Factors affecting ERP system

adoption
A comparative analysis between SMEs and
large companies
G. Buonanno, P. Faverio, F. Pigni, A. Ravarini,
D. Sciuto and M. Tagliavini
(ETl( ln/ters/la (allanec – Lll(. (asle//an.a. lla/v
Abstract
Purpose – Proposes providing an insight about enterprise resource planning (ERP) adoption,
highlighting contact points and significant differences between the way small to medium-sized
enterprises (SMEs) and large companies approach such a task.
Design/methodology/approach – The research is based on a wide literature review, focused on the
identification of a taxonomy of business and organizational factors influencing ERP adoption. The
deriving research model was incorporated in a questionnaire that was preliminarily tested and finally
provided to a sample of 366 companies of any size. Responses were collected through personal
interviews made by a dedicated team to a top manager.
Findings – The analysis of the empirical data shows that business complexity, as a composed factor,
is a weak predictor of ERP adoption, whereas just company size turns out to be a very good one. In
other words, companies seem to be disregarding ERP systems as an answer to their business
complexity. Unexpectedly, SMEs disregard financial constraints as the main cause for ERP system
non-adoption, suggesting structural and organizational reasons as major ones. This pattern is
partially different from what was observed in large organizations where the first reason for not
adopting an ERP system is organizational. Moreover, the decision process regarding the adoption of
ERP systems within SMEs is still more affected by exogenous reasons or “opportunity of the moment”
than business-related factors, contrary to large companies that are more interested in managing
process integration and data redundancy/inconsistency through ERP implementation.
Research limitations/implications – The research model is based on the assumption that
business complexity and organizational change are the most relevant variables influencing ERP
adoption, and such variables are explained through a set of factors inherently limited by the results of
the literature review.
Practical implications – The results of the empirical research provide indication to SMEs willing
to take into consideration the adoption of an ERP system. The same outcomes could be incorporated
into the development strategies of ERP software houses.
Originality/value – This paper contributes to enhancing the understanding of the factors
influencing the evolution of information systems within SMEs with respect to large companies.
Keywords Manufacturingresource planning, Small to medium-sizedenterprises, Organizational change
Paper type Research paper
Introduction
The capability of enterprise resource planning (ERP) systems to manage a company’s
resources efficiently and effectively by providing a total, integrated solution for its
information processing needs (Fui Hoon Nah el a/, 2001) has persuaded both
practitioners and managers of the importance of integrated systems, not only for large
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
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Journal of Enterprise Information
Management
Vol. 18 No. 4, 2005
pp. 384-426
qEmerald Group Publishing Limited
1741-0398
DOI 10.1108/17410390510609572
multinational organizations, but also for small and medium-sized firms (Van
Everdingen el a/, 2000).
The evaluation of the contribution of ERP systems in terms of both value creation and
economic returns is a difficult task, because of the extent of the organizational changes
(Lozinsky, 1999; Shtub, 1999; Willcocks and Lacity, 1998) to which their implementation
leads, as well as the difficulties in predicting the return on investment (Mabert el a/,
2001). The competences required to manage properly the organizational change
determined by an ERP systemimplementation is still a debated issue. The most qualified
literature has always stressed the importance of change and project management
competences as critical success factors for ERP implementation (Davenport, 2000;
Mandal and Gunasekaran, 2003; Motwani el a/, 2002), hereby indirectly raising the issue
of small to medium-sized enterprises’s (SMEs’s) lack of organizational preparation. Such
a situation is mainly caused by the low extent of formalization of people’s roles and
responsibilities that is expressed by with their continuous re-shuffle (Dutta and Evrard,
1999). This structural condition makes the identification of ERP implementation’s main
figures, such as the process owner and the key user (Davenport, 2000), extremely difficult
to achieve. Beside this, SMEs generally suffer froma widespread lack of culture, as to the
concept of business process: it is not by chance that the reinforcement of the concept of
business process is often claimed among the critical success factors in ERP
implementation (Beretta, 2002). In particular, the business process concept helps
promoting co-operation and convergence of efforts among managers (i.e. managerial
integration), versus the internal competition induced by the functionally-oriented
organizational models which is typical of SMEs.
One of the most misleading legacies of traditional software project management is
that the company expects to gain value from the use of the software application as soon
as it is installed (Al-Mashari el a/, 2003). Since the adoption of an ERP system requires
extensive efforts, both for the technological and business aspects of the
implementation, neither information technology (IT) practitioners nor researchers
have developed a deterministic method to evaluate the related impacts (Al-Mashari,
2002). In spite of the benefits potentially offered by ERP systems (Banker el a/, 1998;
Davenport, 1998; Gable, 1998; Hicks and Stecke, 1998; Minahan, 1998) the evaluation
issue plays an essential role regardless the company size; during the planning phase it
is critical for companies to figure out whether a specific ERP system fits their business
practices. When the features of the software application do not correctly fit the
business requirements two possible strategies can be identified:
(1) (hange lhe /us/ness þrc·esses lc fil lhe scfluare u/lh m/n/ma/ ·uslcm/.al/cn. On
one hand, fewer modifications to the software application should reduce errors
and help to take advantage of newer versions and releases (Fui Hoon Nah el a/,
2001). On the other hand, this choice could mean changes in long-established
ways of doing business (that often provide competitive advantage), and could
shake up important people roles and responsibilities (Dewett and Jones, 2001;
Koch el a/, 1999).
(2) Mcd/fv lhe scfluare lc fil lhe þrc·esses. This choice would slow down the
project, could affect the stability and correctness of the software application and
could increase the difficulty of managing future releases, because the
customizations could need to be torn apart and rewritten to work with the
newer version (Koch el a/, 1999). Conversely, it implies less organizational
Factors affecting
ERP system
adoption
385
changes, because it does not require dramatically changing the company best
practices, and therefore the way people work.
Although ERP vendors are concentrating on the customization process needed to match
the ERP system modules with the actual features of existing processes in a number of
different industries, several studies show that configuring and implementing ERP
systems is a complex and expensive task (Van Everdingen el a/, 2000; Mabert el a/, 2000).
Several aspects related to this twofold approach towards ERP adoption and
implementation become even more critical, for their known specificities, within SMEs
(Ravarini el a/, 2000; Van Everdingen el a/, 2000). Although the effective use of
business information is a strategic goal for companies of any size, nowadays most of
the ERP systems available on the market are too expensive for the financial
capabilities of smaller companies (Chau, 1995; Gartner Group and Dataquest, 1998,
1999). SMEs differ from large companies in important ways affecting their
information-seeking practices (Lang el a/, 1997). These differences include the:
.
lack of (or substantially less sophisticated) information system management
(Kagan el a/, 1990);
.
frequent concentration of information-gathering responsibilities into one or two
individuals, rather than the specialization of scanning activities among top
executives (Hambrick, 1981);
.
lower levels of resource available for information-gathering; and
.
quantity and quality of available environmental information (Pearce el a/, 1982).
Chan (1999) asserts that many SMEs either do not have sufficient resources or are not
willing to commit a huge fraction of their resources due to the long implementation
times and high fees associated with ERP implementation. The resource scarcity, the
lack of strategic planning of information systems (IS) (Cragg and Zinatelli, 1995; Levy
and Powell, 2000; Zinatelli el a/, 1996), the limited expertise in IT (Levy and Powell,
2000) and also the opportunity to adopt a process-oriented view of the business are
among the factors that strongly influence, either positively or negatively, ERP
adoption by SMEs. Thus it is necessary to find out alternative solutions providing the
ERP capabilities at an affordable price, including implementation costs (Rao, 2000).
Some ERP vendors have taken up the gauntlet and have been moving their attention
toward SMEs (Gable and Stewart, 1999) by offering simplified and cheaper solutions
(Kirchmer, 1998) from both the organizational and technological points of view,
pre-configured systems based on best-practices at a fraction of the cost originally
required and promising implementation times of 60 days. In spite of such promises,
there is not a general agreement on the effectiveness of such systems. As a result, the
current ERP systems adoption rate in SMEs is still low. Furthermore, even if ERP
implementation differences between large and small organizations are recognized in
literature (Bernroider and Koch, 2001), their focus is on the decision-making process.
Hence, other issues need to be further explored: To what extent SMEs informational
needs are different with respect to large companies? Are SME peculiarities a real
obstacle to ERP adoption? Is it possible to identify a relationship between
organizational change and ERP adoption in companies of different size?
This paper studies the factors influencing ERP systems adoption, and discusses to
what extent the differences between SMEs and larger firms affect such factors,
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contributing to the increasing literature on ERP adoption in small businesses. Through
a detailed literature review, a set of indicators are identified as variables which could
influence the ERP adoption process. These indicators have been tested on the field
through an empirical study carried out on a sample of 366 companies.
Conceptual framework
The literature provides different definitions of ERP systems: Rosemann (1999) defines an
ERP system as a customizable, standard application software which includes integrated
business solutions for the core processes (e.g. production planning and control,
warehouse management) and the main administrative functions (e.g. accounting, human
resource management) of an enterprise. Gable (1998) defines it as a comprehensive
package software solution that seeks to integrate the complete range of business
processes and functions in order to present an holistic view of the business from a single
information and IT architecture. Watson and Schneider (1999) define ERP as an
integrated, customized, packaged software-based system that handles the majority of an
enterprise’s system requirements in all functional areas such as finance, human
resources, manufacturing, sales, and marketing. It has a software architecture that
facilitates the flowof information among all functions within an enterprise. It is built on a
common database and is supported by a single development environment. Previous
research works (Gibson el a/, 1999; Ryan, 1999) suggested how ERP adoption and
implementation could be an highly complex task in which strong managerial and
strategic competences are required to achieve the best fit between the business
peculiarities and the system itself and to deal with the unavoidable organizational
impact induced by an ERP implementation. Other studies outlined different adoption
patterns depending on company size and also observed that smaller companies face only
subset of the needs and opportunities of larger organizations (Markus and Tanis, 2000).
Furthermore, for a long time ERP adoption reasons within SMEs were explained only by
contingency or exogenous factors (Tagliavini el a/, 2002). To investigate these
differences further, the research model presented in this paper explores to what extent
the business complexity (measured from a set of business factors) and the awareness of
the organizational requirements (measured by the extent of organizational change) affect
the extent of ERP adoption. Such an effort seems, in fact, feasible for organizations
experiencing high business complexity and information needs, and expecting, or even
planning, significant organizational changes.
The methodology contribution of this paper is experimentally proved by testing the
relationship between business complexity, organizational change and ERP adoption on
300 SMEs through direct, survey-based, interviews. Such an approach, based on a
statistical analysis on a high number of respondents, implies that its findings are not
easily comparable to other previous research works that are often based on case
studies on a very small set of companies.
The following sections will detail the two main components of the conceptual
framework: the business factors and the organizational change.
8us/ness fa·lcrs
Although the organizational structure of larger firms could be very different fromSMEs,
it is reasonable to assume that companies of any size, characterized by high
organizational complexity (or “business complexity”), also show a critical need for
Factors affecting
ERP system
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387
coordination and control of business activities which, in turn, is related to the complexity
of the information system(Grinyer el a/, 1986; Lorange, 1980; Vancil and Lorange, 1975).
Since ERP systems have been very often advocated by researchers and practitioners as
“the answer” to manage the complexity of information flows more effectively, this last
interpretation of business complexity, will be used in the research model to investigate if
the “the condition” of being a complex organizations (which is measured by a set of
business factors) and a greater extent of ERP adoption are straight related factors. Hence,
the model approaches ERP systems as a sort of “black box” and thus their undeniable
inner complexity (expressed by implementation and technological issues for instance) is
taken for granted, and are therefore considered only an exogenous factor embedded into
the ERP concept itself. In particular, the several issues related to ERP system chartering,
development and maintenance (i.e. project and change management issues or cultural
and organizational un-readiness) are typical of the “critical success factors” stream of
research (Davenport, 2000; Mandal and Gunasekaran, 2003; Motwani el a/, 2002) and
generally refer more to the success of the implementation than to the reasons that bring
companies to evaluate the opportunity of implementing an ERP system. Therefore, is
business complexity the possible explanation?
The assessment of the complexity measures is partially based on previous works
(Grinyer el a/, 1986; Yasai-Ardekani and Haug, 1997) that have developed and
proposed metrics essentially based on size, diversification, and divisionalization. This
paper neither proposes any new measure nor tests their reliability; instead it studies
their occurrence in ERP adoption. Since the consistency of these indicators is essential
for the theoretical validity of the whole framework, a detailed analysis of the IS
literature has been performed in order to identify a set of additional business factors:
.
(cmþanv s/.e ím/·rc. sma//. med/um. /argeì Existing literature confirms the
existence of a mutual dependence between size and organizational complexity.
Kimberly (1976) stressed the necessity of applying a different approach
depending on the industry the company belongs to: for the services industry the
number of employees has a better fit, while for manufacturing companies the
turnover seems to be a better match. In any case, literature emphasizes size as
one of the issues increasing the need for co-ordination and control of
organizational activities (Howard and Hine, 1997; Yasai-Ardekani and Haug,
1997). Apart from any organizational or strategic remark, other research works
(IDC, 1999) simply suggest a direct relationship between the size of organizations
and the percentage of organizations where ERP has been implemented.
.
The mar/el area í/c·a/. reg/cna/. nal/cna/. /nlernal/cna/ì Working on a wider
market area requires the management of more differentiated legal and cultural
issues, thus introducing a higher level of complexity (Davenport, 1998; Hamel
and Prahalad, 1994; Prahalad, 1990; Sanders and Carpenter, 1998), as well as the
facing of competitive pressures characterizing the international markets (Bartlett
and Ghoshal, 1989; Roth and O’Donnell, 1996; Rumelt, 1974). In addition, as
companies become more global and develop international supply chains, the
limitations of MRPII have become apparent. Literature has identified the
attempts being made by many organizations to expand their IS infrastructure
beyond their organizational boundaries through the development of
inter-organizational business systems. Consequently, this has resulted in the
widespread adoption of ERP solutions (Irani, 2002).
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.
The mem/ersh/þ an /nduslr/a/ grcuþ íe/lher as lhe hc/d/ng cr as a ·cnlrc//ed firmì
This variable seems to be strongly related to the co-ordination of dispersed
business units, in terms of alignment of processes and procedures both between
the holding and the controlled companies and among controlled companies
themselves. However, if the imposition of common operating processes on all
units could lead to a tight coordination between the controlled companies, in a
multiregional context strict process uniformity could be counterproductive in
terms of flexibility (Davenport, 1998).
.
The þresen·e cf /ran·h cffi·es í/c·a//.al/cn and num/er cf /ran·hesì The
management of information flows is a crucial issue for companies with branch
offices which need to be remotely controlled. In larger organizations the
development of intranets is often characterized by a lack of coordination and
supervision (Horgan, 1997). SMEs face different issues (i.e. the cultural and
technological levels of the entrepreneur): this is one of the aspects that must be
considered to comprehend fully the fall-outs in terms of management complexity,
organizational impact and required competencies.
.
The /ete/ cf d/ters/fi·al/cn í/n lerms cf þrcdu·ls. mar/els. le·hnc/cg/esì
Operating in different product-market combinations introduces another level of
complexity (Yasai-Ardekani and Haug, 1997). In related-diversified firms, an
increase in the number of businesses adds information-processing demands by
increasing business-unit interdependencies (Hill and Hoskisson, 1987; Kerr, 1985;
Michel and Hambrick, 1992; Pitts and Hopkins, 1982). In unrelated-diversifiers,
as the number of businesses increases, the information-processing requirements
associated with maintaining efficient internal capital markets also increase
(Jones and Hill, 1988). Moreover, because of the greater need for co-ordination
and control of activities, complex organizations will tend to have specialized
planning departments, employ a larger number of planners and consequently
devote a substantially larger amount of financial resources to strategic planning
(Grinyer el a/, 1986; Kukalis, 1989).
.
The degree cf fun·l/cna/ exlens/cn ínum/er cf a·l/t/l/es ·arr/ed cul /nlerna//vì
Many companies prefer to outsource those activities that are not directly related to
the business strategies (non-core processes). The degree of functional extension
refers to the number of strategic functions directly managed within the company,
which should be related to the amount of information to be managed (Price, 1997).
In the light of the identified business factors, it is therefore necessary to verify the
association between these factors and the use of ERP systems by testing the following
six main hypotheses:
H1 The company size affects the adoption of ERP systems.
H? The market area affects the adoption of ERP systems.
HS The membership of a group affects the adoption of ERP systems.
H4 The presence of branch offices affects the adoption of ERP systems.
Ho The level of diversification affects the adoption of ERP systems.
H6 The degree of functional extension affects the adoption of ERP systems.
Factors affecting
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Organ/.al/cna/ ·hange fa·lcrs
Even though business factors play an important role in determining business complexity
