CMV Assimilation of Enterprise Systems The Effect of Institutional Pressures and The Mediating

Assimilation of Enterprise Systems: The Effect of Institutional Pressures and the Mediating
Role of Top Management

Author(s): Huigang Liang, Nilesh Saraf, Qing Hu and Yajiong Xue
Source: MIS Quarterly, Vol. 31, No. 1 (Mar., 2007), pp. 59-87
Published by: Management Information Systems Research Center, University of Minnesota
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Liang et al./Assimilation of Enterprise Systems
Qjarterjy
Assimilation of Enterprise Systems: The Effect

of Institutional Pressures and the Mediating
Role of Top Management1
By: Huigang Liang Abstract

Department of Information Technology and
Operations Management We develop and test a theoretical model to investigate the
Florida Atlantic University assimilation of enterprise systems in thepost-implementation
Ft. Lauderdale, FL 33308
stage within organizations. Specifically, thismodel explains
U.S.A. how topmanagement mediates the impact of external institu
hliang@fau.edu tional pressures on the degree of usage of enterprise
resource
planning (ERP) systems. The hypotheses were tested using

Nilesh Saraf
survey data from companies thathave already implemented
Faculty of Business Administration ERP Results least
systems. from partial squares analyses
Simon Fraser University
suggest thatmimetic pressures positively affect topmanage
Burnaby, BCV5A1S6 ment beliefs, which thenpositively affects topmanagement
CANADA
participation in theERP assimilation process. In turn, top
nsaraf@sfu.ca
management participation isconfirmed topositively affect the
Qing Hu degree of ERP usage. Results also suggest that coercive

Department of Information Technology and pressures positively affect top management participation
without the mediation of top management beliefs. Sur
Operations Management
College of Business prisingly, we do notfind supportfor our hypothesis that top
Florida Atlantic University management participation mediates the effect of normative
Boca Raton, FL 33431 pressures on ERP usage, but instead we find that normative
U.S.A. pressures directly affectERP usage. Our findings highlight
qhu@fau.edu the importantrole of topmanagement inmediating the effect
of institutional pressures on IT assimilation. We that
confirm
Yajiong Xue institutional pressures, which are known to be important for
College of Business IT adoption and implementation, also contribute to post
Florida Atlantic University assimilation when the integration
implementation processes
Boca Raton, FL 33431 are and outcomes are and uncertain.
prolonged dynamic
U.S.A.
yxue@fau.edu
Carol Saunders was the accepting senior editor for this paper. Rob Fichman
Keywords: Enterprise resource planning, technology assimi
was the associate editor. Hock-Hai Teo and Rajeev Sharma served as lation, innovation diffusion, top management, institutional
reviewers. The third reviewer chose to remain anonymous. theory
MIS Quarterly Vol. 31 No. 1, pp. 59-87/March 2007 59

Introduction _ _ _ _ _ __ _ _ _ the findings of Teo et al. (2003b) that isomorphic processes

drive the adoption of electronic data interchange (EDI) by
With thepromise of greatly improving operational efficiency organizations, we submit that institutional forces retain their
and enhancing organizational performance, enterprise influence into thepost-implementation stages of complex IT
resource planning (ERP) systems have been embraced by innovations. Due to the persistent uncertainties and com
most of the large and medium organizations worldwide. A plexities surrounding an ERP project even during the post
survey of 500 mid- to large-size companies shows thatERP implementationphase, the implementingorganization remains
penetration was 67 percent and another 21 percent of the acquiescent to themimetic, coercive, and normative pressures
companies were evaluating the systems; 74 percent ofmanu arising from its organizational field consisting of the com
facturers and 59 percent of service companies were either munity of suppliers, customers, competitors, professional net
using or implementingERP (Sirkisoon and Shepherd 2002). works, and governmental agencies. In addition, we extend
However, many ERP projects have failed and led companies Teo et al.'s (2003b) argument in another direction by con
to financial difficulties (Miller 2000; Xue et al. 2005). tending that the impact of institutionalforces on ERP assimi
According to one estimate, the percentage of ERP imple lation is mediated by top management, who serves as an
mentations that can be classified as "failures" range from 40 organization's primary human interface to the external
percent to 60 percent (Langenwalter 2000). environment.
The high failure rate of ERP projects can be largely ascribed While it is reasonable to assume that institutional forces and
to the complexity of ERP systems. ERP systems' impacts on topmanagement, critical to successful adoption and imple
organizational processes, structures, and even cultures are mentation of ERP systems,might still be influential in the
much broader and more profound (Robey et al. 2002; Soh et assimilation stage, we submit that a theoretical explanation
al. 2000) than less complicated technologies. Implementation regarding the effects of these factors on ERP assimilation
of an ERP system involves unpacking the "best practices" during actual usage is still underdeveloped. Theory-based
embedded in the design of the software, possibly through empirical studies with a focus on the post-implementation
various customizable configurations. The challenge of assimilation of ERP systems, and IT innovations in general,
aligning the embedded business processes with the existing are clearly called for. By empirically validating a theo
organizational processes puts ERP projects at considerable retically derived ERP assimilation model, this study offers
risk. As a consequence, the outcome of an ERP project is threemajor contributions to the literatureon IT innovation.
highly dynamic and often a moving target: an early success First, as a novel contribution,we investigate towhat extent
could become a later failure and an early failure could turn topmanagement mediates the effectof institutionalforces on
into a later success (Larsen and Myers 1999). Since the ERP assimilation. Second, recognizing the inherentmulti
potential business value of IT applications cannot be fully dimensionality of the concept of topmanagement, we con
realized until they are extensively assimilated in an organi ceptualize the construct at a refined level by discriminating
zation (Armstrong and Sambamurthy 1999; Purvis et al. 2001; between topmanagement beliefs and actions. In the litera
Zmud and Apple 1992), success cannot be claimed until ERP ture, these two constructs are often treated as a
single con
assimilation is ultimately achieved by the organization. struct,topmanagement championship. Our thirdcontribution

