becoming or remaining competitive in the global market. Although it has been well documented in the literature and reported by the practitioners that the usage of technologies in manufacturing operations could bring numerous benefits to an organization such as quality, financial, management, and industry benefits (Zhao and Co, 1997; McDermott and Stock, 1999; Ariss et al., 2000; Walters et al., 2006), many firms still do not use advanced technology in all or part of their manufacturing operations, despite having the intention to adopt. Langley and Truax (1994) highlight that the technology adoption decision making is a series of nested choices which vary from company to company . In fact, there are too many variables in any decision process over which a manager has no control. According to Harfield et al. (2001), most of the decision making approaches used by small companies are based on intuitive judgments and/or rules and shortcuts and they are less likely to engage into a more complex and time consuming decision-making process. Therefore, an investigation on what they perceive as benefits and obstacles towards AMT adoption is a crucial initial step to further understand why these firms remain to hold their investment in AMT. This research investigates why firms do not adopt AMT although they have the intention to adopt (we term them as the future adopters). This paper highlights what future adopters perceive as benefits of AMT adoption. As they have the intention to adopt, but yet to adopt, the paper also unveils their major obstacles towards the technology adoption. The study focuses on Malaysian SMEs. This study is different from many previous research conducted in this area. Research on AMT has so far addressed the following: (1) the factors that determine success or failure in the acquisition and implementation of AMT, (2) benefits associated with AMT implementation, and (3) the planning associated with AMT implementation. There have been very limited researches investigating advanced technology adoption issue from the future adopters perspectives. In fact, previous research has widely focused on the developed country and not on the SMEs in developing countries.

TECHNOLOGY AND MALAYSIAN SMEs

The role of SMEs in supporting the activities of larger companies in countries like Korea, Japan and Taiwan, has successfully propelled these countries into industrialization. That has made Malaysia realize, especially after economic slowdown in mid 1980s, the need to promote and support the activities of SMEs (Yusuff et al., 2005). SMEs were the worst affected during the economic downturn as most of them had no capacities and capabilities to deal with the crisis of that magnitude. In fact, the lack of proper styouudy conducted on them makes it difficult for government to recognize the difficulties they are facing now (The-Star, march 27 2009). Governments around the world have embarked upon programs to promote technological innovation. In Malaysia, the government through SME Corp Malaysia (Formerly known as Small and Medium Industries Development Corporation (SMIDEC)) has developed policies and programs to help SMEs with difficulties. These programs were included in the Malaysia Plan. Over the years, the government has introduced various schemes and programs together with Malaysia Plan to assist SMEs in line with the vision to transform them into vibrant enterprises capable of meeting the onslaught of global competition; and seizing opportunities arising from globalization and the rapid pace of technological development. Such aid programs have been fine-tuned over time to cover the multifaceted needs of such enterprises as a whole. Through SME Corp, broad-based assistance to SMEs in general covers five main areas which include the access to markets, skill, technology, and finance. SMEs need to upgrade their production processes. Enterprise Resource Planning (ERP) has become an integral part of business operations in the new millennium. Besides that, SME would also need to make substantial investments to acquire production technology such as Computer Numerical Control (CNC), robotics, Computer Aided Design (CAD), Computer Aided Manufacturing (CAM), Computer Aided Engineering (CAE) and Computer Integrated Manufacturing (CIM) (SMIDEC, 2006). To adopt some of these technologies, the government provides matching grants and soft loans under SME Corporations technical assistance programs. As for product and process improvement grants, the assistance scheme provides SMEs with matching grant for improvement and upgrading of existing products, product and process (SMIDEC, 2008). The second grant, certification and quality management system provides matching grant for SMEs to obtain certification and quality management systems (SMIDEC, 2008). Besides grants and soft loans, SMEs that need assistance to upgrade their production processes are also eligible to apply for Technology Acquisition Fund (TAF). A Total of RM250 million was provided to this fund under the eighth Malaysia plan. The plan provides assistance for companies to acquire high-tech equipment and machinery, technology licensing, as well as patent rights, prototypes and design, that can facilitate technology transfer. The TAF is managed by the Malaysian Technology Development Corporation (MTDC) and provides a matching grants up to 70% or maximum of RM2 million.