they are not considered sufficient to assure the feasibility of ERP adoption. Another issue
that deserves consideration is the organizational impact of ERP systems as they tend to
impose their own logic on company strategy, organization and culture (Davenport, 1998).
Thus, the ERP adoption decision affects most of the company business functions and
directly involves a significant number of people. The project team responsible for ERP
implementation will be challenged to either match the functionality of the application to
business practice or find ways to adapt or change current processes and procedures,
while the project team could face organizational resistance to changing the status quo
(Laughlin, 1999). By providing universal, real-time access to operating and financial
data, ERP systems allow companies to streamline their management structures, creating
flatter, more flexible, and more democratic organizations. On the other hand, they also
involve the centralization of control over information and the standardization of
processes, which are qualities more consistent with hierarchical, command-and-control
organizations with uniform cultures (Davenport, 1998). Are the organizations aware of
such a change and then ready to bear and manage it? Is the alignment between the
desired organizational change and the complexity of the IT solution verified? These
remarks highlight a possible relationship between the extent of organizational change
and the rate of ERP system adoption.
The extent of organizational change represents the degree of company
transformation that the entrepreneur plans as a consequence of a technological
innovation. This measure depends on the evaluation of the organizational and
economic impacts, such as the competence of the internal staff or their expected
resistance to change to the adoption of a newtechnology. In order to analyze the factors
influencing the adoption of ERP systems, we assume that ERP systems could generate
larger benefits if implemented when a high level of organizational change is planned.
Venkatraman (1994) classifies five main levels of transformation (Figure 1):
(1) Lc·a/ aulcmal/cn cf ex/sl/ng þrc·edures This strategy is pursued only for
automation of local, independent procedures. It requires minimal efforts and the
corresponding expected results are enhancements in business process
performance. Benefits coming from this strategy are easily duplicable, as
Figure 1.
Levels of business
transformation related to
technological innovation
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most of standardized solutions. Therefore, it is unlikely to obtain competitive
advantage by simply automating existing procedures.
(2) lnlerna/ /nlegral/cn cf ex/sl/ng /us/ness þrc·esses. It aims at integrating the
business processes and the company IS in order to create competitive advantage.
The required integration has to be pursued both at the technological and
organizational level: whenever necessary, people belonging to different business
functions have to cooperate to reach common objectives. Together with the
necessary automation effort, this strategy requires an integration effort; however,
in both cases the business process structures remain unchanged.
(3) 8us/ness þrc·ess reeng/neer/ng. It involves the partial or complete redesign of
business processes, affecting not only the company procedures, but also its
organizational structure.
(4) 8us/ness nelucr/ redes/gn. Changes overcome the boundaries of the company
and could affect the entire network of its external relationships. For instance,
electronic data interchange (EDI) can represent the technology chosen to pursue
this strategy, but a great effort has to be put into business process integration,
through a continuous information exchange and competence sharing. Under
these conditions each partner can exploit the competencies of the business
network instead of adopting expensive solutions of vertical integration.
(5) Redefin/l/cn cf ·cmþanv /cundar/es lhrcugh lhe ·real/cn cf /nlercrgan/.al/cna/
re/al/cnsh/þs. The information communication technologies (ICT) allow the
redefinition of the competitive environment through the creation of strong
inter-organizational relationships (joint ventures, long-term contracts, licensing
agreements).
Therefore another hypothesis to be tested is focused on the matching between
organizational issues and ERP system adoption:
H7 The extent of planned organizational change is directly related to the use of
ERP systems (the greater is the planned organizational change, the greater is
the rate of adoption of ERP systems).
To develop an effective framework it is necessary to include into the research model (as
control measures) both the endogenous and exogenous reasons that may affect ERP
adoption. According to the literature (Al-Mashari, 2002), among the reasons that may
affect ERP adoption, either positively or negatively, it is possible to distinguish operational
reasons (i.e. improving responsiveness to customers and simplifying ineffective or
complex business processes) and technological reasons (i.e. Y2Kcompliance requirements,
integration of business processes and systems, replacement of older, obsolete systems).
For those companies which have stated that they do not make use of an ERP system, we
classified each justification for ERP non-adoption into four main categories:
(1) Structural motivations related to the need for coordination and control of business
activities, thus to the complexity of information flows (which means that the
company is not sufficiently complex to need an ERP systemto manage the business).
(2) Organizational motivations (the company is not prepared to face and manage
the organizational changes related to the adoption and implementation of an
ERP system).
Factors affecting
ERP system
adoption
391
(3) Economic motivations (ERP system adoption and implementation would be too
costly for the company).
(4) Other reasons.
In the light of the control measures introduced the whole framework can be represented
as shown in Figure 2.
Methodology
Based on the literature review, focused on the identification of a taxonomy of business
and organisational factors, a questionnaire was designed. It comprised three parts: the
company demographics, the assessment of each business factor and the extent of the
organizational change. Before the complete deployment of the survey a first trial was
carried out on 122 companies suggesting the validity of the proposed approach
(Tagliavini el a/, 2002). Responses were collected through personal interviews made by
a dedicated team to a top manager (possibly the entrepreneur him/herself or the CEO)
since the proposed questions required the knowledge of the main business objectives,
as well as of the features of the different business activities. The final questionnaire (an
abstract is shown in Figure 2) was then proposed to a random sample of about 2000
Italian companies of any size and industry, geographically located in northern Italy.
Data were finally analyzed with SPSS v11, in particular the hypotheses (from H1-H7)
have been tested by means of cross tabulations. Pearson chi-square was used to verify
whether the cross-tabulated groups were different, while þ-values measure how the
previously mentioned difference is statistically significant. Finally, the value of
Spearman’s R is used to evaluate the reliability of correlations.
A preliminary validation of collected data has been performed by cross-tabulating
ERP adoption with each of the seven factors corresponding to the seven hypotheses
(from H1-H7). Chi-square and þ-value tests have been used to verify whether the set of
companies using an ERP system is significantly different from the set of the not
adopters. Then, the connection existing between each factor and ERP adoption has
been assessed through Pearson’s R. A further analysis has been also performed
Figure 2.
Theoretical framework
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separating SMEs from large companies to highlight possible differences between the
two subsets.
Variable measurement
According to the theoretical framework, the following sets of variables were measured:
(1) The business complexity factors have been evaluated through six indicators
detailed in the Figure 3. Respondents were asked to qualitatively assess each
variable of the set. More specifically:
.
Diversification has been measured as a synthetic index of business strategy
by offering only two possible responses: diversification and other strategies
(including cost-based and differentiation strategies).
.
Degree of functional extension, i.e. the number of activities carried out
internally, has been assessed with respect to a set of typical business
activities. The classical representation of the value chain (Porter and Millar,
1985) has been integrated with a more recent measure used to assess the
impact of BPR on manufacturing firms (Guimaraes and Bond, 1996). This
measure has been already adopted in author’s previous research (Tagliavini
el a/, 2002).
(2) The extent of organizational change which aims at evaluating the level of
organizational change the company is prepared to face in order to achieve
competitive advantage through the use of IT, has been assessed through a
question suggesting Venkatraman five levels of organizational change. Due to
the academic formulation which undoubtedly characterizes the question in the
survey, all the organizational implications and characteristics related to each
level of the Venkatraman’s model have been thoroughly explained by the
interviewers to respondents, to clearly point out any organizational-related
issue.
(3) The technological and operational drivers have been assessed using the model
proposed by Al-Mashari (2002) integrated with other drivers which have been
identified in a previous research (Chau, 1995). Multiple responses were allowed.
(4) The motivations for ERP non-adoption have been assessed by asking
respondents to select items from a check-list (also in this case multiple
responses were allowed).
Research findings
Of the 2,000 contacted companies only 370 accepted to be interviewed yielding a
response rate of 18.5 percent. Data from this sample were collected and filtered to
resolve inconsistencies and correct anomalies, resulting in 366 valid questionnaires.
The choice of the direct interviews to collect data is accountable for the low rate of
rejected questionnaires: only four questionnaires were discarded.
Demcgraþh/· dala
The first part of the questionnaire dealt with companies’ demographics. Firm size
(number of employees and turnover) was investigated according to the current
definition provided by the European Union (see Table I).
Factors affecting
ERP system
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393
Figure 3.
Measures adopted in the
questionnaire
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Small sized companies represent 43 percent of respondents (18 percent micro, 25
percent small) while 42 percent have a medium size. Large enterprises represent 15
percent of the sample.
With respect to the industry, the sample can be further categorized into three main
groups: manufacturing (66 percent), services (20 percent) and trade (14 percent). This
distribution is highly representative of the economical characteristics of this
geographic area, where large enterprises and services/wholesaling companies play a
secondary role (see Figure 4).
(cmþanv s/.e (H1)
The analysis of the correlation between company size (as a composite index between
turnover and number of employees) and ERP adoption shows a very good fit with data.
The two groups are significantly different (chi-square equal to 65,166 and þ-value
lower than 0.001) while the Pearson’s R (0.401) shows that firms size and ERP adoption
are significantly correlated. In detail, while only 7 percent of companies not making use
of ERP systems are large-sized, the value corresponding to those large companies
adopting ERP systems seems even more significant. In fact, despite not constituting
the most relevant group in absolute terms (medium-sized companies are the 47 percent
of the whole sample adopting ERP), in relative terms as to the sample composition (in
which large companies are only 15 percent) large companies show an interesting result
(38 percent). The analysis clearly shows also that the rate of ERP system adoption is
quite low among both micro and small firms (3 percent and 12 percent respectively).
This reinforces the persuasion that the company size affects the ERP adoption process.
H1: verified.
Mem/ersh/þ cf a grcuþ (H2)
The cross tabulation for H? shows an inverse correlation between membership of a
group and ERP adoption (Pearson’s R ¼ 20:277). Moreover, the 55 percent of companies
Criteria
Micro
enterprises
Small-sized
enterprises
Medium-sized
enterprises
Maximum number of employees ,10 ,50 ,250
Maximum turnover in e million – 7 40
Maximum balance-sheet total in e million – 5 27
Source: European Commission (1996)
Table I.
SMEs definition
Figure 4.
Sample definition by size,
industry and enterprise
application
Factors affecting
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395
belonging to a group prefer other management systems rather than ERP (Tables II-IV).
A correct interpretation of such result requires considering that distribution of the
sample according to this factor as unbalanced (237 firms in a standalone configuration
compared to 53 belonging to an industrial group). Nonetheless, it is reasonable to
conclude that, despite what suggested in the existing literature, the membership of a
group seems not to be directly related to the use of ERP systems.
The Pearson’s R index of correlation computed on SMEs (20.169, Tables V-VII) and
large enterprises (0.060, Tables VIII-X) did not show consistent results.
H?: rejected.
Mar/el area (H3)
At a first glance, a wider market area of a company seems to be related to the use of
ERP systems. Only a small subset of companies with a limited market area make use of
ERP systems, while this value is higher for companies with a national market area (22
percent) and even more for those companies acting on international markets (74
percent, see cross-tabulation in Tables XI-XIII). Nevertheless, the high percentage of
companies with an international market area which do not use ERP systems (68
percent) clearly shows that the ERP system is far from being the only solution adopted
as stated in HS. The significant difference between the cross-tabulated groups,
Size
Company size and ERP adoption
(whole sample)
Other management system ERP Total
Micro Count 62 3 65
% within size 95.4 4.6 100.0
% within ERP 23.6 3.3 18.4
Small Count 77 11 88
% within size 87.5 12.5 100.0
% within ERP 29.3 12.2 24.9
Medium Count 105 42 147
% within size 71.4 28.6 100.0
% within ERP 39.9 46.7 41.6
Large Count 19 34 53
% within size 35.8 64.2 100.0
% within ERP 7.2 37.8 15.0
Total Count 263 90 353
% within size 74.5 25.5 100.0
% within ERP 100.0 100.0 100.0
% of total 74.5 25.5 100.0
Table II.
Company size and ERP
adoption (whole sample)
Value df Asymptotic significance (two-sided)
Pearson chi-square 65.166
a
3 0.000
Likelihood ratio 65.121 3 0.000
Linear-by-linear association 56.552 1 0.000
n of valid cases 353
Note:
a
0 cells (0.0 percent) have expected count less than 5. The minimum expected count is 13.51
Table III.
Company size and ERP
adoption (whole sample)
– Chi-square tests
JEIM
18,4
396
(chi-square ¼ 14:538, þ-value ¼ 0:000, Tables XI-XIII), is contradicted by the
unsatisfactory value of the Pearson’s R index (0.190), which confirms the lack of a
correlation between market area and ERP adoption.
HS has also been tested on both SMEs and large companies, pointing out the same
trend (Tables XIV-XVI and Tables XVII-XIX).
HS: rejected.
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.401 0.042 8.197 0.000
c
Ordinal by ordinal Spearman correlation 0.405 0.044 8.287 0.000
c
n of valid cases 0.353
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table IV.
Company size and ERP
adoption (whole sample)
– symmetric measures
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 27.327
b
1 0.000
Continuity correction
a
25.919 1 0.000
Likelihood ratio 25.640 1 0.000
Fisher’s exact test 0.000 0.000
Linear-by-linear association 27.250 1 0.000
n of valid cases 355
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. The
expected count is 24.85
Table VI.
Membership and ERP
adoption (whole sample)
– Chi-square tests
Membership of a group and ERP
adoption (whole sample)
Other management system ERP Total
Member of a group Count 54 44 98
% within membership 55.1 44.9 100.0
% within ERP 20.4 48.9 27.6
Standalone company Count 211 46 257
% within membership 82.1 17.9 100.0
% within ERP 79.6 51.1 72.4
Total Count 265 90 355
% within membership 74.6 25.4 100.0
% within ERP 100.0 100.0 100.0
% of total 74.6 25.4 100.0
Table V.
Membership and ERP
adoption (whole sample)
Factors affecting
ERP system
adoption
397
lresen·e cf /ran·h cffi·es (H4)
According to the literature, the presence of branch offices could be a factor that
positively influences the complexity of information flows and that, consequently, could
lead to a larger adoption of ERP systems. The empirical analysis shows a correlation
between the extent of geographical dispersion of the company and the use of ERP
systems. These systems have been adopted by only 15 percent of respondents with no
branch offices and by 42 percent of companies with geographically dispersed offices
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 20.277 0.056 25.426 0.000
c
Ordinal by ordinal Spearman correlation 20.277 0.056 25.426 0.000
c
n of valid cases 355
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table VII.
Membership and ERP
adoption (whole sample)
– symmetric measures
Membership of a group and ERP
adoption (SMEs)
Other management system ERP Total
Member of a group Count 36 17 53
% within membership 67.9 32.1 100.0
% within ERP 15.2 32.1 18.3
Stand-alone company Count 201 36 237
% within membership 84.8 15.2 100.0
% within ERP 84.8 67.9 81.7
Total Count 237 53 290
% within membership 81.7 18.3 100.0
% within ERP 100.0 100.0 100.0
% of total 81.7 18.3 100.0
Table VIII.
Membership and ERP
adoption (SMEs)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson chi-square 8.269
b
1 0.004
Continuity correction
a
7.177 1 0.007
Likelihood ratio 7.393 1 0.007
Fisher’s exact test 0.009 0.005
Linear-by-linear association 8.240 1 0.004
n of valid cases 290
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. The
expected count is 9.69
Table IX.
Membership and ERP
adoption (SMEs) –
Chi-square tests
JEIM
18,4
398
(Tables XX-XXII). The evaluation of the behavior of companies making use of ERP
systems confirms this relationship: 62 percent of them have geographically dispersed
offices, while only 38 percent of ERP users have no branch offices to manage. Although
this interesting trend, a correlation between the two variables cannot be fully claimed:
the empirical verification shows a Pearson’s R value equal to 0.297 that is not
statistically reliable to state that the presence of branch offices directly affects a higher
rate of ERP system adoption (Tables XX-XXII).
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 0.193
b
1 0.660
Continuity correction
a
0.011 1 0.915
Likelihood ratio 0.196 1 0.658
Fisher’s exact test 0.749 0.464
Linear-by-linear association 0.190 1 0.663
n of valid cases 53
Notes:
a
Computed only for a 2 £ 2 table;
b
1 cell (25.0 percent) has expected count less than 5. The
expected count is 4.66
Table XII.
Membership and ERP
adoption (large
companies) – Chi-square
tests
Membership and ERP adoption (large
companies)
Other management system ERP Total
Member of group Count 15 25 40
% within membership 37.5 62.5 100.0
% within ERP 78.9 73.5 75.5
Standalone company Count 4 9 13
% within membership 30.8 69.2 100.0
% within ERP 21.1 26.5 24.5
Total Count 19 34 53
% within membership 35.8 64.2 100.0
% within ERP 100.0 100.0 100.0
% of total 35.8 64.2 100.0
Table XI.
Membership and ERP
adoption (large
companies)
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 20.169 0.067 22.907 0.004
c
Ordinal by ordinal Spearman correlation 20.169 0.067 22.097 0.004
c
n of valid cases 290
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table X.
Membership and ERP
adoption (SMEs) –
symmetric measures
Factors affecting
ERP system
adoption
399
The empirical verification of H4 on the subsets obtained by separating the companies
by size does not show any interesting result (Tables XXIII-XXV and
Tables XXVI-XXVIII). In particular, the statistical analysis on large companies
(Tables XXVI-XXVIII) does not show any meaningful difference between the two
groups (chi-square ¼ 0:348 and þ-value ¼ 0:409).
H4: rejected (weak significance on the whole sample).
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.060 0.134 0.432 0.668
c
Ordinal by ordinal Spearman correlation 0.060 0.134 0.432 0.668
c
n of valid cases 53
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XIII.
Membership and ERP
adoption (large
companies) – symmetric
measures
Market area
Market area and ERP adoption
(whole sample)
Other management system ERP Total
Local Count 19 2 21
% within market area 90.5 9.5 100.0
% within ERP 7.0 2.2 5.8
Regional Count 25 2 27
% within market area 92.6 7.4 100.0
% within ERP 9.2 2.2 7.4
National Count 83 20 103
% within membership 80.6 19.4 100.0
% within ERP 30.6 21.7 28.4
International Count 144 68 212