is thatwe extend prior research on IT adoption and imple
While there is a rich body of literatureon ERP adoption and mentation to thepost-implementation assimilation phase. Our
implementation (Holland and Light 1999;Markus and Tanis findingsenrich the theoryon IT innovation by confirming that
2000), research on ERP assimilation is scant (Gattiker and institutional forces remain significant in the context of post
Goodhue 2005). Existing post-implementation studiesmainly implementation assimilation. The relevance of studying the
focus on ascertaining their organizational impact of ERP external institutional forces becomes clearer as we describe
systems and consequently theirbusiness value (e.g., Gattiker next the difficulties thatarise in assimilating ERP systems in
and Goodhue 2005; Hitt et al. 2002). Few studies utilize a organizational work processes.
theoryfocused approach tounderstand the role of key factors
in influencingpost-implementation assimilation. Drawing on In this study,we adopt thedefinition of assimilation by Purvis
the literatureon institutional theory (Powell and DiMaggio et al. (2001) as "the extent towhich the use of technology
1991; Zucker 1977,1987) and topmanagement (Chatterjee et diffuses across the organizational projects orwork processes
al. 2002a; Jarvenpaa and Ives 1991; Purvis et al. 2001), we and becomes routinized in the activities of those projects and
develop a theoreticalmodel to explain how ERP assimilation processes." This definition corresponds to the "shakedown"
within an organization is influenced by the external and "onward and upward" stages of theERP life cycle model
institutionalforces and the internalhuman agency. Extending proposed by Markus and Tanis (2000). The key objective
60 MIS QuarterlyVol. 31 No. 1/March

2007

Liang et ai/Assimilation of Enterprise Systems
during the post-implementation stage is to assimilate the operationalization and data collection method, present the
technical features of an ERP system into thebusiness routines data analysis procedure and the results of themodel testing,
so that the expected benefits of ERP can be actually realized. and discuss the findings and their theoretical and managerial
At this stage, the involvement of the vendors is significantly implications. This paper concludes with a discussion about
lowered and the system is considered officially "rolled out" our findings and directions for future research.
for routine usage by the operational-level users. Most of the
radical customizations such as process conversion and re
engineering are complete at this stage (Luo and Strong 2004).

As the initial implementation ends, organizations typically try Theoretical Framework _ _ _
to ensure that a sufficient amount of knowledge about the
ERP system has been transferred from the vendors and The foundation of our theoretical framework comprises of two
consultants to the end users. Power users (users who are elements: institutional theory and the influence of topman
technically savvy about theERP system) are identified tohelp agement (see Figure 1). During the last two decades, institu
their peers adapt, and sufficient training resources are com tional theory (DiMaggio and Powell 1983;Meyer and Rowan
mitted to reinforce the changes (Somers and Nelson 2004). 1977) has emerged as a powerful explanation to account for
the influence of external institutionson organizational deci
However, a number of obstacles could slow down or even sion making and outcomes (Mizruchi and Fein 1999). We
stop the assimilation of the ERP after the implementation. argue that institutionalforces retain theirinfluence throughout
For instance, users may not understand the ERP system the life cycle of complex enterprise systems as they are
completely. Instead theymay create and reenactworkarounds adopted and thenevolve continuously (Gosain 2004; Swanson
(Markus and Tanis 2000). These workarounds can then and Ramiller 1997). However, external forces, nomatter how
persist indefinitely (Tyre and Orlikowski 1994) even though strong they are, will have no effect on the behavior of an
they are recognized as inefficient. For example, Boudreau organization without first affecting the behavior of human
and Robey (2001) described how users in a state university agents within the organization. Thus, we furtherargue that
continued tomaintain the shadow systems and how power external institutional forces affect the assimilation of ERP
users found itdifficult to unlearn their legacy systems after systems through the agency of key organizational members
the implementation of an ERP system. Further, unless users (topmanagement). Our theoretical framework is grounded in
are motivated to adapt, theymay continue to informally rely the proposition that institutional forces affect organizational
(sometimes exclusively) on consultants or power users for behavior afterbeing mediated by the topmanagement.
solving bottlenecks (Hirt and Swanson 2001). It is also
possible that the top executives publicize an ERP project for
the purpose of satisfying shareholder expectations without Institutional Isomorphism and
being fully committed to assimilating theERP systemwithin ITAssimilation
the organization2 (Chatterjee et al. 2002b). At worst, it is
even possible that an ERP system is terminated in the post
When considering the influence of external social, technical,
implementation stage ifnot appropriately assimilated (Daven and political environments on organizational behavior such as
port 1998). In summary, ERP assimilation in the post
assimilation of innovations, institutional theory is especially
implementation stage is fraught with uncertainties under salient. In contrast to transaction cost economics (Williamson
which organizations are inclined to seek solutions from their
1975, 1981) and resource dependence theory (Pfeffer and
institutionalenvironments. Hence, institutionaltheoryaffords
Salancik 1978), institutional theoryposits that structuraland
us a lens through which organizational behavior in
behavioral changes inorganizations are driven less by compe
assimilating ERP systems can be reasonably explained. tition and the desire for efficiency, but more by the need for
The rest of the paper is organized as follows. In the next organizational legitimacy. It is this drive for legitimacy that
fosters theprocesses of institutionalizationwhich eventually
section, we develop our theoretical framework,which inte makes organizations more similarwithout necessarily making
grates institutional theorywith the topmanagement perspec themmore efficient,giving rise to institutional isomorphism
tive. Subsequent sections consecutively develop a research
(DiMaggio and Powell 1983).
model based on this framework, describe the construct
DiMaggio and Powell (1983) identify three basic types of

institutional isomorphism, coercive, mimetic, and normative,
This also emerged during an exploratory interview with a project manager which reflect three analytically distinct processes of institu
of a large outsourcing vendor operating in theUnited States. tionalization. Coercive isomorphism results when organiza
MIS QuarterlyVol. 31 No. 1/March