PERCEIVED BENEFITS OF ADVANCED MANUFACTURING TECHNOLOGY

Despite the existence of numerous definitions of AMT, literature generally agrees that it has been widely defined as a group of computer-based technologies, which include computer-aided design (CAD), computer-aided manufacturing (CAE), manufacturing resources planning (MRPII), robotics, group technology, flexible manufacturing systems (FMS), automated materials handling systems, computer numerically controlled (CNC) machine tools, and bar-coding or other automated identification techniques (Zairi, 1992; Zammuto and O'Connor, 1992; Sambasivarao and Deshmukh, 1995; Millen and Sohal, 1998; Stock and Tatikonda, 2000; Guimaraes et al., 2002; Lewis and Boyer, 2002; Abd-Rahman et al., 2009). Consistent with Abd-Rahman et al. (2009), this study also applies the existing definition of AMT but extends this to include any technology which is new or advanced to a company when compared to its previous or current manufacturing technology. The study also focuses on the hard form of AMT as well as soft technologies when they are embedded in hardware rather than being adopted independently. The use of advanced manufacturing technology (AMT) has not been fully understood although billions of dollars are invested in them each year (Swamidass and Kotha, 1998). Investments are made each year in AMT because practitioners perceive a number of benefits attributed directly to

their use. The experiences of firm investing in AMT are not uniformly the same. Some firms achieve the intended benefits of AMT, while others have been slow to benefit from it, or might not grab the benefits at all. A survey of related literature shows that most studies on AMT adoption focus only on successful implementation of AMT and typically based on implementation experiences. Thus, a major thrust of this study is to link factors that are commonly cited in the literature as benefits and obstacles in implementation of AMT as perceived benefits for future adopters of AMT in this study. As cited, AMT brings about many benefits. These include improved quality, reduced labor requirement, increased flexibility and lead time reduction. According to McDermott and Stock (1999), benefits of AMT can be categorized into operational, managerial and competitive benefits. Operational benefits are commonly used to justify the purchase of the equipment to upper management (McDermott and Stock, 1999). Examples of operational benefits are increase in efficiency, productivity, quality and flexibility and cost reduction. Operational benefits increase the organizations option in the marketplace, and may ultimately provide advantages over competitors who have not implemented AMTs (Zairi, 1992). Operational benefits is a commonly cited result in the literature (McDermott and Stock, 1999). For example, Sohal (1997) in his longitudinal study on planning and implementation of AMT found that four out of these six most important benefits is categorized in the operational benefits. These are improved quality, reduced costs, increased throughput and increased flexibility. On a similar issue, Swamidass and Kotha (1998) found various benefits from the use of AMT are linked to the operational benefits. For example, the programmable capability of AMTs brings flexibility benefit because users can switch machines and programs from producing one kind of component to another instantly by punching a few computer keys. According to them, AMT can also increase productivity by embedding routine repetitive tasks into AMT hardware and software. This embedding reduces cost such as direct labor costs, rework costs, and work-in-process inventories (Zammuto and O'Connor, 1992). Finally, process oriented AMTs such as FMS and CNC machines enable greater consistency in the manufacturing process by reducing the variance in the production process, thus enabling a firm to achieve superior product quality (Swamidass and Kotha, 1998). In addition, Machuca et al. (2004) in their study of AMT implementation have found the benefits expected from manufacturing AMT are reduction in production costs, consistent quality and meeting delivery dates, as well as a few other issues relating to flexibility, such as the ability to offer a wide range of products or the speed with which new products are developed. All these benefits are categorized as operational benefits. as According to Small (1999), the benefits attributed by AMT are the ability to offer products with improved quality and reliability. Others researchers that show the significant result of the operational benefits in their studies are: Udo and Ehie (1996), Chen and Small (1996), Noori (1997), Zhao and Co (1997), Sabourin and Beckstead (1999) and Walters et al. (2006). AMT calls for not only technological/operational change, but also on the managerial and organizational changes, where human factors, skills and managing change play as important a role as the technology itself (Schroeder et al., 1989). According to Dhar (1989), majority of benefits do not come from the technology itself but from the organizational and methodological changes that are required to be made to support it. This will lead to another category of benefits which is managerial or organizational benefits that include improvements in work flows, communication, lead time, integration of work, and managerial control (Zairi, 1992). Although, its effect is not as large as operational benefits but it does effect the way management team do their work. So, it is essential to study managerial benefits. Zairi (1992) has found that the benefits of AMT lead to better communication, redesigned work flows, or better integration of work across boundaries. All these benefits can be categorized under managerial benefits. Ariss et al. (2000) also cited in their study that the benefits that organizations aim to get are management and organization benefits. For example, modernization of management philosophy, develop trainable and capable employees, management exposure to modern technology and good management/labor relations. Other studies highlighting managerial benefits from the use of advanced technologies are: (Chen and Small, 1996; Sohal, 1997; Zhao and Co, 1997; Efstathiades et al., 1999; McDermott and Stock, 1999; Sabourin and Beckstead, 1999).