% within market area 67.9 32.1 100.0
% within ERP 53.1 73.9 58.4
Total Count 271 92 363
% within market area 74.7 25.3 100.0
% within ERP 100.0 100.0 100.0
% of total 74.7 25.3 100.0
Table XIV.
Market area and ERP
adoption (whole sample)
Value df Asymptotic significance (two-sided)
Pearson Chi-square 14.358
a
3 0.002
Likelihood ratio 16.081 3 0.001
Linear-by-linear association 13.113 1 0.000
n of valid cases 363
Note:
a
0 cells (0.0 percent) have expected count less than 5. The minimum expected cost is 5.32
Table XV.
Market area and ERP
adoption (whole sample)
– Chi-square tests
JEIM
18,4
400
D/ters/fi·al/cn (H5)
Despite the support provided by the literature for diversification as a factor affecting
the complexity of information flows, the empirical verification does not show
meaningful correlations with the adoption of ERP systems (Tables XXIX-XXXI). Only
27 percent of diversified companies make use of an ERP system. Moreover, 55 percent
of companies adopting an ERP system pursue another kind of strategy. The low
significance of diversification as a factor affecting ERP adoption is also confirmed by
the results of the statistical analysis: the two groups are not significantly different
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.190 0.042 3.684 0.000
c
Ordinal by ordinal Spearman correlation 0.196 0.046 3.796 0.000
c
n of valid cases 363
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XVI.
Market area and ERP
adoption (whole sample)
– symmetric measures
Market area
Market area and ERP adoption (SMEs)
Other management system ERP Total
Local Count 19 19
% within market area 100.0 100.0
% within ERP 7.9 6.4
Regional Count 21 2 23
% within market area 91.3 8.7 100.0
% within ERP 8.7 3.6 7.7
National Count 74 13 87
% within market area 85.1 14.9 100.0
% within ERP 30.6 23.6 29.3
International Count 128 40 168
% within market area 76.2 23.8 100.0
% within ERP 52.9 72.7 56.6
Total Count 242 55 297
% within market area 81.5 18.5 100.0
% within ERP 100.0 100.0 100.0
% of total 81.5 18.5 100.0
Table XVII.
Market area and ERP
adoption (SMEs)
Value df Asymptotic significance (two-sided)
Pearson Chi-square 9.643
a
3 0.022
Likelihood ratio 13.235 3 0.004
Linear-by-linear association 9.561 1 0.002
n of valid cases 297
Note:
a
Two cells (25.0 percent) have expected count less than 5. The minimum expected count is 3.52
Table XVIII.
Market area and ERP
adoption (SMEs) –
Chi-square tests
Factors affecting
ERP system
adoption
401
(Chi-square equal to 0.261, with a þ-value of 0.610) and the very low value of Pearson’s
R correlation index (0.027) bears out that no correlation occurs. Accordingly to the
methodology, the analysis has been carried out on both SMEs and large companies to
verify possible different behaviors in the sub-groups (Tables XXXII-XXXIV and
Tables XXXV-XXXVII), but no statistical evidence has been found.
Ho: rejected.
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.180 0.039 3.138 0.002
c
Ordinal by ordinal Spearman correlation 0.173 0.049 3.019 0.003
c
n of valid cases 297
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XIX.
Market area and ERP
adoption (SMEs) –
symmetric measures
Market area
Market area and ERP adoption
(large companies)
Other management system ERP Total
Local Count 1 1
% within market area 100.0 100.0
% within ERP 2.9 1.9
Regional Count 3 3
% within market area 100.0 100.0
% within ERP 15.8 5.7
National Count 4 7 11
% within market area 36.4 63.6 100.0
% within ERP 21.1 20.6 20.8
International Count 12 26 38
% within market area 31.6 68.4 100.0
% within ERP 63.2 76.5 71.7
Total Count 19 34 53
% within market area 35.8 64.2 100.0
% within ERP 100.0 100.0 100.0
% of total 35.8 64.2 100.0
Table XX.
Market area and ERP
adoption (large
companies)
Value df Asymptotic significance (two-sided)
Pearson Chi-square 6.230
a
3 0.101
Likelihood ratio 7.351 3 0.062
Linear-by-linear association 1.397 1 0.237
n of valid cases 53
Note:
a
Five cells (62.5 percent) have expected count less than 5. The minimum expected count is 0.36
Table XXI.
Market area and ERP
adoption (large
companies) – Chi-square
tests
JEIM
18,4
402
Iun·l/cna/ exlens/cn (H6)
Even though most of respondents (88 percent) manage all the business activities
internally, the functional extension does not seem to affect the rate of ERP system
adoption. For each meaningful value of functional extension (cross-tabulation cells
with more than five companies, Tables XXXVIII-XL), the percentage of companies
making use of ERP systems is at most equal to the 26.1 percent. In particular, only 25.9
percent of the 321 companies characterized by the maximum level of functional
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.164 0.145 1.187 0.241
c
Ordinal by ordinal Spearman correlation 0.163 0.141 1.180 0.244
c
n of valid cases 53
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXII.
Market area and ERP
adoption (large
companies) – symmetric
measures
Branch offices
Branch offices and ERP adoption
(whole sample)
Other management system ERP Total
No Count 193 35 228
% within branch offices 84.6 15.4 100.0
% within ERP 70.7 37.6 62.3
Yes Count 80 58 138
% within branch offices 58.0 42.0 100.0
% within ERP 29.3 62.4 37.7
Total Count 273 93 366
% within branch offices 74.6 25.4 100.0
% within ERP 100.0 100.0 100.0
% of total 74.6 25.4 100.0
Table XXIII.
Branch offices and ERP
adoption (whole sample)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 32.282
b
1 0.000
Continuity correction
a
30.890 1 0.000
Likelihood ratio 31.597 1 0.000
Fisher’s exact test 0.000 0.000
Linear-by-linear association 32.194 1 0.000
n of valid cases 366
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. the
maximum expected count is 35.07
Table XXIV.
Branch offices and ERP
adoption (whole sample)
– Chi-square tests
Factors affecting
ERP system
adoption
403
extension claim to make use of an ERP system. The unbalanced distribution of the
sample undoubtedly challenges the reliability of the analysis; nevertheless SMEs do
not consider ERP systems as the solution needed to improve their organizational
performance yet. The analysis of both correlation and statistical significance with
respect to SMEs and large companies does not show any meaningful change in of the
main indexes (Tables XLI-XLI and Tables XLIV-XLVI).
H6: rejected.
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.297 0.052 5.934 0.000
c
Ordinal by ordinal Spearman correlation 0.297 0.052 5.934 0.000
c
n of valid cases 366
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXV.
Branch offices and ERP
adoption (whole sample)
– symmetric measures
Branch offices
Branch offices and ERP
adoption (SMEs)
Other management system ERP Total
No Count 181 29 210
% within branch offices 86.2 13.8 100.0
% within ERP 74.2 51.8 70.0
Yes Count 63 27 90
% within branch offices 70.0 30.0 100.0
% within ERP 25.8 48.2 30.0
Total Count 244 56 300
% within branch offices 81.3 18.7 100.0
% within ERP 100.0 100.0 100.0
% of total 81.3 18.7 100.0
Table XXVI.
Branch offices and ERP
adoption (SMEs)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 10.877
b
1 0.001
Continuity correction
a
9.837 1 0.002
Likelihood ratio 10.230 1 0.001
Fisher’s exact test 0.002 0.001
Linear-by-linear association 10.841 1 0.001
n of valid cases 300
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. the
maximum expected count is 16.80
Table XXVII.
Branch offices and ERP
adoption (SMEs) –
Chi-square tests
JEIM
18,4
404
Exlenl cf crgan/.al/cna/ ·hange (H7)
Unlike previous factors (from H?-H6), the results of the data analysis on H7
(Table XLVII-XLIX) highlights that the extent of organizational change the company
wishes to achieve is likely to affect the decision of whether adopting an ERP systemor not.
Even though the Pearson’s R value (0.306) shown by the whole sample is just acceptable,
other considerations support this statement. In particular (Tables L-LII), companies
adopting other management systems reveal a lower mean for the organizational change
factor (1.2) in comparison with those companies which have adopted an ERP system (2.3).
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 0.348
b
1 0.555
Continuity correction
a
0.044 1 0.835
Likelihood ratio 0.340 1 0.560
Fisher’s exact test 0.706 0.409
Linear-by-linear association 0.342 1 0.559
n of valid cases 53
Notes:
a
Computed only for a 2 £ 2 table;
b
One cell (25.0 percent) has expected count less than 5. The
maximum expected count is 3.23
Table XXX.
Branch offices and ERP
adoption (large
companies) – Chi-square
tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.190 0.062 3.348 0.001
c
Ordinal by ordinal Spearman correlation 0.190 0.062 3.348 0.001
c
n of valid cases 300
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXVIII.
Branch offices and ERP
adoption (SMEs) –
symmetric measures
Branch offices
Presence of branch offices and
ERP adoption (large companies)
Other management system ERP Total
No Count 4 5 9
% within branch offices 44.4 55.6 100.0
% within ERP 21.1 14.7 17.0
Yes Count 15 29 44
% within branch offices 34.1 65.9 100.0
% within ERP 78.9 85.3 83.0
Total Count 19 34 53
% within branch offices 35.8 64.2 100.0
% within ERP 100.0 100.0 100.0
% of total 35.8 64.2 100.0
Table XXIX.
Branch offices and ERP
adoption (large
companies)
Factors affecting
ERP system
adoption
405
A detailed analysis of the cross-tabulation between organizational change and ERP
adoption has pointed out some interesting remarks (see Figure 5):
.
Companies seem to privilege the ERP solution when their need to integrate,
reengineer or redesign business processes becomes a priority (respectively the
17.4 percent, 25 percent and the 16.3 percent). Only 11 percent of companies
which make use of ERP systems exploit this solution just for local automation
purposes, while the number of companies considering a more advanced solution
(business network redesign levels) is quite negligible (8.7 percent).
Diversification and ERP adoption
Other management system ERP Total
Other strategy Count 158 51 209
% within diversification 75.6 24.4 100.0
% within ERP 57.9 54.8 57.1
Diversification Count 115 42 157
% within diversification 73.2 26.8 100.0
% within ERP 42.1 45.2 42.9
Total Count 273 93 366
% within diversification 74.6 25.4 100.0
% within ERP 100.0 100.0 100.0
% of total 74.6 25.4 100.0
Table XXXII.
Diversification and ERP
adoption (whole sample)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson chi-square 0.261
b
1 0.609
Continuity correction
a
0.152 1 0.697
Likelihood ratio 0.260 1 0.610
Fisher’s exact test 0.629 0.348
Linear-by-linear association 0.260 1 0.610
n of valid cases 0.366
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. The
maximum expected count is 39.89
Table XXXIII.
Diversification and ERP
adoption (whole sample)
– Chi-square tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.081 0.141 0.581 0.564
c
Ordinal by ordinal Spearman correlation 0.081 0.141 0.581 0.564
c
n of valid cases 53
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXXI.
Branch offices and ERP
adoption (large
companies) – symmetric
measures
JEIM
18,4
406
.
A quite unexpected outcome of the analysis is the relevant percentage of
companies (21.7 percent) declaring that no organizational change occurred, or
has been foreseen, as a consequence of ERP adoption. This result is even more
surprising in the light of the support given by IS literature to the thesis that ERP
adoption both requires and provokes an unavoidable organizational reshuffling
of roles and tasks (Dewett and Jones, 2001).
.
The comparative analysis of means and distribution for the organizational
change factor (Table XLVII-XLIX) also shows that the underestimation of the
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.027 0.052 0.510 0.610
c
Ordinal by ordinal Spearman correlation 0.027 0.052 0.510 0.610
c
n of valid cases 366
Notes:
a
Not assuming the null hypothesis;
b
Using the asymtopic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXXIV.
Diversification and ERP
adoption (whole sample)
– symmetric measures
Diversification and ERP adoption
(SMEs)
Other management system ERP Total
Other strategy Count 142 32 174
% within diversification 81.6 18.4 100.0
% within ERP 58.2 57.1 58.0
Diversification Count 102 24 126
% within diversification 81.0 19.0 100.0
% within ERP 41.8 42.9 42.0
Total Count 244 56 300
% within diversification 81.3 18.7 100.0
% within ERP 100.0 100.0 100.0
% of total 81.3 18.7 100.0
Table XXXV.
Diversification and ERP
adoption (SMEs)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 0.021
b
1 0.885
Continuity correction
a
0.000 1 1.000
Likelihood ratio 0.021 1 0.885
Fisher’s exact test 0.882 0.500
Linear-by-linear association 0.021 1 0.886
n of valid cases 300
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. The
maximum expected count is 23.52
Table XXXVI.
Diversification and ERP
adoption (SMEs) –
Chi-square tests
Factors affecting
ERP system
adoption
407
organizational change factor becomes even more relevant among those
companies that make use of another management system (50.4 percent).
The previous analysis has been performed also separating SMEs and large companies
in order to highlight possible differences in the behavior of the two sub-groups.
Organizational change shows a stronger correlation with ERP adoption in the case of
large companies (Pearson’s R ¼ 0:386, Tables LIII-LV) with respect to SMEs
(Pearson’s R ¼ 0:218, Table LVI-LVIII). To explore the reasons underlying the
different correlation shown by the two sub-groups, the previous outcome has been
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.008 0.058 0.144 0.886
c
Ordinal by ordinal Spearman correlation 0.008 0.058 0.144 0.886
c
n of valid cases 300
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XXXVII.
Diversification and ERP
adoption (SMEs) –
symmetric measures
Diversification and ERP adoption
(large companies)
Other management system ERP Total
Other strategy Count 12 17 29
% within diversification 41.4 58.6 100.0
% within ERP 63.2 50.0 54.7
Diversification Count 7 17 24
% within diversification 29.2 70.8 100.0
% within ERP 36.8 50.0 45.3
Total Count 19 34 53
% within diversification 35.8 64.2 100.0
% within ERP 100.0 100.0 100.0
% of total 35.8 64.2 100.0
Table XXXVIII.
Diversification and ERP
adoption (large
companies)
Value df
Asymptotic
significance
(two-sided)
Exact
significance
(two-sided)
Exact
significance
(one-sided)
Pearson Chi-square 0.852
b
1 0.356
Continuity correction
a
0.403 1 0.525
Likelihood ratio 0.859 1 0.354
Fisher’s exact test 0.401 0.264
Linear-by-linear association 0.836 1 0.361
n of valid cases 53
Notes:
a
Computed only for a 2 £ 2 table;
b
0 cells (0.0 percent) have expected count less than 5. The
maximum expected count is 8.60
Table XXXIX.
Diversification and ERP
adoption (large
companies) – Chi-square
tests
JEIM
18,4
408
further investigated by means of the analysis of both frequencies for the organizational
change factor and ERP non-adoption reasons:
.
The evaluation of frequencies (Figure 5) points out that SMEs are more inclined to a
strategy of incremental innovation (local automation and internal integration) when
adopting ERP systems, whereas the use of ERP among large companies seems to
be more related to a radical-oriented attitude towards organizational innovation
(business process reengineering and business network redesign). As suggested by
literature, an incremental and too prudential approach towards organizational
innovation could endanger the survival itself of the small organization. This is due
to the mismatches that could occur between the assumptions about organizational
structure implicitly embedded in the reference models the ERP software makes use
of and the actual organization (Kumar and Hillegersberg, 2000). This remark gains
Functional extension and ERP
adoption
Number of internally
managed activities
Other management
system ERP Total
0 Count 1 1
% within functional extension 100.0 100.0
% within ERP 0.4 0.3
3 Count 3 3
% within functional extension 100.0 100.0
% within ERP 1.1 1 0.8
5 Count 3 25.0 4
% within functional extension 75.0 1.1 100.0
% within ERP 1.1 3 1.1
6 Count 11 21.4 14
% within functional extension 78.6 3.2 100.0
% within ERP 4.0 6 3.8
7 Count 17 26.1 23
% within functional extension 73.9 6.5 100.0
% within ERP 6.2 83 6.3
8 Count 238 25.9 321
% within functional extension 74.1 89.2 100.0
% within ERP 87.2 93 87.7
Total Count 273 25.4 366
% within functional extension 74.6 100.0 100.0
% within ERP 100.0 25.4 100.0
% of total 74.9 100.0
Table XLI.
Functional extension and
ERP adoption (whole
sample)
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.127 0.135 0.913 0.366
c
Ordinal by ordinal Spearman correlation 0.127 0.135 0.913 0.366
c
n of valid cases 53
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XL.
Diversification and ERP
adoption (large
companies) – ymmetric
measures
Factors affecting
ERP system
adoption
409
even more importance in the light of the 25.5 percent of SMEs adopting ERP
claiming that no organizational change occurred or has been foreseen, compared
with the only 14.7 percent of large companies.
.
The incremental attitude towards organizational innovation shown by SMEs is
strengthened by the analysis of both the reasons justifying ERP non-adoption
Value df Asymptotic significance (two-sided)
Pearson Chi-square 1.519
a
5 0.911
Likelihood ratio 2.506 5 0.776
Linear-by-linear association 1.057 1 0.304
n of valid cases 366
Note:
a
Seven cells (58.3 percent) have expected count less than 5. The minimumexpected count is 0.25
Table XLII.
Functional extension and
ERP adoption (whole
sample) – Chi-square
tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.054 0.037 1.028 0.305
c
Ordinal by ordinal Spearman correlation 0.030 0.050 0.576 0.565
c
n of valid cases 366
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XLIII.
Functional extension and
ERP adoption (whole
sample) – symmetric
measures
Number of internally
managed activities
Functional extension and ERP
adoption (SMEs)
Other management system ERP Total
3 Count 3 3
% within functional extension 100.0 100.0
% within ERP 1.2 1.0
5 Count 2 2
% within functional extension 100.0 100.0
% within ERP 0.8 0.7
6 Count 9 2 11
% within functional extension 81.8 18.2 100.0
% within ERP 3.7 3.6 3.7
7 Count 16 2 18
% within functional extension 88.9 11.1 100.0
% within ERP 6.6 3.6 6.0
8 Count 214 52 266
% within functional extension 80.5 19.5 100.0
% within ERP 87.7 92.9 88.7
Total Count 244 56 300
% within functional extension 81.3 18.7 100.0
% within ERP 100.0 100.0 100.0
% of total 81.3 18.7 100.0
Table XLIV.
Functional extension and
ERP adoption (SMEs)
JEIM
18,4
410
and the stated extent of organizational innovation (Figure 6). In the 58.2 percent
of cases (multiple response allowed) SMEs declare their business is not complex
enough to justify the adoption of an ERP system (structural reasons), while the
organizational un-readiness (i.e. organizational skills are not sufficient to manage
Value df Asymptotic significance (two-sided)
Pearson Chi-square 1.962
a
5 0.911
Likelihood ratio 2.970 5 0.776
Linear-by-linear association 1.336 1 0.304
n of valid cases 300
Note: Six cells (60.0 percent) have expected count less than 5. The minimum expected count is 0.37
Table XLV.
Functional extension and
ERP adoption (SMEs) –
Chi-square tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.067 0.037 1.156 0.248
c
Ordinal by ordinal Spearman correlation 0.064 0.049 1.103 0.271
c
n of valid cases 300
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XLVI.
Functional extension and
ERP adoption (SMEs) –
symmetric measures
Number of internally
managed activities
Functional extension and ERP
adoption (large companies)
Other management system ERP Total
0 Count 1 1
% within functional extension 100.0 100.0
% within ERP 5.3 1.9
5 Count 1 1 2
% within functional extension 50.0 50.0 100.0
% within ERP 5.3 2.9 3.8
6 Count 2 1 3
% within functional extension 66.7 33.3 100.0
% within ERP 10.5 2.9 5.7
7 Count 1 3 4
% within functional extension 25.0 75.0 100.0
% within ERP 5.3 8.8 7.5
8 Count 14 29 43
% within functional extension 32.6 67.4 100.0
% within ERP 73.7 85.3 81.1
Total Count 19 34 53
% within functional extension 35.8 64.2 100.0
% within ERP 100.0 100.0 100.0
% of total 35.8 64.2 100.0
Table XLVII.
Functional extension and
ERP adoption (large
companies)
Factors affecting
ERP system
adoption
411
the change in the organization induced by an ERP implementation) is cited in
only the 29.5 percent of cases. Despite the emphasis that the literature has always
put on the scarcity of financial resource of SMEs as one the most important
factors affecting ERP non-adoption (Cragg and Zinatelli, 1995; Levy and Powell,
2000; Themistocleous el a/, 2001; Zinatelli el a/, 1996), quite surprisingly
economic reasons (15,2 percent) are not as important as structural and
organizational motivations.
.
The same analysis performed on large companies (Table LIX and Figure 7)
shows a supremacy of organizational reasons (45.5 percent of cases) whereas
structural reasons are mentioned in the 36.4 percent of cases. These results are
merely indicative due to the lack of numerical consistency of the sub-group itself
(only 11 valid cases and 12 total responses).
H7: verified (in particular for large companies).
Discussion
The empirical verification of the framework shows the difficulties in describing the
relationship between the growth in business and organizational complexity and ERP