2007 61

Mimetic
Coercive _Top ERP

,_,
t^w_Forces _ *
Management
* Assimilation
Normative/
i-n/^
Forces
Figure 1. Conceptual Framework
tions acquiesce to "the formal and external pressures exerted Institutional theoryhas been widely used in the social science
upon themby other organizations upon which theyare depen andmanagement literature(Mizruchi and Fein 1999) and has
dent, and thecultural expectations in the societywithin which recently begun to be applied in IS research. For example,
the organizations function" (DiMaggio and Powell 1983, p. empirical evidence of mimetic behavior has been found in
various contexts such as website adoption (Flanagin 2000),
150). Coercive pressures can also arise from government
EDI adoption (Teo et al. 2003b), IT product choice (Tingling
regulations and policies and from industryand professional
and Parent 2002), and in IT budgeting decisions (Hu and
networks and associations, or in the form of competitive
Quan 2006). Coercive and normative isomorphicmechanisms
necessity within an industryormarket segment (Gular et al. are found to occur in organizational information security
2002; Mezias 1990; Tolbert and Zucker 1983). Mimetic
as organizations respond to uncertainty practices and policies (Hu et al. 2006). In particular, ERP
isomorphism results
systems have been described as both the objects and carriers
by mimicking actions of other organizations. When tech
of external institutionalforces. Gosain (2004) theorizes how
nologies are poorly understood, when goals are ambiguous, or institutionalforcesmay not only lead to theadoption of enter
when the environment creates uncertainty, organizations may
prise systems, such as ERP, but may also have a powerful
model themselves after other organizations perceived to be influence on how these systems are configured during
legitimate or successful (DiMaggio and Powell 1983). implementation.
Therefore, mimicry is often associated with the bandwagon
effect (Staw and Epstein 2000). Several empirical studies To our knowledge, institutional theoryhas not been applied
observe mimetic isomorphism in the decision making pro in the context of ERP assimilation. Research literature
cesses (Haveman 1993; Staw and Epstein 2000). Normative commonly conveys thenotion that innovation assimilation is
determined primarily by factors internal to the organization
isomorphism occurs primarily as a result of professiona
lization defined as "the collective struggle ofmembers of an (Armstrong and Sambamurthy 1999; Purvis et al. 2001).
However, there are significant indications in qualitative
occupation to define the conditions and methods of their
studies thatexternal factors are also significant. For example,
work, to control theproduction of the futuremember profes
Hirt and Swanson (2001) describe the increasingly important
sionals, and to establish a cognitive base and legitimization
role of consultants, vendors, and industryconferences in the
for their occupational autonomy" (DiMaggio and Powell
post-implementation context. Although Somers and Nelson
1983, p. 152). For a particular industry, it is argued that a
(2004) do not explicitly note this, their findings also indicate
pool of almost interchangeable employees is created through the important role of external entities during the "infusion"
formal education and professional networks. By occupying
stage. Similarly, Damanpour (1991) suggests thatcommuni
similar positions across a range of organizations, these cations with external entitiesmay be just as importantduring
individuals possess similar orientation and disposition that the early as in the later stages of an innovation's life cycle.
override the variations in traditions and controlmechanisms Hence, institutional theory ishighly relevant inunderstanding
otherwise shaping distinctive organizational behavior. the assimilation stage.

2007

Top Management and ITAssimilation companies (Jarvenpaa and Ives 1991), contributes to assimi
lation of CASE tools (Purvis et al. 2001), increases the assi
While institutionaltheorypredicts institutional isomorphism, milation of web technologies (Chatterjee et al. 2002a), and
in reality,organizations have exhibited diversitywith respect can reverse failing implementations (Akkermans and van
to thedegree of ERP assimilation under a similar institutional Helden 2002).
environment. To account for thisdiversity,we apply a human
agency perspective and posit that the topmanagement mem
bers are the primary human agency that translates external
influences intomanagerial actions such as changing organi Research Model and Hypotheses _ _
zational structures and establishing policies based on their
perceptions and beliefs of institutional practices. Top Based on our theoretical proposition that topmanagement
management's boundary spanning role has been found to mediates the effect of institutionalpressures on assimilation,
significantly affect IT project performance by importing we develop a research model (Figure 2) and propose six
external knowledge and integrating internal knowledge hypotheses grounded in the ERP assimilation context.
(Mitchell 2006). In the institutional environment, top However, these hypotheses do not exclude thepossibility that
managers are not only influenced by others' choices of IT other factorsmay mediate the influence of institutionalforces,
products or services or of influential consultants, theymay a possibility thatwill be considered during ourmodel testing
also benchmark the business benefits they derive from their and subsequent discussion.
ERP usage against those derived by other organizations.
Thus, we propose that institutional forces may not directly
affectERP assimilation in organizations; rather, their effect
on ERP assimilation is realized by the actions of top Top Management Beliefs and
management. That is,we theorize that institutional forces' Participation inAssimilation
influence on ERP assimilation is mediated by top man
agement. To fully explain the extent of ERP assimilation, we To develop a refinedunderstanding of the role of topmanage
must consider the interactionbetween institutionalforces and ment, we elaborate on two conceptual stages in theprocess by
topmanagement. Itmay be argued that it is the operational which topmanagement supports an organizational initiative,
level employees who need to adapt theirwork processes to namely, belief and participation. Following Jarvenpaa and
assimilate a new IT artifact. However, past research suggests Ives (1991), we use topmanagement beliefs (TMB) and parti
that top management needs to recognize and assume the cipation (TMP) to represent these two stages and treat them
responsibility for both the technical and organizational as two distinct constructs. TMB refers to a subjective psycho
changes (Leonard-Barton 1988). Indeed, literatureon innova logical state regarding thepotential ofERP, while TMP refers
tion assimilation largelyviews topmanagement as the agency to the behavior and actions performed to facilitate ERP
responsible forchanging thenorms, values, and culturewithin assimilation. First, past research shows how the external
an organization, and in turn,this enables other organizational environment affects the beliefs of top management. For
members to adapt to thenew technology artifact. The norms, example, topmanagers develop "belief structures" to
manage
values, and culture engendered by the top management concepts and stimuli from the environment and use these
permeate to the individual level in the form of procedures, beliefs as a basis for inferences (Walsh 1988). Second, litera
rules, regulations, and routines, which serve as
powerful tem ture suggests that topmanagers' beliefs guide theiradminis
plates thatguide individual behavior (Purvis et al. 2001). trative behaviors. Srivastava (1983) asserts that organiza
tional strategies, decisions, and behavior are guided by top
In contrast to the relative lack of theorizing about the role of managers' mental image of a desired future organizational
external institutions in IT assimilation, a broad base of state. Hambrick and Mason (1984) suggest that organiza
literature provides theoretical support for the role of top tional choices are a reflection of the top management's values
management indriving IT usage within organizations (Reich and cognitive bases. Thus, the positive beliefs of topman
and Benbasat 1990). For example, prior studies demonstrate agers about the usefulness of information systems result in
that formal monitoring of progress (Garrity 1963) and certainmanagerial actions intended to assimilate such sys
incentives (Bhattacherjee 1996) result in increased usage of tems. For instance, Chatterjee et al. (2002a) state that
IT. For large scale systems, topmanagement is especially "through theirbeliefs, topmanagement can offervisions and
critical for forging partnerships among functional area guidelines tomanagers and business units about the oppor
executives (Doll and Vonderembse 1987). Prior studies also tunities and risks in assimilating theWeb technologies" (pp.
find that topmanagement affects progressive usage of IT in 70-71). Lefebvre et al. (1997) also find thattopmanagement's