Another outcome that might result from AMT implementation is competitive benefits which include improved sales growth, market share, and return on investment (Ramamurthy, 1995). Zairi (1998) in his research suggests that the introduction of AMT is not merely for economic benefits but also for strategic gains. Sohal (1997) in his study states that the most important benefits are the benefits that provide a competitive advantage. Efstathiades et al. (1999) later found in their study that the reasons for the introduction of AMT are to increase the competitive advantages and maintain existing market. Walters et al. (2006) have found that the benefits gained from adopting advanced technology such as pick and place system, MRPI II system and CAD/CAM are development of new businesses. In addition, Swamidass and Winch (2002) in their study state that one of the benefits gained from AMT implementation is return on investment.

PERCEIVED OBSTACLES IN ADVANCED MANUFACTURING TECHNOLOGY

While the previous section dealt with the benefits associated with the adoption of advanced technologies, this section investigates the perceived obstacles of advanced manufacturing technology. There are a variety of costs associated with the adoption of advanced technology. These include equipment costs, financing costs, software development costs, problems finding adequate technical support, costs associated with skill shortages, and the inability to properly evaluate the impact of the new technology. All these costs can be categorized into four main categories of obstacles which are financial obstacles, knowledge obstacles, people obstacles and support services obstacles. Organizations are more likely to adopt new technologies when the investment is financially justified, that is, when the benefit from the adoption is positive. Investments may not be financially justified if equipment costs, software development costs, integration costs or financing costs are too high relative to the expected stream of benefits. Lack of financial justification is the most stated obstacle in the literature. For example, Sabourin and Beckstead (1999) in their study on the development of useful indicators of science and technology activities have found that one of the obstacles that impede AMT implementation is lack of financial justification. According to them, lack of financial justification include high cost equipment, cost of capital, cost of integration, cost to develop software and small market share. There are also obstacles related to personnel. Adoption of new technology may require a firm to increase the skill level of its employees. For example, Yusuff et al. (2005) in their study have found that the lack of suitable skills at a number of levels will not only slow down the absolute rate of technology adoption, but also limit the range of applications that can be made because of a lack of trained manpower to support the development of technology in Malaysia. They can do this by upgrading the skills of their existing workforce or by hiring new employees with the necessary skills. Either way, it is costly to the firm. Continuing education and training help to ease the resistance to AMT adoption (Beatty and Gordon, 1988). But, if they choose to train, they may encounter resistance from employees who are unwilling to invest time to acquire new skills. Alternatively, if they have intention to hire new staff, they may have problems finding and attracting individuals with necessary skills. Furthermore, successful adoption of AMT requires that required staffs fully understand the corporate strategic goals and objectives and must direct factory automation projects to support these goals and objectives (Hottenstein and Casey, 1997). Adoption in technology is also influenced by the competencies of its management team. Management may be adverse to risk taking. The introduction of new technology into the organization may be met with resistance by the management itself or the establishment may be unable to effectively evaluate the expected benefit from adoption. Ferraro et al.(1988) highlights that mismatches often occur between the various levels of the organization. For example, a manufacturing manager with expertise in operations often may not have adequate understanding of strategic issues. And conversely, top management may not have a full understanding of operational details. This often results in frustration as operation engineers are expected to meet unrealistic demands of top management. Many manufacturing firms experience resistance whenever a new technology is introduced. Besides that, failure of AMT implementation is also because of inadequate planning (Ramamurthy, 1995; Kumar et al., 1996). Planning is essential to enable a careful assessment of the innovation's