adoption: only two measures were considered reliable (Table LX).
The data analysis supports the existence of a strong correlation between company size
(evaluated as a composed measure of number of employees and turnover) and ERP
adoption. All the other hypotheses regarding possible business complexity measures have
been rejected. No other studies seem to have tested the relationship between business
complexity and ERP adoption on such a relative high number of companies, and on SMEs
in particular. The methodology itself differentiates this research from previous efforts,
being based on an extensive questionnaire deployed through direct interviews, instead of
Value df Asymptotic significance (two-sided)
Pearson Chi-square 3.610
a
4 0.461
Likelihood ratio 3.813 4 0.432
Linear-by-linear association 2.678 1 0.102
n of valid cases 53
Note: Eight cells (80.0 percent) have expected count less than 5. The minimum expected count is 0.36
Table XLVIII.
Functional extension and
ERP adoption (large
companies) – Chi-square
tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.227 0.111 1.664 0.102
c
Ordinal by ordinal Spearman correlation 0.162 0.143 1.173 0.246
c
n of valid cases 53
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table XLIX.
Functional extension and
ERP adoption (large
companies) – symmetric
measures
JEIM
18,4
412
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Table L.
Organizational change
and ERP adoption (whole
sample)
Factors affecting
ERP system
adoption
413
the commonly used approach based on case study. Despite the positive outcomes of such
choices, one main side effect could be a reduced comparability of the results.
The findings on the relationship between ERP adoption and organizational change
(H7) show that companies making use of an ERP system expect a wider extent of
business transformation (business process reengineering and business network
redesign) with respect to companies making use of other software applications. SMEs
always scheduled a limited organizational change in the case of ERP adoption, thus
they seem not to consider ERP systems as a keystone for organizational innovation. If
the testing on H7 reveals an incremental and conservative approach to organizational
change by SMEs, on the contrary, H7 suggests a different innovation strategy by large
Value df Asymptotic significance (two-sided)
Pearson Chi-square 34.097
a
5 0.000
Likelihood ratio 33.650 5 0.000
Linear-by-linear association 31.147 1 0.000
n of valid cases 334
Note:
a
One cell (8.3 percent) has expected count less than 5. The minimum expected count is 3.58
Table LI.
Organizational change
and ERP adoption (whole
sample) – Chi-square
tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.306 0.053 5.853 0.000
c
Ordinal by ordinal Spearman correlation 0.304 0.052 5.822 0.000
c
n of valid cases 334
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table LII.
Organizational change
and ERP adoption (whole
sample) – symmetric
measures
Figure 5.
Frequencies for
organizational change and
adopted software solution
(whole sample)
JEIM
18,4
414
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Table LIII.
Organizational change
and ERP adoption (large
companies)
Factors affecting
ERP system
adoption
415
companies since they are especially aware of the organizational implications of ERP
adoption and, in particular, of the need of more radical changes.
Firms that are planning to change their information system radically are more
inclined to adopt ERP systems due to the expected “integration” outcomes. However,
SMEs result to be less inclined to radical change and less aware of the organizational
impact caused by the implementation of an ERP system. SMEs’ traditional focus on
operations and day-by-day management, coupled with a lack of strategic view of ICT,
could be partially accountable for these findings. Indeed, SMEs could simply prefer to
continue doing business as they are used to, by refusing to adopt solutions that could
change their “course”. On one hand, this approach has opened up the SME market to
personalized integrated solutions able to respond adequately both to their information
needs and extreme flexibility, not necessarily provided by the ERP market’s big
players. On the other hand, it is a clear sign for ERP big players that the SME market
requires simplified and less expensive solutions. This has been the way ERP vendors
tried to cope with the issues connected to the dualism between business processes
change and software customization issues. In particular, the first answer of ERP
vendors was the proposal of products with a range of functionalities on a smaller scale
to lower the overall costs and vertical solutions to achieve a concrete reduction in
customization costs without a dramatic change in the way people currently work.
It is still questionable whether ERP packages are really keeping their promises. The
subject is still debated but, by looking at vendors’ scenery, there is a general agreement
on the role played by company size (H1) as the main clustering variable for the ERP
market. The ERP market evolution has clearly shown that differences in company size
have an influence not only on the adoption of ERP systems (H1), but also on the inner
characteristics of ERP packages themselves. In particular, experiences on the field
seem to confirm that both the extent of business complexity and the sustainable level
of organizational change may dramatically vary according to company size, hence
SMEs could be no longer treated by the same standard as large companies. Therefore,
Value df Asymptotic significance (two-sided)
Pearson’s Chi-square 11.582
a
5 0.041
Likelihood ratio 13.665 5 0.018
Linear-by-linear association 7.454 1 0.006
n of valid cases 51
Note:
a
Eight cells (66.7 percent) have expected count less than 5. The minimum expected count is 1.00
Table LIV.
Organizational change
and ERP adoption (large
companies) – Chi-square
tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.386 0.116 2.930 0.005
c
Ordinal by ordinal Spearman correlation 0.393 0.116 2.994 0.004
c
n of valid cases 51
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table LV.
Organizational change
and ERP adoption (large
companies) – symmetric
measures
JEIM
18,4
416
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Table LVI.
Organizational change
and ERP adoption
(SMEs)
Factors affecting
ERP system
adoption
417
a first wave in the ERP market segmentation occurred: for example, SAP AG
introduced Business One, a solution for small firms, by keeping R/3 for the medium
and large companies. This was only the first wave in the vendors’ strategy: some
intrinsic characteristics of medium companies, such as organizational flexibility,
availability of financial resources and dynamism, make them a specific and hybrid
economic subject which has to face the typical issues of both large and small
businesses. The characteristics of medium companies led to a second wave in the
evolution of the ERP systems. Software packages such as mySAP All-in-One should be
able to minimize customization costs through an enhanced availability of vertical
solutions, relying on the same technology platform of the traditional ERP systems
(such as mySAP Business Suite or Peoplesoft EnterpriseOne) to ensure the scaling up
of the ERP package.
Value df Asymptotic significance (two-sided)
Pearson’s Chi-square 14.547
a
5 0.012
Likelihood ratio 14.291 5 0.014
Linear-by-linear association 12.849 1 0.000
n of valid cases 271
Note:
a
One cell (8.3 percent) has expected count less than 5. The minimum expected count is 1.62
Table LVII.
Chi-square tests
Value
Asymptotic
standard error
a
Approximate
T
b
Approximate
significance
Interval by interval Pearson’s R 0.218 0.061 3.666 0.000
c
Ordinal by ordinal Spearman correlation 0.222 0.059 3.741 0.000
c
n of valid cases 0.271
Notes:
a
Not assuming the null hypothesis;
b
Using the asymptotic standard error assuming the null
hypothesis;
c
Based on normal approximation
Table LVIII.
Organizational change
and ERP adoption
(SMEs) – symmetric
measures
Figure 6.
Frequencies for
organizational change and
adopted software solution
(SMEs vs large
companies)
JEIM
18,4
418
On the other hand, the urgent need for integrating ERP systems with the existing
legacy systems could not only br met by offering vertical and lighter ERP solutions.
Thus, a third wave in the ERP vendor’s strategy has taken place, by offering
component-based solutions allowing SMEs gradually to acquire and assemble a lower
cost ERP systems, by gradually integrating components that are reasonably
Count Percentage of responses Percentage of cases
Economic reasons 26 15.2 17.8
Structural reasons 85 49.7 58.2
Organizational reasons 43 25.1 29.5
Other reasons 17 9.9 11.6
Total responses 171 100 117.1
98 missing cases; 146 valid cases
Economic reasons 1 8.3 9.1
Structural reasons 4 33.3 36.4
Organizational reasons 5 41.7 45.5
Other reasons 2 16.7 18.2
Total responses 12 100 109.1
8 missing cases; 11 valid cases
Table LIX.
Reasons for ERP
non-adoption (SMEs and
large companies)
Figure 7.
Extent of organizational
change
Hypothesis Result Remarks
Company size (H1) Verified Extremely significant for the whole sample
Membership of an industrial group (H?) Rejected
Market area (HS) Rejected
Presence of branch offices (H4) Rejected Some significance for the whole sample
Level of diversification (Ho) Rejected
Degree of functional extension (H6) Rejected
Extent of organizational change (H7) Verified Extremely significant for the whole sample
Table LX.
Outcomes of the
empirical verification
Factors affecting
ERP system
adoption
419
customized to their specific needs. This would help reducing the problem of mismatch
between organizational requirements and ERP solutions and finally migrations should
become more gradual as outdated components are upgraded individually instead of the
whole system (Kumar and Hillegersberg, 2000). The same component strategy marks
the ERP systems for large companies and is based on the composition of large systems
from largely independent components that are assembled to meet situation-specific
requirements (e.g. mySAP Business Suite, Peoplesoft Enterprise and Oracle Business
Suite includes the Customer Relationship Management, Supplier Relationship
Management, Business Intelligence and Product Lifecycle Management modules
among others).
The adequacy of the behaviour of ERP big players seems to find a confirmation in
the findings related to company size (H1), organizational change (H7) and ERP
adoption. After a period in which ERP packages were generally planned with a great
emphasis on the reduction of the organizational-related costs through vertical and less
expensive solutions, now vendors seem to have understood that the deployment of
independent business modules could address the same issues in a different way. The
role of ERP modules has gradually shifted from the automation of specific processes
(invoicing and billing, HR management) to a view in which ERP modules manage the
“stakeholders-centric” requirements of the company also through the so-called
enterprise portals. In particular, ERPII (or “second generation” ERP) systems are built
in a modular way, thus allowing companies the possibility of acquiring only the
business modules needed (instead of a monolithic package) and to ensure also the
presence of the technological platforms (e.g. SAP NetWeaver or Oracle Data Hub)
which are needed to achieve an effective interaction between the ERP and the existing
legacy systems.
lmþa·l cf le·hnc/cg/·a/ and cþeral/cna/ dr/ters cn ERl adcþl/cn
One of the most interesting outcomes of the analysis on H7 is that SMEs are less
inclined to evaluate and plan the organizational change when implementing an ERP
system than large companies. Yet, the differences in the approach towards ERP
adoption are confirmed by the outcome of the analysis which has been performed on
the technological and operational drivers that affect ERP adoption in 90 of the 366
companies the whole sample is made of. The results (Table LXI) show that SMEs still
consider contingency factors such as the millennium bug (Y2K, 30.4 percent), the
introduction of the Euro (30.4 percent), hardware or software obsolescence (44 percent)
as the prevailing reasons leading to ERP adoption, whereas strategic and
organizational drivers (i.e. limited support to decisions, dissimilarity of procedures)
are stated as less important. The unsatisfying process integration (30.4 percent) is the
only exception to this trend.
The same analysis has been carried out on large companies and results point out a
greater balance between exogenous and endogenous reasons. Large companies seem to
devote more attention to endogenous reasons as motivating factors for ERP adoption:
the unsatisfying process integration is claimed to be the most relevant factor (44.1
percent of cases in comparison with the 30.4 percent claimed by SMEs), while the high
relevance of data redundancy/inconsistency and dissimilarity of procedures (29.4
percent and 23.5 percent respectively) seems to highlight a greater attention by large
JEIM
18,4
420
companies to both the process management issues and the related information flows in
comparison to SMEs (19.6 and only 1.8 percent respectively).
Despite the greater awareness of organizational and information-related issues if
compared to SMEs, also among large companies the decision regarding the ERP
system adoption is strongly affected by exogenous reasons. 38.2 percent of large
companies declare that the ERP system adoption has been imposed by the controlling
company. In accordance with the outcomes of other studies on the same topic, Euro and
Y2K issues turn out to be important drivers also for large companies (26.5 percent and
29.4 percent respectively).
A further proof of how differently the two sub-groups managed exogenous reasons
(such as Y2K and Euro) is given by the analysis of ERP adoption curves for both SMEs
and large companies. Figure 8 clearly points out howlarge companies’ strategy seemto
anticipate ERP adoption with respect to the occurrence of external events: in detail, the
adoption curve for large companies in years 1999 (Y2K issue) and 2001 (Euro issue)
shows a greater gradient in comparison with SMEs’ curve, whereas the rate of
adoption is constantly lower than SMEs upon the occurrence of the external event. It is
also interesting to notice that the ERP adoption curve of large companies is flattening
showing the difficulties for ERP vendors to penetrate large companies’ market further,
while in the last two years SMEs’ market has been showing a steady growth.
Conclusions and further research
This research has attempted to study the relationship between business complexity,
organizational change and ERP adoption. The analysis of the empirical data clearly
shows that business complexity, as a composed factor, is a weak predictor of ERP
implementation, whereas just company size results to be a very good one. In other
words, companies seem to be disregarding ERP systems as an answer to their business
complexity. This outcome could depend both on the validity of this index or the
Drivers
Percentage of cases
(SMEs)
Percentage of cases
(large companies)
HW/SW obsolescence 44.6 26.5
Euro issue 30.4 26.5
Y2K issue 30.4 29.4
Unsatisfying process integration 30.4 44.1
Unsatisfying order management 26.8 8.8
Data redundancy and/or inconsistency 19.6 29.4
Limited support to decisions 19.6 26.5
Lack of flexibility 17.9 23.5
Forced decision (by a controlling company) 16.1 38.2
Logistics and transportation issues 16.1 14.7
High cost of data distribution 14.3 8.8
Other reasons 14.3 11.8
Over-dimensioning of stock 12.5 5.9
CRM issues 8.9 14.7
Unsatisfying time-to-market 3.6 8.8
Dissimilarity of procedures (i.e. rules on quality
management) 1.8 23.5
Total responses 307.1 341.2
Table LXI.
Technological and
operational drivers (90
SMEs and large
enterprises adopting ERP
systems)
Factors affecting
ERP system
adoption
421
erroneous perception of SMEs of their business complexity: the reason they cite most
for discounting ERP systems. However, no large differences in terms of complexity
were found among these two groups. Unexpectedly, SMEs disregard financial
constraints as the main cause for ERP system non-adoption, suggesting structural and
organizational reasons as major ones. This pattern is partially different from what
observed in large organizations where the first reason for not adopting ERP system is
organizational. These results could imply that SMEs structural peculiarities are a real
obstacle to ERP diffusion if and adequate strategy by vendors lacks. Moreover, the
decision process regarding the adoption of ERP systems within SMEs is still more
affected by exogenous reasons or “opportunity of the moment” rather than on
business-related factors contrary to large companies that are more interested in
managing process integration and data redundancy/inconsistency through ERP
implementation. This paper investigates whether business complexity could influence,
and somehow explain, the different extent to which companies of any size adopt ERP
systems. The focus has been largely appointed to a comparative analysis of the
business characteristics of the companies themselves, intentionally leaving out of
consideration a closer investigation of ERP packages. Accordingly to the previous
section remarks, a further research could consider a sort of reverse engineering of this
approach. In particular, it could be interesting to analyze how vendors interpret the
concepts of “business complexity” and “organizational change” by exploring in detail
the characteristics of the ERP systems they currently offer.
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multinational organizations, but also for small and medium-sized firms (Van Everdingen et al., 2000). The evaluation of the contribution of ERP systems in terms of both value creation and economic returns is a difficult task, because of the extent of the organizational changes (Lozinsky, 1999; Shtub, 1999; Willcocks and Lacity, 1998) to which their implementation leads, as well as the difficulties in predicting the return on investment (Mabert et al., 2001). The competences required to manage properly the organizational change determined by an ERP system implementation is still a debated issue. The most qualified literature has always stressed the importance of change and project management competences as critical success factors for ERP implementation (Davenport, 2000; Mandal and Gunasekaran, 2003; Motwani et al., 2002), hereby indirectly raising the issue of small to medium-sized enterprises’s (SMEs’s) lack of organizational preparation. Such a situation is mainly caused by the low extent of formalization of people’s roles and responsibilities that is expressed by with their continuous re-shuffle (Dutta and Evrard, 1999). This structural condition makes the identification of ERP implementation’s main figures, such as the process owner and the key user (Davenport, 2000), extremely difficult to achieve. Beside this, SMEs generally suffer from a widespread lack of culture, as to the concept of business process: it is not by chance that the reinforcement of the concept of business process is often claimed among the critical success factors in ERP implementation (Beretta, 2002). In particular, the business process concept helps promoting co-operation and convergence of efforts among managers (i.e. managerial integration), versus the internal competition induced by the functionally-oriented organizational models which is typical of SMEs. One of the most misleading legacies of traditional software project management is that the company expects to gain value from the use of the software application as soon as it is installed (Al-Mashari et al., 2003). Since the adoption of an ERP system requires extensive efforts, both for the technological and business aspects of the implementation, neither information technology (IT) practitioners nor researchers have developed a deterministic method to evaluate the related impacts (Al-Mashari, 2002). In spite of the benefits potentially offered by ERP systems (Banker et al., 1998; Davenport, 1998; Gable, 1998; Hicks and Stecke, 1998; Minahan, 1998) the evaluation issue plays an essential role regardless the company size; during the planning phase it is critical for companies to figure out whether a specific ERP system fits their business practices. When the features of the software application do not correctly fit the business requirements two possible strategies can be identified: (1) Change the business processes to fit the software with minimal customization. On one hand, fewer modifications to the software application should reduce errors and help to take advantage of newer versions and releases (Fui Hoon Nah et al., 2001). On the other hand, this choice could mean changes in long-established ways of doing business (that often provide competitive advantage), and could shake up important people roles and responsibilities (Dewett and Jones, 2001; Koch et al., 1999). (2) Modify the software to fit the processes. This choice would slow down the project, could affect the stability and correctness of the software application and could increase the difficulty of managing future releases, because the customizations could need to be torn apart and rewritten to work with the newer version (Koch et al., 1999). Conversely, it implies less organizational