2007 63

Institutional
Top Control
Forces Management Variables
Mimetic|H3a1, TMB j I ^^
| Capacity I
! |\ Ij Organization
I H3b I hi Size: Employees
l \ i I j _ |
. .. ..
I 4_t_
tp=^l
| Organization
I H4
H-
I H2 A <
A?" labon^_j
Size: Revenue
Coercive TMP 1 Ij
"1-f* |
LVI Organization
\ \ A\ Compatibility
i H5 | |_I |
Normative Time
Figure 2. Research Model
participation in organizational IT management activities is ciations, etc. Second, employees view internalpolicies and
largelybased upon theirbeliefs, rather thanobjective reality. rules relevant to the ERP initiative as cognitive guides. For
Based on substantial evidence from themanagement and IS example, in one organization, top management was
reported
we that to actively direct ERP users within the company to interact
literature, propose
with external parties and encourage participation in industry
wide ERP user forums or conferences (Hirt and Swanson
Hypothesis 1: Stronger top management beliefs
about thebenefits ofERP lead tohigher levels of top 2001). Finally, due to thebroad impact of an ERP implemen
tation on structure and processes,
organizational organiza
management participation in theERP assimilation
tional diktats (rules and sanctions) could either facilitate or
process.
hinder the adaptation by employees. As an example, it is
recommended that topmanagement pay particular attention to
Drawing from the prior research on IT implementation designing appropriate performance control systems thatalign
(Armstrong and Sambamurthy 1999; Orlikowski 1992; individual incentives touse ITwith thebenefits accruing from
Orlikowski and Gash 1994; Purvis et al. 2001; Sharma and
adoption (Ba et al. 2001). These mechanisms have a meta
Yetton 2003), we argue thatTMP is accomplished by the
structuring effect by providing a vision as to what the IT
creation of organizational structures thatfacilitate ERP assi innovation is supposed to achieve and by encouraging organi
milation in differentways. First, topmanagement publicly zational members to adapt a new IT artifact toward specific
championing thenew systems lends legitimacy to assimilating goals. Therefore,
theERP system and to the changes imposed by managers in
thework routines. Legitimacy is especially important since
Hypothesis 2: Higher levels of top management
ERP systems are high impact systems that could encounter
participation in theERP assimilation process lead
strong resistance from organizational elements such as func to a higher extent of ERP assimilation within the
tional cliques, unions, asso
departments, regional employee organization.
64 MIS Quarterly Vol. 31 No. 1/March 2007

The Role of Institutional Pressures Hypothesis 3a: Higher levels ofmimetic pressures
inAssimilation lead to stronger topmanagement beliefs about the
benefits ofERP assimilation.
Mimetic Pressures
Hypothesis 3b: Higher levels ofmimetic pressures
We argue thattopmanagement mediates the effectofmimetic lead to higher levels of top management parti
pressures on ERP assimilation when it copies the choices cipation in theERP assimilation process.
other firmshave made in theireffortsto assimilate the system.
Given the inherent uncertainty of the outcomes of ERP
initiatives, topmanagers succumb tomimicking theactions of Coercive Pressures
their successful peers or competitors since it shields them
against potential loss of face and helps to maintain the Coercive pressures have been shown to be significant in the
legitimacy of theirdecisions.3 For example, in theireffortto adoption of innovations (Hart and Saunders 1998; Hu et al.
achieve organization-ERP alignment, top managers may 2006; Mezias 1990). We predict that such pressures remain
experience ambivalence about the manner in which they significant in the assimilation stage. In Teo et al.'s (2003b)
undertake business process redesign: theymay either follow EDI study, coercive pressures mainly stem from dominant
a radical approach (Hammer and Champy 1993) or a gradual suppliers and customers because of the nature of EDI as a
approach (Davenport and Stoddard 1994). The decision to dyadic technology linkingbusiness partners. In theERP assi
follow either approach presents uncertainties inperformance milation context of this study,we believe that coercive pres
outcomes of ERP. Hence, top management exhibits the sures arise primarily from regulatory agencies and industry
tendency to imitate the action taken by other structurally associations. In developing countries where government
equivalent organizations perceived as successful (Teo et al. agencies still exert significant influences on business policies
2003b). For example, Liang and Xue (2004) find thatmany and practices in addition to the emergingmarket forces (Park
Chinese companies follow a mild organizational transfor and Luo 2001), coercive pressures are more likely to arise
mation strategyto improve,optimize, and reengineer business from governments and collective industryassociations, and
processes during ERP assimilation, primarily because of the could be especially pronounced in countries likeChina where
perceived success of this approach. the legacy of a central-planning economy stillmanipulates the
emerging freemarket economy (Rawski 1994). The Chinese
Extant literature is not clear about how top management
government has been coercing firms touse ERP systems both
mediates the impact ofmimetic forces on ERP assimilation.
directly and indirectly. The direct pressures arise from
On the one hand, the institutional theoryposits thatmimetic
government agencies that require specific report formats or
forces should directly affect TMP, since the practices of
standard procedures supported by certain ERP modules. The
successful competitors may be taken for granted. On the
State Food and Drug Administration, for instance, requires
otherhand, based on vicarious learning, topmanagement may
Chinese pharmaceutical distributors and wholesalers to con
choose to imitatecertain organizational practices according to
duct good supply practice (GSP) supported by the quality
theirperceived impact or outcomes (Haunschild and Miner
management modules of ERP (Liang and Xue 2004); and the
1997), implying thatTMP is indirectlyaffected throughTMB. of Finance mandates
Ministry specific accounting report
Swanson and Ramiller (2004) suggest that themajority of
formats supported by the accounting modules of ERP (Xue et
firmsmay "borrow" mindfulness from a few successful peers
al. 2005). Thus, firms thathave implemented ERP systems
by observing what they are doing and what theyhave to say are obligated to assimilate the functionalities of various ERP
about an innovation's benefits. As a rational response to
modules into their work routines to meet government
uncertainty, top management tends to develop beliefs about an
regulations. The indirect arise from government
innovation's benefits and then translate their beliefs into pressures4
based agencies such as theMinistry of Science and Tech
actions. Hence, we propose that both TMB and TMP are
influenced by mimetic forces. nology and State Economic and Trade Commission, which
reward companies that successfully assimilate IT into their
business routines. Local governments and industry associa
tions (usually affiliatedwith the government) also recognize
Top management is also able to learn coping strategies fromwatching the local companies as "model" IT users, which increases their
actions and failures of unsuccessful peers or competitors. This avenue
warrants taking a learning theory perspective, which is beyond the scope of
this research. Besides, itwould be difficult for topmanagement to learn from
unsuccessful firms because implementation and assimilation failures are often
covered up. In this study, we will focus on the imitative tendencies of top This informationwas obtained by personal communications with the senior
management. marketing manager atUFIDA.