potential, the level of integration required, the functions affected and all the necessary changes required. There is also enough evidence to suggest a need to involve various business activities in order to achieve overall business effectiveness. Maximum benefits will accrue if there is a fit between the capabilities of the technologies and the firm's business and manufacturing priorities (Gupta, 1996). Finally, external technical support may also influence the implementation of AMT. Sabourin and Beckstead (1999) have found that one of the factors that influence the failure of AMT implementation is lack of external support system.

RESEARCH METHODOLOGY Sample and Sampling Procedure

The target population for this study is SMEs manufacturers that have intention to adopt AMT for their manufacturing operations, but yet to adopt. More specifically, the unit of analysis is an entire company, a division, or subsidiary located within the boundaries of peninsular Malaysia. The subjects chosen for this study were chief operating officers, operations managers or other senior manufacturing manager s with similar status and who are in charge of manufacturing. These individuals are expected to possess the relevant information pertaining to this study, that is, information about both strategic and managerial issue at the institutional level. Federation of Malaysian Manufacturer (FMM) and SMIDEC directories were used as sampling frames. Based on the literature review, we defined SMEs as companies with less than or equal to 250 employees. The present study used judgmental sampling procedure. Judgmental sampling occurs when a researchers selects sample members to conform to some criterion. Specifically, the respondent who fulfilled the required criteria were chosen to be contacted from the entire population of the sampling frame. The criteria set for this research was: the firm must have had the intention to adopt the technology. Firms that do not have any intention to adopt the technology were dropped from this study.

Measurement
There are 23 advanced technologies listed in this study. The list is derived and modified from version variety of surveys conducted by Statistic Canada (Sabourin and Beckstead, 1999), Swamidass and Kotha (1998), and Abd-Rahman et al. (2009). The list includes five functional technology groups: design and engineering, processing, fabrication and assembly, automated material handling, inspection, and integration and control. Respondents were asked to indicate the technologies being used and planned to be used. Scales for perceived benefits of advanced technology were developed based on the study done by McDermott and Stock (1999), which categorized the benefits of technology adoption into operational, organizational, and competitive benefits. After considering various benefits documented in the literature as a result of technology usage by the adopting firms, modification was made to the original scale. Seventeen items were used to measure perceived benefits of advanced technology adoption. The items are: Increase in productivity, Increase in Efficiency, Cost Reduction, Increase in reliability, Increase in quality, Increase in flexibility, Improvement in lead time, Improvement in workflow, Improvement in communication, Improvement in integration of business activity, Improvement in management control, Enable firm to meet organizational goal, Increase in sales growth, Increase in Market share, Increase return on investment, Increase in profitability, and Increase in the ability to compete. Items were scoredon the 5-point scale from Not at all to To a very Great Extent. Questions 1 to 7 measured operational benefits, questions 8 to 13 measured managerial benefits and competitive benefits were measured using the 4 items which are from questions 14 to 17. The final value for each groups was determined by averaging the score for each item in that group. Meanwhile, perceived obstacles in this study were developed based on various researches that documented the stumbling blocks of successful technology implementation (Sambasivarao and Deshmukh, 1995; Udo and Ehie, 1996; Sohal, 1997; Sabourin and Beckstead, 1999; Walters et al., 2006). Respondents were asked to indicate using a 5-point Likert scale from Not at all to To a very Great Extent. Questions 1 to 5 measured financial obstacles (small market size, high equipment cost, lack of funding, high integration cost of new technology, high training cost), questions 6 to 8 measured obstacles in terms of lack of skill (management is lacking of skill, staff is lacking of skill, inexperienced in new/ advanced technology implementation), items 9 to 12 measured obstacles in term of lack of knowledge (lacking of knowledge in new/advanced