Factors affecting ERP system adoption 385

JEIM 18,4

changes, because it does not require dramatically changing the company best practices, and therefore the way people work. Although ERP vendors are concentrating on the customization process needed to match the ERP system modules with the actual features of existing processes in a number of different industries, several studies show that configuring and implementing ERP systems is a complex and expensive task (Van Everdingen et al., 2000; Mabert et al., 2000). Several aspects related to this twofold approach towards ERP adoption and implementation become even more critical, for their known specificities, within SMEs (Ravarini et al., 2000; Van Everdingen et al., 2000). Although the effective use of business information is a strategic goal for companies of any size, nowadays most of the ERP systems available on the market are too expensive for the financial capabilities of smaller companies (Chau, 1995; Gartner Group and Dataquest, 1998, 1999). SMEs differ from large companies in important ways affecting their information-seeking practices (Lang et al., 1997). These differences include the: . lack of (or substantially less sophisticated) information system management (Kagan et al., 1990); . frequent concentration of information-gathering responsibilities into one or two individuals, rather than the specialization of scanning activities among top executives (Hambrick, 1981); . lower levels of resource available for information-gathering; and . quantity and quality of available environmental information (Pearce et al., 1982). Chan (1999) asserts that many SMEs either do not have sufficient resources or are not willing to commit a huge fraction of their resources due to the long implementation times and high fees associated with ERP implementation. The resource scarcity, the lack of strategic planning of information systems (IS) (Cragg and Zinatelli, 1995; Levy and Powell, 2000; Zinatelli et al., 1996), the limited expertise in IT (Levy and Powell, 2000) and also the opportunity to adopt a process-oriented view of the business are among the factors that strongly influence, either positively or negatively, ERP adoption by SMEs. Thus it is necessary to find out alternative solutions providing the ERP capabilities at an affordable price, including implementation costs (Rao, 2000). Some ERP vendors have taken up the gauntlet and have been moving their attention toward SMEs (Gable and Stewart, 1999) by offering simplified and cheaper solutions (Kirchmer, 1998) from both the organizational and technological points of view, pre-configured systems based on best-practices at a fraction of the cost originally required and promising implementation times of 60 days. In spite of such promises, there is not a general agreement on the effectiveness of such systems. As a result, the current ERP systems adoption rate in SMEs is still low. Furthermore, even if ERP implementation differences between large and small organizations are recognized in literature (Bernroider and Koch, 2001), their focus is on the decision-making process. Hence, other issues need to be further explored: To what extent SMEs informational needs are different with respect to large companies? Are SME peculiarities a real obstacle to ERP adoption? Is it possible to identify a relationship between organizational change and ERP adoption in companies of different size? This paper studies the factors influencing ERP systems adoption, and discusses to what extent the differences between SMEs and larger firms affect such factors,

386

contributing to the increasing literature on ERP adoption in small businesses. Through a detailed literature review, a set of indicators are identified as variables which could influence the ERP adoption process. These indicators have been tested on the field through an empirical study carried out on a sample of 366 companies. Conceptual framework The literature provides different definitions of ERP systems: Rosemann (1999) defines an ERP system as a customizable, standard application software which includes integrated business solutions for the core processes (e.g. production planning and control, warehouse management) and the main administrative functions (e.g. accounting, human resource management) of an enterprise. Gable (1998) defines it as a comprehensive package software solution that seeks to integrate the complete range of business processes and functions in order to present an holistic view of the business from a single information and IT architecture. Watson and Schneider (1999) define ERP as an integrated, customized, packaged software-based system that handles the majority of an enterprise’s system requirements in all functional areas such as finance, human resources, manufacturing, sales, and marketing. It has a software architecture that facilitates the flow of information among all functions within an enterprise. It is built on a common database and is supported by a single development environment. Previous research works (Gibson et al., 1999; Ryan, 1999) suggested how ERP adoption and implementation could be an highly complex task in which strong managerial and strategic competences are required to achieve the best fit between the business peculiarities and the system itself and to deal with the unavoidable organizational impact induced by an ERP implementation. Other studies outlined different adoption patterns depending on company size and also observed that smaller companies face only subset of the needs and opportunities of larger organizations (Markus and Tanis, 2000). Furthermore, for a long time ERP adoption reasons within SMEs were explained only by contingency or exogenous factors (Tagliavini et al., 2002). To investigate these differences further, the research model presented in this paper explores to what extent the business complexity (measured from a set of business factors) and the awareness of the organizational requirements (measured by the extent of organizational change) affect the extent of ERP adoption. Such an effort seems, in fact, feasible for organizations experiencing high business complexity and information needs, and expecting, or even planning, significant organizational changes. The methodology contribution of this paper is experimentally proved by testing the relationship between business complexity, organizational change and ERP adoption on 300 SMEs through direct, survey-based, interviews. Such an approach, based on a statistical analysis on a high number of respondents, implies that its findings are not easily comparable to other previous research works that are often based on case studies on a very small set of companies. The following sections will detail the two main components of the conceptual framework: the business factors and the organizational change. Business factors Although the organizational structure of larger firms could be very different from SMEs, it is reasonable to assume that companies of any size, characterized by high organizational complexity (or “business complexity”), also show a critical need for

Factors affecting ERP system adoption 387

In addition.. 1980. this has resulted in the widespread adoption of ERP solutions (Irani. Hamel and Prahalad. thus introducing a higher level of complexity (Davenport. Yasai-Ardekani and Haug. this last interpretation of business complexity. and are therefore considered only an exogenous factor embedded into the ERP concept itself. regional. 1997. Motwani et al. large). Since ERP systems have been very often advocated by researchers and practitioners as “the answer” to manage the complexity of information flows more effectively. Consequently. . the limitations of MRPII have become apparent. is business complexity the possible explanation? The assessment of the complexity measures is partially based on previous works (Grinyer et al. national. Therefore. Roth and O’Donnell. Lorange.4 388 coordination and control of business activities which. 1986. 1999) simply suggest a direct relationship between the size of organizations and the percentage of organizations where ERP has been implemented.. 2003. Apart from any organizational or strategic remark. as well as the facing of competitive pressures characterizing the international markets (Bartlett and Ghoshal. medium. in turn. In particular. . Prahalad. as companies become more global and develop international supply chains. diversification. other research works (IDC. Mandal and Gunasekaran. Sanders and Carpenter. The market area (local. a detailed analysis of the IS literature has been performed in order to identify a set of additional business factors: . 1994. 1974). and divisionalization. the model approaches ERP systems as a sort of “black box” and thus their undeniable inner complexity (expressed by implementation and technological issues for instance) is taken for granted.e. will be used in the research model to investigate if the “the condition” of being a complex organizations (which is measured by a set of business factors) and a greater extent of ERP adoption are straight related factors. Literature has identified the attempts being made by many organizations to expand their IS infrastructure beyond their organizational boundaries through the development of inter-organizational business systems. 1989. 1996. In any case. the several issues related to ERP system chartering. Since the consistency of these indicators is essential for the theoretical validity of the whole framework. is related to the complexity of the information system (Grinyer et al.JEIM 18. project and change management issues or cultural and organizational un-readiness) are typical of the “critical success factors” stream of research (Davenport. literature emphasizes size as one of the issues increasing the need for co-ordination and control of organizational activities (Howard and Hine. Vancil and Lorange. 1997) that have developed and proposed metrics essentially based on size. while for manufacturing companies the turnover seems to be a better match. 2002) and generally refer more to the success of the implementation than to the reasons that bring companies to evaluate the opportunity of implementing an ERP system. Company size (micro.. Hence. Rumelt. Kimberly (1976) stressed the necessity of applying a different approach depending on the industry the company belongs to: for the services industry the number of employees has a better fit. Existing literature confirms the existence of a mutual dependence between size and organizational complexity. Yasai-Ardekani and Haug. 1998. 1998). Working on a wider market area requires the management of more differentiated legal and cultural issues. 2002). development and maintenance (i. 1986. 1990. small. instead it studies their occurrence in ERP adoption. This paper neither proposes any new measure nor tests their reliability. 1975). 1997). international). 2000.

which should be related to the amount of information to be managed (Price. Pitts and Hopkins. the cultural and technological levels of the entrepreneur): this is one of the aspects that must be considered to comprehend fully the fall-outs in terms of management complexity. The degree of functional extension affects the adoption of ERP systems. if the imposition of common operating processes on all units could lead to a tight coordination between the controlled companies. 1988).. The level of diversification affects the adoption of ERP systems. The company size affects the adoption of ERP systems. . as the number of businesses increases. 1998). 1989). Factors affecting ERP system adoption 389 In the light of the identified business factors. an increase in the number of businesses adds information-processing demands by increasing business-unit interdependencies (Hill and Hoskisson. 1992.e. The market area affects the adoption of ERP systems. The membership an industrial group (either as the holding or as a controlled firm). H5. it is therefore necessary to verify the association between these factors and the use of ERP systems by testing the following six main hypotheses: H1. Michel and Hambrick. markets. in a multiregional context strict process uniformity could be counterproductive in terms of flexibility (Davenport. H4. However. complex organizations will tend to have specialized planning departments. . In related-diversified firms. Many companies prefer to outsource those activities that are not directly related to the business strategies (non-core processes). Operating in different product-market combinations introduces another level of complexity (Yasai-Ardekani and Haug. The presence of branch offices affects the adoption of ERP systems. The degree of functional extension (number of activities carried out internally). 1997). In unrelated-diversifiers. The presence of branch offices (localization and number of branches). . The degree of functional extension refers to the number of strategic functions directly managed within the company. 1987. 1982). Kerr. in terms of alignment of processes and procedures both between the holding and the controlled companies and among controlled companies themselves. . H2. The level of diversification (in terms of products. 1997). H3. 1997). 1985. In larger organizations the development of intranets is often characterized by a lack of coordination and supervision (Horgan. SMEs face different issues (i. because of the greater need for co-ordination and control of activities. Moreover. This variable seems to be strongly related to the co-ordination of dispersed business units. The management of information flows is a crucial issue for companies with branch offices which need to be remotely controlled. 1986. H6. organizational impact and required competencies. the information-processing requirements associated with maintaining efficient internal capital markets also increase (Jones and Hill. technologies). employ a larger number of planners and consequently devote a substantially larger amount of financial resources to strategic planning (Grinyer et al.. Kukalis. The membership of a group affects the adoption of ERP systems.

organization and culture (Davenport. such as the competence of the internal staff or their expected resistance to change to the adoption of a new technology. command-and-control organizations with uniform cultures (Davenport. and more democratic organizations. This strategy is pursued only for automation of local. Venkatraman (1994) classifies five main levels of transformation (Figure 1): (1) Local automation of existing procedures. while the project team could face organizational resistance to changing the status quo (Laughlin. 1998). This measure depends on the evaluation of the organizational and economic impacts.JEIM 18. It requires minimal efforts and the corresponding expected results are enhancements in business process performance. In order to analyze the factors influencing the adoption of ERP systems. The project team responsible for ERP implementation will be challenged to either match the functionality of the application to business practice or find ways to adapt or change current processes and procedures. 1999). we assume that ERP systems could generate larger benefits if implemented when a high level of organizational change is planned. which are qualities more consistent with hierarchical. Benefits coming from this strategy are easily duplicable. as Figure 1. On the other hand.4 390 Organizational change factors Even though business factors play an important role in determining business complexity they are not considered sufficient to assure the feasibility of ERP adoption. The extent of organizational change represents the degree of company transformation that the entrepreneur plans as a consequence of a technological innovation. 1998). Another issue that deserves consideration is the organizational impact of ERP systems as they tend to impose their own logic on company strategy. the ERP adoption decision affects most of the company business functions and directly involves a significant number of people. Levels of business transformation related to technological innovation . ERP systems allow companies to streamline their management structures. Thus. real-time access to operating and financial data. more flexible. creating flatter. Are the organizations aware of such a change and then ready to bear and manage it? Is the alignment between the desired organizational change and the complexity of the IT solution verified? These remarks highlight a possible relationship between the extent of organizational change and the rate of ERP system adoption. they also involve the centralization of control over information and the standardization of processes. independent procedures. By providing universal.

affecting not only the company procedures. The required integration has to be pursued both at the technological and organizational level: whenever necessary. Redefinition of company boundaries through the creation of inter-organizational relationships. integration of business processes and systems. through a continuous information exchange and competence sharing. electronic data interchange (EDI) can represent the technology chosen to pursue this strategy. . however. For those companies which have stated that they do not make use of an ERP system. it is possible to distinguish operational reasons (i. in both cases the business process structures remain unchanged. 2002). the greater is the rate of adoption of ERP systems). It involves the partial or complete redesign of business processes. licensing agreements). Y2K compliance requirements. It aims at integrating the business processes and the company IS in order to create competitive advantage. Under these conditions each partner can exploit the competencies of the business network instead of adopting expensive solutions of vertical integration. we classified each justification for ERP non-adoption into four main categories: (1) Structural motivations related to the need for coordination and control of business activities.e. either positively or negatively. Factors affecting ERP system adoption 391 Therefore another hypothesis to be tested is focused on the matching between organizational issues and ERP system adoption: H7. Together with the necessary automation effort. thus to the complexity of information flows (which means that the company is not sufficiently complex to need an ERP system to manage the business). Changes overcome the boundaries of the company and could affect the entire network of its external relationships. people belonging to different business functions have to cooperate to reach common objectives. but also its organizational structure. Business process reengineering. The extent of planned organizational change is directly related to the use of ERP systems (the greater is the planned organizational change. According to the literature (Al-Mashari. replacement of older.e. among the reasons that may affect ERP adoption. obsolete systems). Internal integration of existing business processes. For instance. (2) Organizational motivations (the company is not prepared to face and manage the organizational changes related to the adoption and implementation of an ERP system). but a great effort has to be put into business process integration. Therefore. The information communication technologies (ICT) allow the redefinition of the competitive environment through the creation of strong inter-organizational relationships (joint ventures. Business network redesign. long-term contracts. it is unlikely to obtain competitive advantage by simply automating existing procedures. To develop an effective framework it is necessary to include into the research model (as control measures) both the endogenous and exogenous reasons that may affect ERP adoption.(2) (3) (4) (5) most of standardized solutions. improving responsiveness to customers and simplifying ineffective or complex business processes) and technological reasons (i. this strategy requires an integration effort.