2007 65

reputation and access to business opportunities. In addition, we believe that the networking of topmanagers along the
some local governments also allow companies to get tax value chain comprising a group of closely related suppliers
credits for their capital investments inERP systems. and customers is a more important route through which
normative influences permeate in the context of this study.
Top management teammembers are the focal point of these This is especially true in developing countries where the
coercive pressures and they are forced toparticipate inmeta governance of interfirmrelationships ispervasively achieved
structuring activities to support ERP assimilation. Under throughguanxi, interpersonal relationships between senior
these circumstances, top management does not have to managers (Lee and Dawes 2005). By developing guanxi with
cognitively believe in thebenefits ofERP assimilation. Thus, managers of other organizations and officials of various
we argue that coercive pressures directly stimulate TMP government agencies, top management creates an
interorgani
aimed at assimilating ERP systemwithout affectingTMB. zational networkwithin which greater resources, knowledge,
and management expertise can be accessed (Park and Luo
Hypothesis 4: Higher levels of coercive pressures 2001). Hence, topmanagers tend tobe theboundary spanners
lead to higher levels of top management partici who collectively shape and are inevitably influenced by the
pation in theERP assimilation process. institutionalnorms in this network. In the context of ERP
assimilation, these norms guide them about the extent to
which they should adapt their business processes and work
Normative Pressures routines to theERP system and conversely what features of
theERP system can be modified to suit theirprocesses and
The role of normative pressures inERP assimilation processes routines. We contend that topmanagement is likely to take
is closely related to thekey characteristic of ERP systems that forgranted institutionalnorms thatare prevalent in their inter
they contain commoditized knowledge. Once an ERP pack organizational networks. Hence,
members of an organizational
age is available for the industry,
field such as
suppliers, customers, consultants, and govern Hypothesis 5: Higher levels of normativepressures
ments collectively evaluate and promote various features of lead to higher levels of top management partici
the product (Swanson and Ramiller 1997), thus shaping pation in theERP assimilation process.
institutionalnorms regarding implementation and consequent
assimilation of ERP systems. Given that the so-called "best
practices" embedded in an ERP system cannot provide a Control Variables
generic solution to all users (Newell et al. 2000; Swan et al.
1999), institutionalnorms about ERP systemsmay guide top To fully account for thedifferences among organizations, we
managers in making decisions to mitigate outcome uncer
also include five control variables thatcharacterize our unit of
tainties, such as decisions about when and how tomodify
business vis-a-vis to alter the ERP
analysis, a firm thathas completed the initial implementation
existing processes system
of an ERP system. These variables are absorptive capacity
itself. These decisions aremade not only during implementa
of the implementing organization toward the ERP system;
tion but also during the assimilation stagewhere incremental
number of employees; revenue; organizational compatibility;
adjustments to the system and processes are equally important and time since implementation is completed. We select these
(Markus and Tanis 2000). With their knowledge of the
institutionalnorms and understanding of the enterprise-wide particular variables because of theirpotential impact on ERP
assimilation as suggested by the extant literature.
business processes, the top managers can facilitate the
"unpacking" of these products and their integrationwith
existing organizational knowledge (Davenport 1998;Mitchell
Absorptive Capacity
2006).
The learning perspective suggests that assimilation can be
Although normative pressures usually permeate through the
greatly improved iforganizations have prior knowledge that
channels of professional affiliations as well as the in
facilitates assimilation of external information and its appli
creasingly popular ERP user conferences hosted by vendors5 cation to commercial ends (Cohen and Levinthal 1990). This
ability is termedabsorptive capacity and iswidely understood
to enhance an innovative The
organization's capabilities.
5However, while the literature identifies the role of interlocking directorates intuitionof absorptive capacity has been applied to explain IT
as another source of normative influence, we do not see much influence
arising from the board of directors in the context of this study?except
usage in large organizations. For example, Teo et al. (2003a)
perhaps when they transmit such influence to the topmanagement.
show how absorptive capacity can influence the intention to
66 2007

adopt an EDI system. To account for the variances attri and managers to various degrees at the time the surveywas
butable to organizational knowledge on ERP systems,we taken. Thus, thisvariable takes into account the accumulated
control for the differences among organizations in terms of organizational learning and experience thatfacilitates assimi
theirabsorptive capacity for assimilating theERP system. lation (Fichman 2001). Chatterjee et al. (2002a) used a
similar control variable in a recent study on IT assimilation.
Organization Size
We use number of employees and revenue as two measures of Research Method and Data
organizational size. Justas organizational size connotes slack
resources required forpurchasing expensive innovations and
Construct Operationalization
withstanding adoption failures (Rogers 1983), bigger size
permits organizations to foster adaptation mechanisms such We used the surveymethod to test ourmodel. A survey in
as maintaining shadow systems and slow phasing out of
strumentwas developed by identifyingappropriatemeasure
systems. Whereas can withstand
legacy larger organizations ments from a literature review. Some modi
comprehensive
such implementation hurdles by virtue of their size, for
ficationswere made to the existing scale tomake thosemore
smaller organizations survival is themore immediate concern
suitable in the context of ERP assimilation. Since the target
and thereforeany ERP implementation hurdle has immediate
organizations are the companies thathave implemented ERP
on their business commitments to customers
systems in China, the questionnaire was translated into
repercussions
and suppliers. Organizational size is an important control
Chinese and a panel of experts in theChinese ERP industry
variable for another reason. ERP system vendors have more
examined the face validity of the items. A few changes to the
at stake by being attentive to their larger clients compared to
scales were made in order tomatch theChinese context. All
their smaller ones.
of the exogenous constructs in themodel are operationalized
as reflective constructs. The dependent construct,ERP assi
milation, was as a formative construct as
operationalized
Organizational Compatibility discussed next.
Even though managers of an organization may have assessed