technology by management, lacking of knowledge in new/advanced technology by staff, inability to evaluate financial return, Inadequate understanding of the new/advanced technology), items 13 to 16 measured obstacles in terms of resistance to change ( resistance by staff, resistance by management, lack of support from staff, lack of support from management and finally, questions 17 to 19 measured obstacles in terms of lack of infrastructure and support (lack of effective support system and infrastructure in the firm, lack of technical support/service by vendor/consultant, lack of support by the government). The mean were calculated to determine the score of each group category. The measure of manufacturing performance were based on work done by Vickery et al.(1993) and Youssef (1991). Respondents were asked to indicate on a 5-point Likert scale their business units manufacturing performance on several dimensions in relation to their major competitors. Details of items are shown on the reliability and validity test in Table 1, Table 2, and Table 3 and Table 4.

Scale purification
Cronbachs alpha was used in this study to test how well the items in a set were positively correlated to one another (Sekaran, 2000). Initial reliability test was carried out on all variables and results indicate the values are all above the recommended minimum threshold of 0.7. Corrected item-Total Correlation analysis however indicates that two items from performance variable are less than 0.3. After statistical and theoretical consideration, the two items (item 3 and 11) were dropped form the scale. Then Validity analysis was carried out using factor analysis. During this stage, several items were deleted because they merged into the unintended factors. Also, dimensions of perceived obstacles and performance variables were relabeled according to the pattern suggested by the factor analysis. Table 1 indicates the value of the reliability test on the final items retained for further analysis. Table 1: Reliability test of all variables. Variables Perceived Benefits Operational benefits Managerial benefits Competitive benefits Perceived Obstacles Financial obstacles Knowledge obstacles People obstacles Support obstacles Performance Financial performance Manufacturing performance Cronbachs Alpha ( ) .891 .843 .820 .824 .902 .780 .923 .921 .807 .933 .913 .923

In this study, validity test was carried out using exploratory factor analysis (EFA) on the perceived benefits, perceived obstacles and manufacturing performance. For perceived benefits of scale, two items (enabled the firm to meet organizational goal and increase in the ability to compete) merged into the unintended factors. Therefore the items were deleted in order to increase content validity and internal reliability. Originally, 17 items were used to measure perceived benefit. After deleting two items from managerial benefits dimensions, there were only 15 items left for further analysis. Table 2 below shows the factor analysis after deleting the two items. Table 2: Exploratory Factor analysis for Perceived benefits construct Component 1 2 3 increase in efficiency .165 .051 .836 increase in productivity .197 -.026 .800 increase in reliability .208 .346 .763

increase in quality increase in flexibility cost reduction

.626 .544 .440

.184 .502 .311

.284 .219 .334

Table 2: Exploratory Factor analysis for Perceived benefits construct (Continued) Component 1 2 3 increase in market share .055 .298 .777 increase in profitability .243 .054 .775 increase in return on investment .406 .120 .765 increase in sales growth .234 .054 .671 improvement in communication .021 .340 .792 improvement in work flow .226 .010 .770 integration of business activity .031 .355 .720 improvement in lead time .166 -.135 .717 improvement in management control .321 .365 .620 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Table 3 indicates the results of EFA for perceived obstacles construct. The analysis reveals that instead of loading into five intended dimensions of obstacles (financial, skill, knowledge, people, and support), the components show strong loadings into only four different factors. The Skill and knowledge scale appeared to merge together as one scale (under component 1); therefore it is relabeled as perceived Knowledge obstacles. EFA results for organizational performance (Table 4) indicates loading into 2 separate dimensions. The dimensions are labeled as manufacturing performance (dimension 1) and financial performance (dimension 2). Item 20 merged into the unintended factor. Therefore, after the theoretical and statistical consideration, it is dropped from the scale. Table 3: Exploratory Factor Analysis for perceived obstacles construct 1 .881 .876 .865 .818 .803 .664 .613 .132 .197 .216 .275 .018 .076 .367 .390 .343 Component 2 3 .073 .111 .150 .081 .183 .135 .137 .132 .152 .159 .282 .144 .342 .194 .868 -.032 .005 .865 .010 .847 .050 .810 -.018 .855 -.014 .845 -.208 .612 .124 .552 .344 .532 4 -.026 .013 .012 .131 .013 .058 .260 .152 .233 .222 .104 .109 .055 .268 .120 -.172