A preliminary validation of collected data has been performed by cross-tabulating ERP adoption with each of the seven factors corresponding to the seven hypotheses (from H1-H7). Data were finally analyzed with SPSS v11. The final questionnaire (an abstract is shown in Figure 2) was then proposed to a random sample of about 2000 Italian companies of any size and industry.JEIM 18. Methodology Based on the literature review. in particular the hypotheses (from H1-H7) have been tested by means of cross tabulations. In the light of the control measures introduced the whole framework can be represented as shown in Figure 2. Responses were collected through personal interviews made by a dedicated team to a top manager (possibly the entrepreneur him/herself or the CEO) since the proposed questions required the knowledge of the main business objectives.4 (3) Economic motivations (ERP system adoption and implementation would be too costly for the company). the assessment of each business factor and the extent of the organizational change. Theoretical framework . Before the complete deployment of the survey a first trial was carried out on 122 companies suggesting the validity of the proposed approach (Tagliavini et al. Then. It comprised three parts: the company demographics. the connection existing between each factor and ERP adoption has been assessed through Pearson’s R. Chi-square and p-value tests have been used to verify whether the set of companies using an ERP system is significantly different from the set of the not adopters. a questionnaire was designed. the value of Spearman’s R is used to evaluate the reliability of correlations. as well as of the features of the different business activities.. focused on the identification of a taxonomy of business and organisational factors. 2002). Finally. A further analysis has been also performed 392 Figure 2. geographically located in northern Italy. while p-values measure how the previously mentioned difference is statistically significant. (4) Other reasons. Pearson chi-square was used to verify whether the cross-tabulated groups were different.

separating SMEs from large companies to highlight possible differences between the two subsets. 1996). Demographic data The first part of the questionnaire dealt with companies’ demographics. the number of activities carried out internally. Degree of functional extension. Data from this sample were collected and filtered to resolve inconsistencies and correct anomalies. Diversification has been measured as a synthetic index of business strategy by offering only two possible responses: diversification and other strategies (including cost-based and differentiation strategies). has been assessed through a question suggesting Venkatraman five levels of organizational change. Respondents were asked to qualitatively assess each variable of the set. (3) The technological and operational drivers have been assessed using the model proposed by Al-Mashari (2002) integrated with other drivers which have been identified in a previous research (Chau. to clearly point out any organizational-related issue. More specifically: . all the organizational implications and characteristics related to each level of the Venkatraman’s model have been thoroughly explained by the interviewers to respondents. resulting in 366 valid questionnaires. has been assessed with respect to a set of typical business activities. 1985) has been integrated with a more recent measure used to assess the impact of BPR on manufacturing firms (Guimaraes and Bond.e. i. (4) The motivations for ERP non-adoption have been assessed by asking respondents to select items from a check-list (also in this case multiple responses were allowed).5 percent. The classical representation of the value chain (Porter and Millar. 1995).000 contacted companies only 370 accepted to be interviewed yielding a response rate of 18. 2002). The choice of the direct interviews to collect data is accountable for the low rate of rejected questionnaires: only four questionnaires were discarded. Variable measurement According to the theoretical framework. Firm size (number of employees and turnover) was investigated according to the current definition provided by the European Union (see Table I). (2) The extent of organizational change which aims at evaluating the level of organizational change the company is prepared to face in order to achieve competitive advantage through the use of IT. This measure has been already adopted in author’s previous research (Tagliavini et al. Factors affecting ERP system adoption 393 . Multiple responses were allowed. the following sets of variables were measured: (1) The business complexity factors have been evaluated through six indicators detailed in the Figure 3. . Research findings Of the 2. Due to the academic formulation which undoubtedly characterizes the question in the survey..

4 394 Figure 3.JEIM 18. Measures adopted in the questionnaire .

166 and p-value lower than 0. Company size (H1) The analysis of the correlation between company size (as a composite index between turnover and number of employees) and ERP adoption shows a very good fit with data.Small sized companies represent 43 percent of respondents (18 percent micro. Sample definition by size. the value corresponding to those large companies adopting ERP systems seems even more significant. the sample can be further categorized into three main groups: manufacturing (66 percent).50 7 5 Medium-sized enterprises .10 – – Small-sized enterprises . Large enterprises represent 15 percent of the sample. This reinforces the persuasion that the company size affects the ERP adoption process. despite not constituting the most relevant group in absolute terms (medium-sized companies are the 47 percent of the whole sample adopting ERP). H1: verified. Moreover. In fact. while only 7 percent of companies not making use of ERP systems are large-sized.001) while the Pearson’s R (0. services (20 percent) and trade (14 percent). This distribution is highly representative of the economical characteristics of this geographic area. the 55 percent of companies Micro enterprises . industry and enterprise application . in relative terms as to the sample composition (in which large companies are only 15 percent) large companies show an interesting result (38 percent). 25 percent small) while 42 percent have a medium size.250 40 27 Factors affecting ERP system adoption 395 Criteria Maximum number of employees Maximum turnover in e million Maximum balance-sheet total in e million Source: European Commission (1996) Table I. where large enterprises and services/wholesaling companies play a secondary role (see Figure 4). Membership of a group (H2) The cross tabulation for H2 shows an inverse correlation between membership of a group and ERP adoption (Pearson’s R ¼ 20:277). With respect to the industry. The two groups are significantly different (chi-square equal to 65. In detail. SMEs definition Figure 4. The analysis clearly shows also that the rate of ERP system adoption is quite low among both micro and small firms (3 percent and 12 percent respectively).401) shows that firms size and ERP adoption are significantly correlated.

Tables V-VII) and large enterprises (0.5 Size Micro Small Medium Large Total Table II.000 0. Market area (H3) At a first glance. it is reasonable to conclude that.4 88 100.JEIM 18.5 100. Only a small subset of companies with a limited market area make use of ERP systems. a wider market area of a company seems to be related to the use of ERP systems.2 263 74.5 100.4 396 belonging to a group prefer other management systems rather than ERP (Tables II-IV).5 3 4. the high percentage of companies with an international market area which do not use ERP systems (68 percent) clearly shows that the ERP system is far from being the only solution adopted as stated in H3.6 53 100.0 25.5 29.6 77 87. The significant difference between the cross-tabulated groups.0 percent) have expected count less than 5. Company size and ERP adoption (whole sample) – Chi-square tests Note: a 0 cells (0.0 18.0 41.4 39. see cross-tabulation in Tables XI-XIII). Company size and ERP adoption (whole sample) Total 65 100.0 100.3 105 71. A correct interpretation of such result requires considering that distribution of the sample according to this factor as unbalanced (237 firms in a standalone configuration compared to 53 belonging to an industrial group). Company size and ERP adoption (whole sample) Other management system ERP Count % within size % within ERP Count % within size % within ERP Count % within size % within ERP Count % within size % within ERP Count % within size % within ERP % of total 62 95.0 100. Nonetheless.9 147 100.060.169.121 56.0 74.0 15.8 90 25. H2: rejected.8 7.51 . Nevertheless.7 34 64.6 3.552 353 a df 3 3 1 Asymptotic significance (two-sided) 0. The Pearson’s R index of correlation computed on SMEs (2 0. the membership of a group seems not to be directly related to the use of ERP systems.2 37.4 23.9 19 35.000 0.6 46.3 11 12.0 Value Pearson chi-square Likelihood ratio Linear-by-linear association n of valid cases 65. Tables VIII-X) did not show consistent results.000 Table III. The minimum expected count is 13. while this value is higher for companies with a national market area (22 percent) and even more for those companies acting on international markets (74 percent.0 353 100.5 12. despite what suggested in the existing literature.0 24.166 65.2 42 28.

000 Exact significance (two-sided) Exact significance (one-sided) 27. p-value ¼ 0:000.0 100.327b 25.919 25.0 27.287 Approximate significance 0. Membership and ERP adoption (whole sample) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases a df 1 1 1 1 b Asymptotic significance (two-sided) 0.190).000c Notes: a Not assuming the null hypothesis.9 51.0 72. c Based on normal approximation Table IV.353 Asymptotic standard errora 0. is contradicted by the unsatisfactory value of the Pearson’s R index (0.1 79. Tables XI-XIII).0 25.1 90 25. b Using the asymptotic standard error assuming the null hypothesis.4 355 100.9 46 17. Membership and ERP adoption (whole sample) – Chi-square tests Notes: Computed only for a 2 £ 2 table. pointing out the same trend (Tables XIV-XVI and Tables XVII-XIX). 0 cells (0.0 percent) have expected count less than 5. The expected count is 24. H3 has also been tested on both SMEs and large companies.9 48.405 0.6 257 100.250 355 0.640 27. which confirms the lack of a correlation between market area and ERP adoption.1 20.6 100.4 Total 98 100.(chi-square ¼ 14:538. Factors affecting ERP system adoption 397 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.000 Table VI.4 211 82.6 265 74. Company size and ERP adoption (whole sample) – symmetric measures Membership of a group and ERP adoption (whole sample) Other management system ERP Member of a group Standalone company Total Count % within membership % within ERP Count % within membership % within ERP Count % within membership % within ERP % of total 54 55.000 0.0 Table V.197 8.000 0.0 100.000c 0.85 .6 44 44.000 0.4 100.044 Approximate Tb 8.0 74.000 0.042 0. H3: rejected.401 0.

7 290 100. b Using the asymptotic standard error assuming the null hypothesis. Membership and ERP adoption (SMEs) – Chi-square tests Notes: a Computed only for a 2 £ 2 table.426 2 5.0 81. b 0 cells (0.9 53 18.0 81.0 100.000c Table VII.240 290 b df 1 1 1 1 Asymptotic significance (two-sided) 0.2 67.269 7.056 0.177 7.3 Total 53 100.3 100.1 36 15.3 237 100.69 .393 8.426 Approximate significance 0.JEIM 18.9 15.0 percent) have expected count less than 5.8 237 81.4 398 Presence of branch offices (H4) According to the literature. The expected count is 9. These systems have been adopted by only 15 percent of respondents with no branch offices and by 42 percent of companies with geographically dispersed offices Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 20. consequently.0 100.8 84. c Based on normal approximation Membership of a group and ERP adoption (SMEs) Other management system ERP Member of a group Stand-alone company Total Table VIII.007 0.1 32. the presence of branch offices could be a factor that positively influences the complexity of information flows and that. Membership and ERP adoption (whole sample) – symmetric measures Notes: a Not assuming the null hypothesis.004 0. The empirical analysis shows a correlation between the extent of geographical dispersion of the company and the use of ERP systems. Membership and ERP adoption (SMEs) Count % within membership % within ERP Count % within membership % within ERP Count % within membership % within ERP % of total 36 67.005 Table IX.000c 0.0 18.0 18.0 Value Pearson chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 8.007 Exact significance (two-sided) Exact significance (one-sided) 0.277 20.7 100.277 355 Asymptotic standard errora 0. could lead to a larger adoption of ERP systems.7 17 32.004 0.056 Approximate Tb 2 5.009 0.2 201 84.

0 24.5 73.0 64.0 75.0 35. Asymptotic standard errora 0.2 Total 40 100.8 25 62.5 53 100. Membership and ERP adoption (SMEs) – symmetric measures Membership and ERP adoption (large companies) Other management system ERP Member of group Standalone company Total Count % within membership % within ERP Count % within membership % within ERP Count % within membership % within ERP % of total 15 37.0 Table XI.915 0.0 percent) has expected count less than 5.067 Approximate Tb 2 2.011 0.193b 0. Membership and ERP adoption (large companies) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 0. c Based on normal approximation Table X. b 1 cell (25.658 Exact significance (two-sided) Exact significance (one-sided) 0. Although this interesting trend.169 20.169 290 Notes: a Not assuming the null hypothesis. Membership and ERP adoption (large companies) – Chi-square tests Notes: a Computed only for a 2 £ 2 table. The evaluation of the behavior of companies making use of ERP systems confirms this relationship: 62 percent of them have geographically dispersed offices.1 19 35.66 .0 100.097 Approximate significance 0.0 100.464 Table XII.749 0.2 100.5 9 69.196 0.660 0.067 0. a correlation between the two variables cannot be fully claimed: the empirical verification shows a Pearson’s R value equal to 0.907 2 2.5 13 100.2 26.004c Factors affecting ERP system adoption 399 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 20.190 53 df 1 1 1 1 Asymptotic significance (two-sided) 0.(Tables XX-XXII). The expected count is 4.004c 0.8 100.5 78. b Using the asymptotic standard error assuming the null hypothesis.663 0. while only 38 percent of ERP users have no branch offices to manage.297 that is not statistically reliable to state that the presence of branch offices directly affects a higher rate of ERP system adoption (Tables XX-XXII).5 34 64.8 21.9 4 30.

060 0.0 100.6 30.7 2 9. In particular.4 212 100.6 144 67.7 68 32.432 0.5 2.081 13.4 363 100.1 271 74.6 9.113 363 df 3 3 1 Asymptotic significance (two-sided) 0. Market area and ERP adoption (whole sample) Count % within market area % within ERP Count % within market area % within ERP Count % within membership % within ERP Count % within market area % within ERP Count % within market area % within ERP % of total Market area and ERP adoption (whole sample) Other management system ERP 19 90. Membership and ERP adoption (large companies) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.0 7.2 20 19.4 2. c Based on normal approximation Market area Local Regional National International Total Table XIV.8 27 100.0 25.3 Total 21 100.002 0.4 400 The empirical verification of H4 on the subsets obtained by separating the companies by size does not show any interesting result (Tables XXIII-XXV and Tables XXVI-XXVIII).134 Approximate Tb 0.0 100.0 5.060 53 Asymptotic standard errora 0. The minimum expected cost is 5.1 73.5 7.0 28.134 0. Value Table XIII.0 74.001 0. Market area and ERP adoption (whole sample) – Chi-square tests Note: a 0 cells (0.668c 0.0 percent) have expected count less than 5.432 Approximate significance 0. the statistical analysis on large companies (Tables XXVI-XXVIII) does not show any meaningful difference between the two groups (chi-square ¼ 0:348 and p-value ¼ 0:409).000 Table XV.358a 16.4 103 100.668c Notes: a Not assuming the null hypothesis.0 25 92.JEIM 18.2 2 7. b Using the asymptotic standard error assuming the null hypothesis.32 .9 92 25.0 58.9 53.7 100.0 Value Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 14.4 21.2 83 80. H4: rejected (weak significance on the whole sample).3 100.

5 Total 19 100.002 Note: a Two cells (25.0 29.0 percent) have expected count less than 5.235 9.8 72.000c Factors affecting ERP system adoption 401 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0. b Using the asymptotic standard error assuming the null hypothesis.7 3.0 18.0 56. the empirical verification does not show meaningful correlations with the adoption of ERP systems (Tables XXIX-XXXI).6 128 76.042 0.196 363 Notes: a Not assuming the null hypothesis.561 297 a df 3 3 1 Asymptotic significance (two-sided) 0.0 81.7 55 18.2 52.796 Approximate significance 0. Only 27 percent of diversified companies make use of an ERP system.9 23. Market area and ERP adoption (SMEs) Value Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 9.Diversification (H5) Despite the support provided by the literature for diversification as a factor affecting the complexity of information flows. The minimum expected count is 3.0 2 8.3 8. Market area and ERP adoption (SMEs) – Chi-square tests .3 168 100.0 100.9 242 81.0 7.5 100.0 100.046 Approximate Tb 3.52 Table XVIII.6 13 14.0 6. c Based on normal approximation Table XVI.0 7.000c 0.022 0.7 87 100.4 23 100. The low significance of diversification as a factor affecting ERP adoption is also confirmed by the results of the statistical analysis: the two groups are not significantly different Asymptotic standard errora 0.6 40 23. 55 percent of companies adopting an ERP system pursue another kind of strategy.190 0.7 74 85.1 30. Moreover. Market area and ERP adoption (whole sample) – symmetric measures Market area Local Regional National International Total Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP % of total area area area area area Market area and ERP adoption (SMEs) Other management system ERP 19 100.5 Table XVII.9 21 91.6 297 100.004 0.643 13.684 3.5 100.

062 0.0 64. Accordingly to the methodology.8 Total 1 100. the analysis has been carried out on both SMEs and large companies to verify possible different behaviors in the sub-groups (Tables XXXII-XXXIV and Tables XXXV-XXXVII).610) and the very low value of Pearson’s R correlation index (0.0 20.JEIM 18.9 3 100.101 0.6 20.7 53 100.138 3. Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.230 7.5 percent) have expected count less than 5.397 53 a df 3 3 1 Asymptotic significance (two-sided) 0.173 297 Asymptotic standard errora 0.4 402 (Chi-square equal to 0.019 Approximate significance 0.049 Approximate Tb 3.0 2.5 34 64. Market area and ERP adoption (SMEs) – symmetric measures Notes: a Not assuming the null hypothesis.6 63.8 38 100. The minimum expected count is 0.7 11 100. b Using the asymptotic standard error assuming the null hypothesis.002c 0. c Based on normal approximation Market area Local Regional National International Total Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP Count % within market % within ERP % of total area area area area area Market area and ERP adoption (large companies) Other management system ERP 1 100.0 100.261.237 Note: a Five cells (62.039 0.003c Table XIX.2 100.0 100.0 1.1 12 31. Market area and ERP adoption (large companies) – Chi-square tests Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 6.0 35.8 4 36.2 19 35.0 15. but no statistical evidence has been found.8 100.36 .6 26 68.0 Table XX.351 1.4 21.0 71. Market area and ERP adoption (large companies) 7 63.9 3 100.2 Value Table XXI. H5: rejected.027) bears out that no correlation occurs.180 0. with a p-value of 0.4 76.0 5.