the compatibility of an ERP systemwith various dimensions
Assimilation
of theorganization such as itsbusiness values, work practices,
and culture (Jones and Beatty 1998), such assessment might
We reviewed existing literatureas a basis fordeveloping this
often be inaccurate or incomplete. Since theERP life cycle
scale (Hart and Saunders 1998; Iacovou and Benbasat 1995;
is often protracted,6 it is possible thatorganizational criteria
Massetti and Zmud 1996) and in particular, the four dimen
for assessment might have changed or the organization itself
sions ofEDI usage as identifiedbyMassetti and Zmud (1996)
evolved in someway so as to invalidate the initial assessment.
were used as a to construct a three-item formative scale.
guide
It is likely that after the completion of the initial implemen
However, all four scale items inMassetti and Zmud could not
tation, new incompatibilities are discovered the actual
during be replicated because of thediffering contexts of ERP versus
use of the ERP system that could hinder assimilation of the
EDI. Whereas in an EDI context, usage volume can be mea
ERP system. This control variable takes into account the
sured by specifying the extent towhich a firm's particular
variance as a result of organizational issues.
types of transactions are conducted with its suppliers/
compatibility
customers throughEDI, the same scheme could not be used

for ERP systems because different respondents had imple
Time since Implementation mented a different set ofmodules. In the interestofmain
taining the conciseness of the questionnaire (and thus the
Finally, we include the time since the completion of ERP
thevolume dimension was measured by asking
response rate),
implementation as a control variable for the reason that
respondents to indicate thepercentage of a subset of business
adaptation is a time-sensitive process andmisalignments that
processes thatwere conducted using ERP. Diversity repre
might have existed initiallymay have been resolved by users sents the number of a firm's business functional areas
automated by ERP technology. Depth was measured by
asking the respondents to indicate thevertical impact of ERP
According toMabert et al. (2000), an ERP
systems on theirbusiness activities, ranging fromplanning to
implementation project could last
from 6 months to 2 years. decision making. In this research setting,our focus is on how

2007 67

ERP isused forback office automation, sowe did not include detail earlier. We initially devised a three-item reflective
the breadth dimension in the scale for the degree of ERP scale and found that one of the items that referred to com
assimilation. petitive pressures did not load well onto the latent construct.
On reexamining,we dropped this item from furtheranalysis.
Top Management Beliefs

Normative Pressures
This refers to the extent towhich topmanagement considers
thatusing theERP system can potentially benefit the organi This refers to the perceived extent towhich members of the
zation. A three-item reflective scale was derived from the dyadic relational channels have adopted ERP and the extent
four-item scale used by Chatterjee et al. (2002a). We used the towhich the government and industryagencies promote the
first two thatwere relevant to theERP context and we added use of information technology and especially ERP systems.
a thirdnegatively worded item. We emphasize the importance of the interorganizational
networks primarily based on the relationships between top
management of the organizational filed as well as the
Top Management Participation government agencies in shaping thenorm ofERP assimilation
because they have played a central role in cultivating the
This was adapted from Chatterjee et al. (2002a) as a three
development of domestic ERP vendors and the culture of
item reflective scale. It refers to the extent to which top
using ERP in businesses (Xue et al. 2005). This scale is
management actively participates in themanagement of the largely consistentwith the threedimensions measured by Teo
ERP initiative. et al. (2003b).
Mimetic Pressures
Absorptive Capacity
Following Teo et al. (2003b), this constructwas measured in We devised our own reflective scale based on items from
terms of the perceived extent to which competitors have Szulanski (1996) and Teo et al. (2003a). We also added two
benefited from assimilating ERP. In our context,we believe additional items to capture the readiness of the organization
that the respondentsmight not be able to accurately gauge the for assimilating ERP systems and paid particular attention to
extent to which their competitors have assimilated ERP; the context of the post-implementation where technical sup
however, theywould be knowledgeable about their compe port and trainingare essential. Some of the itemsdid not load
titors'degree of success afteradopting ERP. We adapted Teo well and were subsequently removed from furtheranalysis.
et al.'s (2003b) scale in the following way. Instead of Since this construct is used as a control variable, we believe
capturing two dimensions of this construct in the context of it is adequate to proceed with the truncated four-item scale.
EDI (extent of adoption of among competitors and perceived
success of adopters who are competitors), we focused on the
second dimension success of who Organizational Compatibility

(i.e., perceived adopters
were competitors) because the firstdimension (competitors'
adoption decisions) isunnecessary in thepost-implementation This refers to the perceived alignment between the IT inno
context, assuming thatany firmwould decide to use itsERP vation and the culture, values, and preferred work practices of
after adoption. the assimilating organization (Jones and Beatty 1998). Using
past studies (Beatty et al. 2001; Jones and Beatty 1998;
O'Callaghan et al. 1992), we measured thisusing a four-item
Coercive Pressures reflective scale adapted from Jones and Beatty (1998) and
thendropped one of the itemsbefore furtheranalysis because
This constructwas operationalized in terms of the extent of itdid not load well.
formal and informal pressures perceived by virtue of the
competitive conditions, and requirements and incentives from
the local government and industry associations. The scale
was differentfrom the one used by Teo et al (2003b). Based Data Collection
on an analysis of the context of ERP assimilation inChina's
we that coercive arise The was administered to managers in Chinese com
organizations, argue pressures mainly survey
from regulations and government incentives, as discussed in panies which have implementedERP systems. A sample was