Inexperience in new/ advance technology implementation Management Lacking of knowledge in new/advanced technology Our staff are lacking of skill for new/advanced technology Our management is lacking of skill for new/advanced technology Lacking of knowledge in new/advanced technology by staff Inability to evaluate financial return of new adopted technology Inadequate understanding of new/advanced technology Resistance by management Lack of support from the management Lack of support from staff Resistance by staff High cost equipment Lack of funding High integration cost of new technology High training cost Small market share

Lack of support by government Lack of technical support/service by vendor/consultant Lack of effective support system (infrastructure) in the firm Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

-.113 .211 .139

.063 .352 .397

.157 -.004 .155

.833 .778 .736

Table 4: Exploratory Factor Analysis for organizational performance construct Component 1 2 production lead time .099 .821 delivery reliability .160 .775 conformance to specifications .227 .771 product performance and reliability .250 .770 customers' perception of quality .319 .722 product features .248 .710 design and engineering quality .175 .670 response to customer requirement .326 .657 speed in changing product volume .122 .646 lead time of order .403 .623 speed in making product changeover .207 .582 new product introduction .122 .568 volume flexibility .173 .531 research and development effort .336 .502 unit labor cost .148 .915 unit material cost .269 .889 unit overhead cost .162 .877 unit production cost .438 .726 Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

RESULTS AND ANALYSIS

Table 5 indicates the means and standard deviations and coefficient alphas for perceived benefits, perceived obstacles, and organizational performance. The mean score for each variable indicates obtaining competitive and operational benefits as the two top perceived benefits from advanced technology adoption with mean scores of 4.41 and 4.32 respectively. Similar reasons have been found from studies done by Millen and Sohal (1998) and Sohal (1999) on motivations for AMT investment. Using firms that have made investment in AMT, the researchers found, regardless of the company size, obtaining financial and competitive benefits as the major motivation for them investing in AMT. These operational benefits can be achieved through various operational measures such as improved in efficiency, quality, and cost reduction. Therefore it appears that what firms perceive as benefits towards advanced technology adoption can be the same factor that motivates their investment on the technology. Meanwhile, Financial impediment and lacking of knowledge and skills have been found as the top two obstacles perceived by the responding firms in adopting advanced technologies with mean scores of 3.7 and 3.24 respectively. Previous studies have reported that lack of financial justification can be a main obstacle towards successful advanced technology implementation. This is because the new implemented technology is considered as a failure in achieving the financial benefits when the

financial return is lower than the expected (Hayes and Jaikumar, 1991; Sohal, 1997). Studies by Millen and Sohal (1998) have found failure to achieve financial target is one of the main risk anticipated by the adopting firms. Knowledge is found as the second obstacle towards technology adoption perceived by responding firms. Many previous studies have found disruption during implementation, problems with interconnection of the new equipment, and technical problems occurring after installation are all related to lack of skills and insufficient understanding of the new technologies (Abd-Rahman et al., 2009) . Therefore it appears what future adopter perceived as obstacles toward advanced technology adoption are the same obstacles that were found to impede technology adoption success amongst the adopters. Sub-variables within the same construct (within perceived benefits, perceived obstacles, or both performance aspects) have been found to be strongly correlated with each other. However, perceived benefits of the technology adoption are not significantly related to the perceived obstacles of technology adoption except for financial obstacles, where financial obstacle is significantly related to both operational and competitive benefits. This could mean that although firms see adoption of advanced technologies bringing operational and competitive benefits to the company, they are however confronted with the financial obstacles, which delay the investment decision. The correlation results also indicate that the higher the performance of the company, the more likely they perceive advanced technologies will give competitive benefits to the firms. Interestingly, firms experiencing higher manufacturing performance (non-cost performance) are more likely to perceive operational benefits from the usage of advanced technologies. Overall, the higher the performance of a company, the more likely they perceive benefits from advanced technologies adoption. In terms of the perceived obstacles toward advanced technology adoption, only people obstacles are significantly correlated to performance. It is found that less performing firms are more likely to perceived people resistance as obstacles towards advanced technology adoption. Table 5: Means, Standard Deviations, and Coefficient Alphas for Perceived Benefits, Perceived Obstacles, and Organizational Performance.
Mean 1. Operational Benefits 2. Managerial Benefits 3. Competitive Benefits 4. Overall Benefits 5. Financial Obstacles 6. Knowledge Obstacles 7. Staff Obstacles 8. Support Obstacles 9. Overall Obstacles 10. Non-Cost Performance 11. Cost Performance 12. Overall Performance **p<0.01 (2-tailed) *p<0.05 (2 tailed) 4.32 4.09 4.41 4.27 3.70 3.24 2.22 2.86 3.09 3.53 3.43 3.50 SD .62 .73 .59 .53 .78 .91 1.00 1.05 .67 .60 .69 .57 1 NA .50** .61** .87** .23** .03 -.09 -.06 .05 .21* .15 .21* NA .43** .81** .07 -.04 -.13 -.01 -.04 .14 .11 .15 NA .77** .21* -.03 -.12 .04 .02 .28** .20* .28** 2 3 4 5 6 7 8 9 10 11