4 93 25. Branch offices and ERP adoption (whole sample) – Chi-square tests Notes: Computed only for a 2 £ 2 table.141 Approximate Tb 1.4 37.0 29. In particular.0 74.4 100.7 80 58.194 366 1 1 1 1 b 0.0 100.6 58 42. the functional extension does not seem to affect the rate of ERP system adoption.0 100.0 percent) have expected count less than 5. only 25.0 62. the percentage of companies making use of ERP systems is at most equal to the 26.9 percent of the 321 companies characterized by the maximum level of functional Asymptotic standard errora 0. b Using the asymptotic standard error assuming the null hypothesis.890 31.187 1.6 70. the maximum expected count is 35.1 percent.000 0.164 0.3 138 100.0 62.0 25.6 100.244c Factors affecting ERP system adoption 403 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0. 0 cells (0.7 366 100. Market area and ERP adoption (large companies) – symmetric measures Branch offices No Yes Total Count % within branch offices % within ERP Count % within branch offices % within ERP Count % within branch offices % within ERP % of total Branch offices and ERP adoption (whole sample) Other management system ERP 193 84.3 273 74. c Based on normal approximation Table XXII.000 Exact significance (two-sided) Exact significance (one-sided) 32.07 .000 0.241c 0.0 Table XXIII. Branch offices and ERP adoption (whole sample) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases a df b Asymptotic significance (two-sided) 0.000 0.145 0.597 32.180 Approximate significance 0.6 35 15. Tables XXXVIII-XL).000 0.4 Total 228 100.282 30.163 53 Notes: a Not assuming the null hypothesis.Functional extension (H6) Even though most of respondents (88 percent) manage all the business activities internally. For each meaningful value of functional extension (cross-tabulation cells with more than five companies.000 Table XXIV.0 37.

Branch offices and ERP adoption (SMEs) Count % within branch offices % within ERP Count % within branch offices % within ERP Count % within branch offices % within ERP % of total Branch offices and ERP adoption (SMEs) Other management system ERP 181 86. Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.0 percent) have expected count less than 5.7 Total 210 100. c Based on normal approximation Branch offices No Yes Total Table XXVI.837 10.0 30.0 Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 10.8 51.934 5.052 Approximate Tb 5.8 244 81.2 56 18.0 70.3 29 13.JEIM 18.297 366 Asymptotic standard errora 0.001 0.001 Table XXVII.297 0.0 300 100. b Using the asymptotic standard error assuming the null hypothesis.0 100. The unbalanced distribution of the sample undoubtedly challenges the reliability of the analysis.000c Table XXV.002 0.3 100.0 81.0 18. The analysis of both correlation and statistical significance with respect to SMEs and large companies does not show any meaningful change in of the main indexes (Tables XLI-XLI and Tables XLIV-XLVI).002 0.80 . Branch offices and ERP adoption (whole sample) – symmetric measures Notes: a Not assuming the null hypothesis.4 404 extension claim to make use of an ERP system.8 27 30.001 Exact significance (two-sided) Exact significance (one-sided) 0.934 Approximate significance 0.0 90 100.0 25.841 300 df 1 1 1 1 Asymptotic significance (two-sided) 0. b 0 cells (0.2 74.052 0.2 63 70.000c 0.0 48. H6: rejected.7 100.001 0. Branch offices and ERP adoption (SMEs) – Chi-square tests Notes: a Computed only for a 2 £ 2 table. the maximum expected count is 16.877b 9.230 10.0 100. nevertheless SMEs do not consider ERP systems as the solution needed to improve their organizational performance yet.

409 Table XXX.0 83.Extent of organizational change (H7) Unlike previous factors (from H2-H6).706 0.0 35.3 34 64.0 17. The maximum expected count is 3. Even though the Pearson’s R value (0.555 0. the results of the data analysis on H7 (Table XLVII-XLIX) highlights that the extent of organizational change the company wishes to achieve is likely to affect the decision of whether adopting an ERP system or not.8 100. Branch offices and ERP adoption (SMEs) – symmetric measures 0.348b 0. b One cell (25.835 0.2) in comparison with those companies which have adopted an ERP system (2.001c Table XXVIII.9 19 35.001c 0.4 21. Branch offices and ERP adoption (large companies) – Chi-square tests Notes: a Computed only for a 2 £ 2 table.1 15 34. Using the asymptotic standard error assuming the null hypothesis.062 Approximate Tb 3.3).348 Approximate significance 0. In particular (Tables L-LII).062 0.044 0.0 100.7 29 65.9 85.560 Exact significance (two-sided) Exact significance (one-sided) 0.0 100. Branch offices and ERP adoption (large companies) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 0.306) shown by the whole sample is just acceptable.342 53 df 1 1 1 1 Asymptotic significance (two-sided) 0. c Based on normal approximation Branch offices No Yes Total Count % within branch offices % within ERP Count % within branch offices % within ERP Count % within branch offices % within ERP % of total Presence of branch offices and ERP adoption (large companies) Other management system ERP 4 44.559 0.8 5 55.2 100. companies adopting other management systems reveal a lower mean for the organizational change factor (1.0 Table XXIX.2 Total 9 100.0 64.190 0. other considerations support this statement.23 .348 3.0 44 100. Factors affecting ERP system adoption 405 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases a Asymptotic standard errora 0.6 14.0 percent) has expected count less than 5.340 0.190 300 b Notes: Not assuming the null hypothesis.0 53 100.1 78.

0 57.JEIM 18.0 100.4 Total 209 100.629 0.6 51 24.4 100.366 df 1 1 1 1 Asymptotic significance (two-sided) 0.0 74.261b 0. 25 percent and the 16. Companies seem to privilege the ERP solution when their need to integrate.8 45.1 157 100.2 93 25.0 100.89 . Diversification and ERP adoption (whole sample) Count % within diversification % within ERP Count % within diversification % within ERP Count % within diversification % within ERP % of total 158 75. c Based on normal approximation Diversification and ERP adoption Other management system ERP Other strategy Diversification Total Table XXXII.581 0.0 Value Pearson chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 0.1 273 74.260 0.9 115 73. Branch offices and ERP adoption (large companies) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.610 Exact significance (two-sided) Exact significance (one-sided) 0.9 366 100.4 406 A detailed analysis of the cross-tabulation between organizational change and ERP adoption has pointed out some interesting remarks (see Figure 5): .4 54.7 percent).564c Notes: a Not assuming the null hypothesis. The maximum expected count is 39.260 0.348 Table XXXIII.564c 0.6 100.2 42.4 percent.6 57. Diversification and ERP adoption (whole sample) – Chi-square tests Notes: a Computed only for a 2 £ 2 table.081 53 Asymptotic standard errora 0.0 percent) have expected count less than 5.152 0.0 25. b Using the asymptotic standard error assuming the null hypothesis.141 0.610 0. Only 11 percent of companies which make use of ERP systems exploit this solution just for local automation purposes.581 Approximate significance 0. Value Table XXXI. b 0 cells (0.081 0.609 0. reengineer or redesign business processes becomes a priority (respectively the 17.8 42 26.141 Approximate Tb 0.3 percent).697 0. while the number of companies considering a more advanced solution (business network redesign levels) is quite negligible (8.0 42.

0 percent) have expected count less than 5.7 Total 174 100. b 0 cells (0.8 244 81.021 300 b df 1 1 1 1 Asymptotic significance (two-sided) 0.021 0.500 Table XXXVI.027 0.882 0.7 percent) declaring that no organizational change occurred..885 1.0 18. or has been foreseen. .0 Table XXXV.0 41. Diversification and ERP adoption (SMEs) – Chi-square tests Notes: a Computed only for a 2 £ 2 table. as a consequence of ERP adoption.885 Exact significance (two-sided) Exact significance (one-sided) 0.0 58.000 0.52 . Diversification and ERP adoption (whole sample) – symmetric measures 0.052 0.2 102 81.6 58.3 100. This result is even more surprising in the light of the support given by IS literature to the thesis that ERP adoption both requires and provokes an unavoidable organizational reshuffling of roles and tasks (Dewett and Jones. Using the asymtopic standard error assuming the null hypothesis.886 0.052 Approximate Tb 0. The comparative analysis of means and distribution for the organizational change factor (Table XLVII-XLIX) also shows that the underestimation of the Factors affecting ERP system adoption 407 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases a Asymptotic standard errora 0.0 126 100.610c Table XXXIV.4 57.7 100.0 42.9 56 18. A quite unexpected outcome of the analysis is the relevant percentage of companies (21.3 32 18. Diversification and ERP adoption (SMEs) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 0. 2001).510 0.0 100.510 Approximate significance 0. The maximum expected count is 23.0 100.027 366 b Notes: Not assuming the null hypothesis.000 0.0 42.0 300 100.1 24 19.0 81.021 0. c Based on normal approximation Diversification and ERP adoption (SMEs) Other management system ERP Other strategy Diversification Total Count % within diversification % within ERP Count % within diversification % within ERP Count % within diversification % within ERP % of total 142 81.610c 0.

c Based on normal approximation Diversification and ERP adoption (large companies) Other management system ERP Other strategy Diversification Total Count % within diversification % within ERP Count % within diversification % within ERP Count % within diversification % within ERP % of total 12 41.008 0. The maximum expected count is 8.0 Table XXXVIII. To explore the reasons underlying the different correlation shown by the two sub-groups.2 100. the previous outcome has been Asymptotic standard errora 0. Table LVI-LVIII).836 53 df 1 1 1 1 Asymptotic significance (two-sided) 0.4 63. Diversification and ERP adoption (SMEs) – symmetric measures Notes: a Not assuming the null hypothesis.354 Exact significance (two-sided) Exact significance (one-sided) Table XXXIX.886c 408 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.4 percent). Diversification and ERP adoption (large companies) Value Pearson Chi-square Continuity correctiona Likelihood ratio Fisher’s exact test Linear-by-linear association n of valid cases 0.6 50.058 Approximate Tb 0.8 17 58.4 organizational change factor becomes even more relevant among those companies that make use of another management system (50.401 0.356 0.2 36.JEIM 18.0 54.8 100. b Using the asymptotic standard error assuming the null hypothesis.0 17 70.2 7 29.8 50.0 34 64.361 0.008 300 Table XXXVII.7 24 100.0 100.3 53 100. The previous analysis has been performed also separating SMEs and large companies in order to highlight possible differences in the behavior of the two sub-groups.2 Total 29 100.144 0.8 19 35. Tables LIII-LV) with respect to SMEs (Pearson’s R ¼ 0:218.525 0.0 35. Diversification and ERP adoption (large companies) – Chi-square tests 0.403 0.60 .0 45.886c 0.852b 0.144 Approximate significance 0.058 0.0 64. b 0 cells (0. Organizational change shows a stronger correlation with ERP adoption in the case of large companies (Pearson’s R ¼ 0:386.859 0.0 100.264 Notes: a Computed only for a 2 £ 2 table.0 percent) have expected count less than 5.

0 1.4 3 100.1 87. As suggested by literature. Diversification and ERP adoption (large companies) – ymmetric measures Number of internally managed activities 0 3 5 6 7 8 Total Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP % of total extension extension extension extension extension extension extension Functional extension and ERP adoption Other management system ERP 1 100.0 25.366c Factors affecting ERP system adoption 409 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.1 3 75.1 11 78.1 6.3 321 100.0 100.1 3 21. Functional extension and ERP adoption (whole sample) .0 17 73.4 Table XLI.0 100. whereas the use of ERP among large companies seems to be more related to a radical-oriented attitude towards organizational innovation (business process reengineering and business network redesign).0 1. 2000). b Using the asymptotic standard error assuming the null hypothesis.9 89.further investigated by means of the analysis of both frequencies for the organizational change factor and ERP non-adoption reasons: .9 6.913 Approximate significance 0.4 3.9 Total 1 100.0 0. The evaluation of frequencies (Figure 5) points out that SMEs are more inclined to a strategy of incremental innovation (local automation and internal integration) when adopting ERP systems.0 1.0 1 25.8 4 100.6 100.8 23 100. This is due to the mismatches that could occur between the assumptions about organizational structure implicitly embedded in the reference models the ERP software makes use of and the actual organization (Kumar and Hillegersberg.0 6.2 93 25. an incremental and too prudential approach towards organizational innovation could endanger the survival itself of the small organization.0 87.0 0.366c 0.0 0.0 3.2 273 74.6 4.127 53 Notes: a Not assuming the null hypothesis.1 14 100.127 0.135 Approximate Tb 0.3 3 100.913 0.0 74.0 1.4 100.135 0.7 366 100.2 6 26.2 238 74.5 83 25. c Based on normal approximation Table XL. This remark gains Asymptotic standard errora 0.

911 0.030 366 Asymptotic standard errora 0.9 56 18.0 3. Functional extension and ERP adoption (whole sample) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.0 6.7 100.305c 0.0 81.3 100.1 3. c Based on normal approximation Number of internally managed activities 3 5 6 7 8 Total Table XLIV.0 0.0 2 100.5 92. The incremental attitude towards organizational innovation shown by SMEs is strengthened by the analysis of both the reasons justifying ERP non-adoption Value df 5 5 1 Asymptotic significance (two-sided) 0.304 410 Table XLII.9 6.776 0.0 1.0 18.0 100.3 Total 3 100.0 88.6 52 19.0 266 100.6 214 80.6 2 11.2 3. even more importance in the light of the 25. Functional extension and ERP adoption (SMEs) Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP % of total extension extension extension extension extension extension Functional extension and ERP adoption (SMEs) Other management system ERP 3 100.5 87.4 . compared with the only 14.7 300 100.7 244 81. b Using the asymptotic standard error assuming the null hypothesis.028 0.0 2 18.3 percent) have expected count less than 5.576 Approximate significance 0.JEIM 18.5 percent of SMEs adopting ERP claiming that no organizational change occurred or has been foreseen.054 0.8 3.519 2.0 100.0 0.050 Approximate Tb 1.037 0.565c Notes: a Not assuming the null hypothesis. Functional extension and ERP adoption (whole sample) – Chi-square tests Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 1.506 1. The minimum expected count is 0.7 percent of large companies.7 11 100.8 9 81.7 .7 16 88.25 Value Table XLIII.2 2 100.057 366 a Note: a Seven cells (58.7 18 100.0 1.

3 34 64.5 1 25.9 2 100.0 8. Functional extension and ERP adoption (SMEs) – Chi-square tests df 5 5 1 Asymptotic significance (two-sided) 0.0 81.0 5.970 1.0 64.156 1.0 3.4 85.3 2.064 300 b Notes: Not assuming the null hypothesis. The minimum expected count is 0. Functional extension and ERP adoption (large companies) .0 1 50.037 0.0 100.0 percent) have expected count less than 5.0 2. while the organizational un-readiness (i.5 43 100.0 1.3 1 50.8 3 100.0 35. In the 58. organizational skills are not sufficient to manage Value Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 1.7 19 35.2 100.304 Note: Six cells (60.and the stated extent of organizational innovation (Figure 6).271c Table XLVI.6 73. c Based on normal approximation Number of internally managed activities 0 5 6 7 8 Total Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP Count % within functional % within ERP % of total extension extension extension extension extension extension Functional extension and ERP adoption (large companies) Other management system ERP 1 100.336 300 a Factors affecting ERP system adoption 411 Table XLV.0 5.911 0.0 100.0 5.248c 0.7 4 100.776 0.e.1 53 100.37 Value Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases a Asymptotic standard errora 0.3 14 32.7 10.0 5. Functional extension and ERP adoption (SMEs) – symmetric measures 0.2 percent of cases (multiple response allowed) SMEs declare their business is not complex enough to justify the adoption of an ERP system (structural reasons).0 7.9 1 33.8 Total 1 100.3 2 66.049 Approximate Tb 1.962 2.8 100.9 3 75.8 29 67. Using the asymptotic standard error assuming the null hypothesis.103 Approximate significance 0.067 0.2 Table XLVII.

1995.227 0. and on SMEs in particular. the change in the organization induced by an ERP implementation) is cited in only the 29.173 Approximate significance 0. c Based on normal approximation . 1996).143 Approximate Tb 1.461 0..2 percent) are not as important as structural and organizational motivations. Functional extension and ERP adoption (large companies) – Chi-square tests Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 3. 2000.813 2.4 percent of cases. The minimum expected count is 0.246c Notes: a Not assuming the null hypothesis. The data analysis supports the existence of a strong correlation between company size (evaluated as a composed measure of number of employees and turnover) and ERP adoption. Zinatelli et al.JEIM 18.0 percent) have expected count less than 5. Themistocleous et al.432 0.610a 3. b Using the asymptotic standard error assuming the null hypothesis..102 Note: Eight cells (80.36 Value Table XLIX. Functional extension and ERP adoption (large companies) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0. No other studies seem to have tested the relationship between business complexity and ERP adoption on such a relative high number of companies.111 0. quite surprisingly economic reasons (15. All the other hypotheses regarding possible business complexity measures have been rejected.678 53 df 4 4 1 Asymptotic significance (two-sided) 0. H7: verified (in particular for large companies).5 percent of cases. These results are merely indicative due to the lack of numerical consistency of the sub-group itself (only 11 valid cases and 12 total responses). 2001.5 percent of cases) whereas structural reasons are mentioned in the 36. Despite the emphasis that the literature has always put on the scarcity of financial resource of SMEs as one the most important factors affecting ERP non-adoption (Cragg and Zinatelli. Discussion The empirical verification of the framework shows the difficulties in describing the relationship between the growth in business and organizational complexity and ERP adoption: only two measures were considered reliable (Table LX).162 53 Asymptotic standard errora 0. being based on an extensive questionnaire deployed through direct interviews.102c 0. instead of Value Table XLVIII.664 1. The methodology itself differentiates this research from previous efforts. Levy and Powell.4 412 . The same analysis performed on large companies (Table LIX and Figure 7) shows a supremacy of organizational reasons (45.