2007

drawn from the clients of UFIDA (known as UFSoft before emerged at the helm of many IT initiativeswithin Chinese
2005), the vendor with the largestmarket share in China's companies.
ERP market (Liang et al. 2004). We requested a marketing
manager atUFIDA to randomly distribute 100 questionnaires Of the 100 questionnaires distributed, 80 questionnaires were
to the directors of its 14 subsidiaries and 15 offices. These returnedand 77 questionnaires were completed and usable for
subsidiaries and offices are located in China's four largest data analysis, showing an effective response rate of 77
cities, three autonomous regions, and 17 provinces, repre percent.We assessed nonresponse bias using Chi-square tests
or t-tests to compare the responding and nonresponding
senting a wide range of geographical and cultural diversity.
business and number of
Each of the 29 directors randomly selected some ERP companies' type, ownership, revenue,
>
customers from his or her region and handed questionnaires employees and found no significant differences (p .05).
Table 1 presents the types of business and ownership repre
to the persons who supervised the ERP projects in these
sented in the sample. Table 2 presents the profiles of the
companies.
responding companies. Table 3 presents thedemographics of
the respondents. As the data indicate, the respondents were
We believe thisdesign is suitable for this research in lightof
China's unique social and cultural context. In China, many mostly seniormanagers ormiddle levelmanagers in the IT or
finance departments. Inmany Chinese firms, there isno CIO
business activities are largelybased on personal relationships,
or CFO position and so a director is often the senior executive
orguanxi, instead of formal rules (Martinsons andWestwood
who oversees these functions.
1997). Collecting data for research purposes fromChinese
companies is extremely difficult unless it is done through There were 28 missing values in thedata set,which accounted
personal liaisons. Only with thehelp fromUFIDA were we for 1.35 percent of the totalnumber of values. We performed
able to access the key person in the ERP project of each Little's MCAR test (Little and Rubin 1987) and found that
company of interest. These informantswere members of the these values were missing completely at random (p > .05).
senior management team and played a key role in the ERP This test suggested that themissing values were not based on
initiativewithin their companies. They not only were in a hidden systematicpattern and any imputationmethods could
volved during ERP vendor selection but also supervised its be applied to replace them (Hair et al. 1998). A regression
implementation, and interactedwith othermembers of the top imputation method was applied because it predicts the
management team frequentlywith respect to ERP issues in missing value of a variable based on its relationship with
their companies. Hence, they are likely to provide a better other variables, thus ensuring that the replacing value is
evaluation of external pressures imposed on theircompanies, consistent with the existing relationship structure in the data
and top management's beliefs and participation regarding set (Hair et al. 1998). After replacing themissing values, a
ERP usage. Even after theprojects were over, theERP usage data setwith 77 complete cases was obtained. Kolmogorov
status report was a of many Smirnov and Shapiro-Wilk tests show that each indicator of
topic companies' management
themajor constructs is normally distributed. Q-Q plots also
meetings and was documented. In order to preserve relative
indicate thatour data are normally distributed.
objectivity of theERP assimilation measures, the key infor
mants were to provide answers based on minutes of
requested
the meetings or other documentation. The risk of inaccuracy
We used Cohen's (1988) power table formultiple regression
in survey responses due to memory-related issues was (MR) analysis to calculate power values for our partial least
alleviated because UFIDA's sales had con squares (PLS) model. This is because PLS is performed by
representatives
iterative regression analysis (Chin 1998). Hence, power
tinuous interactionswith their clients even after implemen
tationswere completed. They intentionallymonitored ERP analysis onMR should be also applicable forPLS. PLS esti
mates a structuralmodel block by block. To ensure thatevery
usage for thepurpose of acquiring additional sales andmain
block of ourmodel has adequate power, we calculated power
tenance contracts.
values block by block. Each block consists of a dependent
variable (DV) and its independent variables (IVs). Our
Several finance managers were among the respondents researchmodel has threeDVs: assimilation, TMP, and TMB.
because of the ERP
implementation history in Chinese So we will have threemajor blocks. Because the assimilation
companies. The predecessor of ERP software inChina was block involves control variables and mediation effects,we
and financial software. a significant
accounting Therefore, took a hierarchical approach to analyze power for incremental
number of Chinese ERP vendors and their clients were
explanation of variance, as suggested by Cohen (1988). Thus
financial software vendors and financial managers respec we had five power analyses. The power values ranged from
tively (Xue et al. 2005). Consequently, finance managers .83 to .99.

2007 69

Table 1. Types of Participating Firms and Ownership
N Percentage (%)
Manufacturing 52 67.5
Types of business Service 2127.3

Other 4 5.2
Private 3545.5
Publicly Traded 20 26.0
Ownership
Jointventure 14 18.2
State owned 8
10.4_
Table 2. Responding Company Demographics

Mean SD
Number of employees 880.62 1777.90
Revenues (milliondollars) 48.47
69.12
Time*
(months)_21.88_15.47_
Time period from the completion of the ERP project to the point when the questionnaire was filled out.
Table 3. Respondent Demographics

Finance Finance Sales
Title CEO VP CIO CFO ITdirector director manager director Total
N 2 3 10 8 16 18 16 4 77
13
_%_3_4 10_21_23_21_5_100
Data Analyses and Results _ _ _ _ _ account for at least 50 percent of thevariance in the items. As
shown inAppendix B, the loadings are in an acceptable range
Since our researchmodel contains both reflective and forma and the t-values indicate that they are significant at the .01
tive constructs, and we have a relatively small sample size, level. If the square root of theAVE is greater than all of the
partial least square was chosen for data analysis. Unlike a inter-constructcorrelations, it is evidence of sufficient dis
covariance-based structural equation modeling method such criminantvalidity (Chin 1998). The results inTable 4 suggest
as LISREL, PLS employs a component-based approach for that our measurement model demonstrates sufficient discrim
estimation purposes (Lohmoller 1989), and can handle inantvalidity. In order to furtherassess validity of ourmea
formative constructs (Chin et al. 2003). In general, PLS is surement instruments,a cross-loadings table (Appendix C)
better suited for explaining complex relationships as itavoids was constructed, as suggested by Gefen et al. (2000). It can
two serious problems: inadmissible solutions and factor inde be seen that each item loading in the table ismuch higher on
terminacy (Fornell and Bookstein 1982). itsassigned construct thanon theother constructs, supporting
adequate convergent and discriminant validity.
Measurement Model As Chin (1998) states, covariance based estimates such as

reliability and AVE are not applicable for evaluating forma
We note that all of the reliability coefficients are above .70 tive constructs. Instead, thepath weights of indicators need
and each AVE is above .50 (see Appendix B), indicating that to be examined to check if they significantly contribute to the
themeasurements are reliable and the latent construct can emergent construct. The measurement of ERP assimilation