NA .20* -.01 -.13 -.02 .01 .25** .18* .25** NA .48** .17* .26** .66** .08 -.03 .06 NA .45** .26** .85** -.16 -.04 -.15 NA .49** .71** -.42** -.20* -.40** NA .61** -.01 -.05 -.02 NA -.19* NA -.10 .58** NA -.19* .98** .74**

Further analysis has been carried out to see if there is any significant difference on the perceived benefits and obstacles between performing and less performing firms (a mean score of 3.5 was used as a cut-off point. A mean score of 3.5 and below is considered as less performing firms and a mean score of above 3.5 was considered as performing firm). Table 6 and Table 7 summarize the result of independent T test between performance as a dependent variable and both perceived benefits and obstacles as an independent variables. Results indicate the mean score of perceived operational benefits, perceived managerial benefits, perceived competitive benefits and perceived overall benefits are significantly different between the high and low performing firms. For all dimensions of perceived benefits, the mean score of high performing firms are higher than the low performing firms. Meanwhile, the mean scores of perceived people resistance as an obstacle and perceived overall obstacles are significantly different between the high and low performing firms. The mean score of people as an obstacle towards advanced technology adoption is lower (1.7917) in the high

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performing firms than the less performing firm (2.6130). Similar pattern is observed for the overall perceived obstacles toward technology adoption, where firms with higher performance perceive lower obstacles (mean score of 2.9171) than firms with lower performance (mean score of 3.2401) towards advanced technology adoption. Table 6: Independent t-test result for differences in perceived benefits of advanced technology adoption by performance level Perceived Benefits Operational Managerial Competitive Overall Performance High Low High Low High Low High Low Mean 4.4279 4.2169 4.2687 3.9288 4.5821 4.2466 4.4159 4.1288 Levenes test (sig. value) .651 .297 .662 .956 Sig. value .042 .005 .001 .001

Table 7: Independent t-test result for differences in perceived obstacles of advanced technology adoption by performance level Perceived Obstacles Financial Performance Mean 3.7045 3.6904 3.0320 3.4305 1.7917 2.6130 2.8458 2.8813 2.9171 3.2401 Levenes test (sig. value) .677 .037 .057 .949 .856 Sig. value .916 .010* .000 .842 .004

High Low Knowledge High Low People High Low Support High Low Overall High Low *Equal Variances not assumed

Although many advantages have been reported as a result of AMT usage, not all firms are able to reap all the potential benefits offered by the technology. This problem can be more apparent for SME manufacturers in Malaysia especially when most of the manufacturing equipments are acquired from overseas through various transfer arrangements. DISCUSSIONS AND CONCLUSIONS The objective of this study is to investigate why firms do not adopt AMT although they have the intention to adopt. This paper highlights what future adopters perceive as benefits of AMT adoption. As they have the intention to adopt, but yet to adopt, the paper also unveils their major obstacles towards the technology adoption. Results indicate that future adopters are aware of benefits gained from the implementation of the technology into their facilities. Obtaining the ability to compete has been found to be the most important benefit perceived by these firms as result of adopting the technology, followed by the ability to achieve operational benefits. Meanwhile, impediments related to financial and lacking of knowledge and abilities have been found to be the top two obstacles towards technology adoption as perceived by the responding firms. Although all sorts of financial assistance have been provided by the Malaysian government, it appears that while funding is available to purchase the technology, other factors like small market size, the cost of the equipment, high integration and training cost can be the major obstacles towards advanced technology adoption. As expected, lack of knowledge is found as the second highest obstacle perceived by firms. Firms that lack knowledge on the technology itself or the