4 10 10.8 100.0 16.1 38.3 ERP 2.5 100.0 8.7 100.7 12.8 47.7 58.0 14.9 100.0 Total Count % within organizational change % within ERP Count % within organizational change % within ERP Count % within organizational change % within ERP % of total 14.Local Nothing automation 122 29 40 25 21 5 Organizational change and ERP adoption Internal Business process Business integration reengineering network redesign Redefinition of company boundaries Total 242 Other management system 50.3 15 16.7 36 10.5 334 100. Organizational change and ERP adoption (whole sample) 413 .0 42.5 13 3.5 71.0 3.4 41.0 74.8 61.1 142 42.0 Factors affecting ERP system adoption Table L.6 56 16.5 8 8.0 10.5 100.5 92 100.0 100.7 28.7 100.9 20 21.6 39 11.9 27.0 72.4 85.4 10.0 100.3 52.4 16 17.4 25.9 16.8 100.9 48 14.1 23 25.0 11.

000 0. b Using the asymptotic standard error assuming the null hypothesis. If the testing on H7 reveals an incremental and conservative approach to organizational change by SMEs.304 334 Asymptotic standard errora 0.4 414 the commonly used approach based on case study.053 0.000 0. Despite the positive outcomes of such choices. The minimum expected count is 3.306 0.000c Notes: a Not assuming the null hypothesis.000 Table LI. thus they seem not to consider ERP systems as a keystone for organizational innovation. Organizational change and ERP adoption (whole sample) – Chi-square tests Pearson Chi-square Likelihood ratio Linear-by-linear association n of valid cases 34. Frequencies for organizational change and adopted software solution (whole sample) .822 Approximate significance 0.147 334 5 5 1 Note: a One cell (8.097 33. on the contrary. The findings on the relationship between ERP adoption and organizational change (H7) show that companies making use of an ERP system expect a wider extent of business transformation (business process reengineering and business network redesign) with respect to companies making use of other software applications.853 5. SMEs always scheduled a limited organizational change in the case of ERP adoption.052 Approximate Tb 5.650 31. c Based on normal approximation Figure 5. one main side effect could be a reduced comparability of the results.JEIM 18.3 percent) has expected count less than 5. Organizational change and ERP adoption (whole sample) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.58 Value Table LII. H7 suggests a different innovation strategy by large Value df a Asymptotic significance (two-sided) 0.000c 0.

0 15.5 87.8 29.6 ERP 4 11.5 8 15.0 4 7.6 100.5 100.0 Total Count % within organizational change % within ERP Count % within organizational change % within ERP Count % within organizational change % within ERP % of total 38.0 33.9 13 25.0 Factors affecting ERP system adoption Table LIII.0 100.5 100.4 5.0 100.0 10 19.0 7. Organizational change and ERP adoption (large companies) 415 .7 51 100.8 66.Organizational change and ERP adoption (large companies) Local Internal Business process Business Redefinition of Nothing automation integration reengineering network redesign company boundaries 8 5 3 1 Total 17 Other management system 47.6 76.3 34 100.9 12.9 50.0 5.8 100.0 25.0 5 14.5 13 25.1 61.5 100.5 5 14.5 7 20.4 50.0 25.0 3 5.7 100.5 23.7 17.1 10 29.0 19.7 100.7 3 8.9 100.8 100.

It is still questionable whether ERP packages are really keeping their promises.041 0. SMEs’ traditional focus on operations and day-by-day management. In particular.00 Value Table LV. Organizational change and ERP adoption (large companies) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0. Value df 5 5 1 Asymptotic significance (two-sided) 0.004c Notes: a Not assuming the null hypothesis. the first answer of ERP vendors was the proposal of products with a range of functionalities on a smaller scale to lower the overall costs and vertical solutions to achieve a concrete reduction in customization costs without a dramatic change in the way people currently work. SMEs result to be less inclined to radical change and less aware of the organizational impact caused by the implementation of an ERP system.006 Table LIV. SMEs could simply prefer to continue doing business as they are used to. Indeed. On the other hand.116 0. of the need of more radical changes. experiences on the field seem to confirm that both the extent of business complexity and the sustainable level of organizational change may dramatically vary according to company size. but also on the inner characteristics of ERP packages themselves.930 2. Organizational change and ERP adoption (large companies) – Chi-square tests Pearson’s Chi-square Likelihood ratio Linear-by-linear association n of valid cases 11. However. there is a general agreement on the role played by company size (H1) as the main clustering variable for the ERP market. by looking at vendors’ scenery.582 13.4 416 companies since they are especially aware of the organizational implications of ERP adoption and. in particular. The ERP market evolution has clearly shown that differences in company size have an influence not only on the adoption of ERP systems (H1). In particular. could be partially accountable for these findings. On one hand. This has been the way ERP vendors tried to cope with the issues connected to the dualism between business processes change and software customization issues. hence SMEs could be no longer treated by the same standard as large companies. The subject is still debated but. Therefore. this approach has opened up the SME market to personalized integrated solutions able to respond adequately both to their information needs and extreme flexibility.994 Approximate significance 0.454 51 a Note: a Eight cells (66. not necessarily provided by the ERP market’s big players.386 0. by refusing to adopt solutions that could change their “course”.JEIM 18. The minimum expected count is 1.018 0. it is a clear sign for ERP big players that the SME market requires simplified and less expensive solutions.393 51 Asymptotic standard errora 0.7 percent) have expected count less than 5. coupled with a lack of strategic view of ICT. b Using the asymptotic standard error assuming the null hypothesis. c Based on normal approximation .116 Approximate Tb 2. Firms that are planning to change their information system radically are more inclined to adopt ERP systems due to the expected “integration” outcomes.665 7.005c 0.

5 13. Organizational change and ERP adoption (SMEs) 417 .7 75.2 29.0 Total Count % within organizational change % within ERP Count % within organizational change % within ERP Count % within organizational change % within ERP % of total 11.5 ERP 2.8 8.4 45 16.0 37.8 70.3 100.0 12.7 63.4 36 13.0 10.0 88.0 9.0 79.4 80.0 Factors affecting ERP system adoption Table LVI.7 15.0 3.4 33 12.6 27 10.6 12 21.5 100.5 122 45.0 45.5 8 3.6 7 12.0 100.0 100.2 19.0 100.5 14 25.0 20.3 62.6 11 20.6 36.6 100.0 100.0 13.3 271 100.Local Nothing automation 108 29 34 21 19 Organizational change and ERP adoption (SMEs) Internal Business process Business integration reengineering network redesign 5 Redefinition of company boundaries Total 216 Other management system 50.0 100.0 100.0 16.3 24.4 8 14.7 55 100.5 3 5.

061 0.4 418 a first wave in the ERP market segmentation occurred: for example. Software packages such as mySAP All-in-One should be able to minimize customization costs through an enhanced availability of vertical solutions.059 Approximate Tb 3.012 0. Frequencies for organizational change and adopted software solution (SMEs vs large companies) .222 0.3 percent) has expected count less than 5.849 271 a df 5 5 1 Asymptotic significance (two-sided) 0. a solution for small firms. The characteristics of medium companies led to a second wave in the evolution of the ERP systems.741 Approximate significance 0.000 Table LVII.271 Asymptotic standard errora 0. b Using the asymptotic standard error assuming the null hypothesis. by keeping R/3 for the medium and large companies. relying on the same technology platform of the traditional ERP systems (such as mySAP Business Suite or Peoplesoft EnterpriseOne) to ensure the scaling up of the ERP package. availability of financial resources and dynamism.000c 0. Value Pearson’s Chi-square Likelihood ratio Linear-by-linear association n of valid cases 14.291 12. SAP AG introduced Business One.666 3. Organizational change and ERP adoption (SMEs) – symmetric measures Interval by interval Pearson’s R Ordinal by ordinal Spearman correlation n of valid cases 0.547 14. The minimum expected count is 1. make them a specific and hybrid economic subject which has to face the typical issues of both large and small businesses.000c Notes: a Not assuming the null hypothesis.JEIM 18. such as organizational flexibility. c Based on normal approximation Figure 6.62 Value Table LVIII. This was only the first wave in the vendors’ strategy: some intrinsic characteristics of medium companies. Chi-square tests Note: a One cell (8.014 0.218 0.

2 109. by gradually integrating components that are reasonably .3 41.7 25.3 33.7 100 Percentage of cases 17. Outcomes of the empirical verification On the other hand.2 29.8 58. a third wave in the ERP vendor’s strategy has taken place. the urgent need for integrating ERP systems with the existing legacy systems could not only br met by offering vertical and lighter ERP solutions.1 Factors affecting ERP system adoption 419 Table LIX.1 9.1 36. 11 valid cases 26 85 43 17 171 1 4 5 2 12 Percentage of responses 15. Extent of organizational change Hypothesis Company size (H1) Membership of an industrial group (H2) Market area (H3) Presence of branch offices (H4) Level of diversification (H5) Degree of functional extension (H6) Extent of organizational change (H7) Result Verified Rejected Rejected Rejected Rejected Rejected Verified Remarks Extremely significant for the whole sample Some significance for the whole sample Extremely significant for the whole sample Table LX. by offering component-based solutions allowing SMEs gradually to acquire and assemble a lower cost ERP systems.5 18. Reasons for ERP non-adoption (SMEs and large companies) Figure 7.7 16.6 117.9 100 8.1 9. Thus.2 49.5 11.Count Economic reasons Structural reasons Organizational reasons Other reasons Total responses 98 missing cases.4 45. 146 valid cases Economic reasons Structural reasons Organizational reasons Other reasons Total responses 8 missing cases.

5 percent respectively) seems to highlight a greater attention by large . the differences in the approach towards ERP adoption are confirmed by the outcome of the analysis which has been performed on the technological and operational drivers that affect ERP adoption in 90 of the 366 companies the whole sample is made of. the introduction of the Euro (30.4 420 customized to their specific needs.4 percent). The results (Table LXI) show that SMEs still consider contingency factors such as the millennium bug (Y2K.g.g. while the high relevance of data redundancy/inconsistency and dissimilarity of procedures (29. whereas strategic and organizational drivers (i. The unsatisfying process integration (30. now vendors seem to have understood that the deployment of independent business modules could address the same issues in a different way.e.4 percent). organizational change (H7) and ERP adoption. Peoplesoft Enterprise and Oracle Business Suite includes the Customer Relationship Management. mySAP Business Suite.JEIM 18. Business Intelligence and Product Lifecycle Management modules among others). 2000). The same analysis has been carried out on large companies and results point out a greater balance between exogenous and endogenous reasons. hardware or software obsolescence (44 percent) as the prevailing reasons leading to ERP adoption. After a period in which ERP packages were generally planned with a great emphasis on the reduction of the organizational-related costs through vertical and less expensive solutions. 30.4 percent and 23. Yet. The adequacy of the behaviour of ERP big players seems to find a confirmation in the findings related to company size (H1). Supplier Relationship Management.1 percent of cases in comparison with the 30. This would help reducing the problem of mismatch between organizational requirements and ERP solutions and finally migrations should become more gradual as outdated components are upgraded individually instead of the whole system (Kumar and Hillegersberg. HR management) to a view in which ERP modules manage the “stakeholders-centric” requirements of the company also through the so-called enterprise portals. limited support to decisions. Impact of technological and operational drivers on ERP adoption One of the most interesting outcomes of the analysis on H7 is that SMEs are less inclined to evaluate and plan the organizational change when implementing an ERP system than large companies. In particular. ERPII (or “second generation” ERP) systems are built in a modular way.4 percent claimed by SMEs). SAP NetWeaver or Oracle Data Hub) which are needed to achieve an effective interaction between the ERP and the existing legacy systems.4 percent) is the only exception to this trend. The role of ERP modules has gradually shifted from the automation of specific processes (invoicing and billing. thus allowing companies the possibility of acquiring only the business modules needed (instead of a monolithic package) and to ensure also the presence of the technological platforms (e. The same component strategy marks the ERP systems for large companies and is based on the composition of large systems from largely independent components that are assembled to meet situation-specific requirements (e. dissimilarity of procedures) are stated as less important. Large companies seem to devote more attention to endogenous reasons as motivating factors for ERP adoption: the unsatisfying process integration is claimed to be the most relevant factor (44.

the adoption curve for large companies in years 1999 (Y2K issue) and 2001 (Euro issue) shows a greater gradient in comparison with SMEs’ curve. also among large companies the decision regarding the ERP system adoption is strongly affected by exogenous reasons. organizational change and ERP adoption.4 30. Technological and operational drivers (90 SMEs and large enterprises adopting ERP systems) .8 19. In other words.9 3. whereas just company size results to be a very good one.8 29.e.6 and only 1. as a composed factor.7 8.3 12. 38.1 14.6 30.4 30.1 8.9 16.5 29. This outcome could depend both on the validity of this index or the Percentage of cases (SMEs) 44.4 percent respectively). whereas the rate of adoption is constantly lower than SMEs upon the occurrence of the external event.2 percent of large companies declare that the ERP system adoption has been imposed by the controlling company.8 307.8 23.5 26. Conclusions and further research This research has attempted to study the relationship between business complexity.5 38.2 14.5 23.6 1.5 341.7 8.9 14.8 percent respectively). Despite the greater awareness of organizational and information-related issues if compared to SMEs. The analysis of the empirical data clearly shows that business complexity.8 11. is a weak predictor of ERP implementation.1 Percentage of cases (large companies) 26.5 percent and 29.6 19. In accordance with the outcomes of other studies on the same topic.companies to both the process management issues and the related information flows in comparison to SMEs (19.5 8.2 Factors affecting ERP system adoption 421 Drivers HW/SW obsolescence Euro issue Y2K issue Unsatisfying process integration Unsatisfying order management Data redundancy and/or inconsistency Limited support to decisions Lack of flexibility Forced decision (by a controlling company) Logistics and transportation issues High cost of data distribution Other reasons Over-dimensioning of stock CRM issues Unsatisfying time-to-market Dissimilarity of procedures (i.3 14.1 16. It is also interesting to notice that the ERP adoption curve of large companies is flattening showing the difficulties for ERP vendors to penetrate large companies’ market further. companies seem to be disregarding ERP systems as an answer to their business complexity.4 44. Euro and Y2K issues turn out to be important drivers also for large companies (26.4 26. rules on quality management) Total responses Table LXI.4 26.8 5. A further proof of how differently the two sub-groups managed exogenous reasons (such as Y2K and Euro) is given by the analysis of ERP adoption curves for both SMEs and large companies.6 17. Figure 8 clearly points out how large companies’ strategy seem to anticipate ERP adoption with respect to the occurrence of external events: in detail. while in the last two years SMEs’ market has been showing a steady growth.

the decision process regarding the adoption of ERP systems within SMEs is still more affected by exogenous reasons or “opportunity of the moment” rather than on business-related factors contrary to large companies that are more interested in managing process integration and data redundancy/inconsistency through ERP implementation. (1998). European Journal of Operational Research. M.. pp. 44 No. 433-50. Banker.B. and Slaughter.D. 103 No. Unexpectedly. This pattern is partially different from what observed in large organizations where the first reason for not adopting ERP system is organizational. M. Al-Mudimigh. In particular. (2002). and Zairi. Moreover. 1. the different extent to which companies of any size adopt ERP systems. (2003). intentionally leaving out of consideration a closer investigation of ERP packages. A. pp. MA. References Al-Mashari. and somehow explain. a further research could consider a sort of reverse engineering of this approach. it could be interesting to analyze how vendors interpret the concepts of “business complexity” and “organizational change” by exploring in detail the characteristics of the ERP systems they currently offer.4 422 Figure 8. Vol.A. 165-70. no large differences in terms of complexity were found among these two groups. This paper investigates whether business complexity could influence. Industrial Management & Data Systems. (Eds) (1989). M. These results could imply that SMEs structural peculiarities are a real obstacle to ERP diffusion if and adequate strategy by vendors lacks. Bartlett. S. SMEs disregard financial constraints as the main cause for ERP system non-adoption. Management Science. and software maintenance performance: a field study”. 146. Vol. Davis. “Enterprise resource planning: a taxonomy of critical factors”. Al-Mashari. No. S. 352-64.. . R. ERP adoption curves (SMEs and large companies) erroneous perception of SMEs of their business complexity: the reason they cite most for discounting ERP systems. “Development practices. Managing across Borders. “Enterprise resource planning (ERP) systems: a research agenda”.JEIM 18. suggesting structural and organizational reasons as major ones. Accordingly to the previous section remarks. Boston. and Ghoshal. C. Harvard Business School Press. The focus has been largely appointed to a comparative analysis of the business characteristics of the companies themselves. G. software complexity. pp. 4. However.

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