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appropriateness of the technology for their manufacturing operations are often hesitant to invest in the technology. In fact, poor support from the technology supplier results in poor implementation performance especially when the adopting firms lack knowledge and experience in handling a similar technological innovation (Abd-Rahman et al., 2009). Due to this, firms are prone to fail or are slow to maximize the benefit from the technology adopted. It is interesting to note that the same risks are perceived by the future adopters of advanced technologies. Perceptions on perceived benefits and obstacles from the technology adoption differ by firms performance level. High performing firms perceive more benefits from advanced manufacturing technology adoption compared to the less performing firms. Rapid changes in market demand affect the product of a manufacturing firm and force it to redesign the product. Due to this, the existing equipment has been inadequate to incorporate the required changes in a product. Performing firms are more quickly to recognize of the requirement and distinguish what the technology could bring to their organization in order to remain competitive. Regardless of the performance level, firms perceived finance and lack of knowledge as the top two obstacles of AMT adoption. Meanwhile less performing firms see more obstacles in terms of people support compared to high performing firms. In terms of overall obstacles, high performing firms perceive fewer obstacles towards technology adoption compared to the low performing firms. The importance of knowledge and support from staff are enormous for successful implementation of advanced technologies into firms. Many firms which have already made investment in technology are unable to progress to higher level of technology. The investment end up as the white elephant and firms fail to benefit from the technology. This is especially true for SMEs. To conclude, this paper has demonstrated with empirical findings that SMEs in Malaysia are aware of the benefits resulting from usage of advanced technologies in their manufacturing operations. Performing and less performing firms are indifferent in terms of their perception of financial burden and lacking of knowledge as obstacles for them delaying their investment in the technologies. However, less performing firm perceived more obstacles in terms of staff and management support compared to the performing firms. The results of the study can provide useful information for the practitioner in planning for their technology adoption process. It also serves as guidelines to the policy makers in assisting SMEs manufacturers. REFERENCES Abd Rahman, A., Bennett, D. and Sohal, A. (2009). Transaction attributes and buyer-supplier relationships in AMT acquisition and implementation: the case of Malaysia. International Journal of Production Research, 47(9), 2257-2278S. Abd Rahman, A., Brookes, N. J. and Bennett, D. J. (2009). The Precursors and Impacts of BSR on AMT Acquisition and Implementation. IEEE Transactions on Engineering Management, 56(2), 285-297. Ariss, S. S., Raghunathan, T. S. and Kunnathar, A. (2000). Factors affecting the adoption of advanced manufacturing technology in small firms. SAM Advanced Management Journal, 14-29. Beatty, C. A. and Gordon, J. R. M. (1988). barriers to the implementation of CAD/CAM system. Sloan Management Review, Summer, 25-33. Chen, I. J. and Small, M. H. (1996). Planning for advanced manufacturing technology: a research framework. International Journal of Operation & Production Management, 16(5), 4-24. Dhar, U. R. (1989). FMS: major breakthrough in manufacturing management Engineering Management International 5(4), 271-277. Efstathiades, A., Tassou, S. A., Antoniou, A., et al. (1999). Strategic consideration in the introduction of advanced manufacturing technologies in the Cypriot industry. technovation, 15, 105-115. Ferraro, R. A., Hunley, T. E. and Shackney, O. Y. (1988). Banishing management barriers to automation. Manufacturing engineering, January, 44-48. Guimaraes, T., Cook, D. and Natarajan, N. (2002). Exploring the importance of business clockspeed as a moderator for determinants of supplier network performance. Decision Science, 33, 629644.

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