2007

Table 4. Correlations among Major Constructs

|
Construct j TMB | TMP |
MIM | COE j NOR | OC | AC | ASSIm"
|TM
Beliefs \ .565 | \ | | | || |
[TMParticipation | .403***
| .636 1
11111 I
[Mimetic | .277* | .243*| .658 [ | | 1"1 1
[Coercive | .120 j .232*[ .034 \ .821 [ [ | | |
|Normative | .086 | .148 | .284*| .044 | .762 | ||
Compatibility
[Org. | .001 | .255*| .021 |~030 | .021 | .650 | | |
Capacity
^Absorptive | .126 j .217 | .265*| .023 | .265*| .027 | .585 |
["Assimilation
** *
[ .346** [ .521*** \ AAA \ .306** |7o27
| .388*** | .433***[ n/a |
***
p < .001; p < .01; p < .05; AVEs are in bold.
was assessed by examining significance of the three path variance of the indicators is .67,while the average method
weights. As shown inAppendix B, all threepathweights are based variance is .016. The ratio of substantive variance to
significant at the .01 level, suggesting that they contribute method variance is about 42:1. In addition, most method
significantlyfromdifferentpaths to form theconstruct ofERP factor loadings are not significant.Given the smallmagnitude
assimilation. and insignificance of method variance, we contend that the
method is unlikely to be a serious concern for this study.
Common Method Bias

Hypothesis Testing*
As with all self-reporteddata, there is a potential for common
method biases resulting frommultiple sources such as con Figure 3 presents the estimates obtained fromPLS analysis.
sistencymotif and social desirability (Podsakoff et al. 2003; The R2 value of .389 indicates that themodel explains a
Podsakoff and Organ 1986). Following Podsakoff and Organ substantial amount of variance for ERP assimilation. The
(1986), we attempted to enforce a procedural remedy by results provide evidence for thehypothesized mediating role
asking the respondent not to estimate ERP assimilation ofTMP between the institutionalforces and ERP assimilation.
outcome measures according to personal experience, but to As shown in Figure 3, the TMB-TMP link and the TMP
get this information fromminutes of company meetings or assimilation link are significant, offering evidence for
documentation. In addition,we performed statistical analyses Hypotheses 1 and 2. In a follow-up test,a TMB-assimilation
to assess the severity of common method bias. First, a linkwas added (with TMP-assimilation link simultaneously
Harmon one-factor test (Podsakoff and Organ 1986) was con included) and found to be insignificant, suggesting the
in our
mediating role of TMP between TMB and assimilation.
ducted on the six crucial variables
conceptually
theoreticalmodel including TMB, TMP, mimetic, coercive, However, thismediation is spurious if TMB is not signi
and normative forces, and ERP assimilation. Results from ficantly related toERP assimilation when TMP is absent. To
this test showed that six factors are present and themost test TMB's independent effect on ERP assimilation, we
covariance explained by one factor is 24.69 percent, indi removed TMP and conducted another run of PLS analysis.
cating that common method biases are not a likely con Results of that analysis showed that the TMB-assimilation
taminant of our results. Second, following Podsakoff et al. link becomes significant (b = .315, p < .05) when TMP is
(2003) andWilliams et al. (2003), we included in the PLS excluded from themodel, supporting thehypothesis thatTMB
model a commonmethod factorwhose indicators included all could influenceERP assimilation, but itseffect ismediated by
the principal constructs' indicators and calculated each indi TMP.
cator's variances substantively explained by the principal
construct and by themethod.7 As shown inAppendix D, the
results demonstrate that the average substantively explained
We also conducted regression analyses to test the hypotheses. The
regression results are consistent with the PLS results. Since regression
analysis cannot assess measurement error and regression at the same time, the
Please see Appendix E for a detailed description of the procedure we used regression results might be misleading (Gefen et al. 2000). Hence, we
to assess common method bias. primarily rely on the PLS results.

2007 71

Institutional Control
Top
**
II ^N^*ni I ~1^H*srI
<-?- Organization
l\
! 0.085 ! 0.455* Size: Employees
i i ,,
il | _ | ;>i_?_ j
^__Nf?,_. Organization
! I I ! 0.297*! I I 0.476* Assimilation Size: Revenue
Coercive TMP -j- R2 = 0.389 J
"1-f*
-
! I br- I ^--N_\.-,.- OrganizatkMi
JCCompatibility
| 0.174 | I-1
NS
/i ! *
Normative Time
*
p < 0.05
Note: The five control variables are not tested all together in a single PLS test. To meet the sample size requirement for PLS analysis
recommended by Chin (1998), we tested the control variables in five PLS tests. This is because assimilation has three incoming links from
its formative indicators and another linkfrom TMP. With 77 data points, assimilation can have at most seven incoming links. With the exception
of absorptive capacity, the presence of other control variables does not affect path weights among the major constructs in the model. The path
weights shown in the figure are from the PLS test when absorptive capacity was included.
Figure 3. PLS Analysis of Results
Figure 3 also shows that themimetic-TMB link is significant test the second mediation, the independent effect ofmimetic
and themimetic-TMP link is insignificant,hence Hypothesis pressure on ERP assimilation needs tobe examined. We con
3a is supported while Hypothesis 3b is not. We further nected mimetic to assimilation, removed TMB and TMP from
demonstrate that the effectofmimetic pressures on ERP assi themodel, and conducted another run of PLS analysis, which
=
milation ismediated by TMB and TMP. As shown inFigure yielded a significantmimetic-assimilation link (b .275, p <
3,mimetic pressures relate significantly toTMB, TMB relates .05). To better understand themechanisms of how institu
significantly toTMP, and finally TMP significantly relates to tional forces interactwith human agencies within organiza
ERP assimilation. This causal chain signifies dual mediation tions in the ERP assimilation processes, we constructed an
effects: (1) TMB mediates between mimetic pressures and alternativemodel inwhich all three institutional forces have
TMP, and (2) TMP and TMB mediate between mimetic direct links to the assimilation variable in addition to the
pressures and ERP assimilation. To test the firstmediation, mediated links, as shown in Figure 4. The results of this
we removed TMB from the model and found that the alternativemodel show that the direct linkbetween mimetic
mimetic-TMP link became significant (.257, p < .05). forces and assimilation is still significant. These results
Combined with Figure 3, thisfinding indicates that the effect jointly indicate that the influence of mimetic force on ERP
ofmimetic pressures on TMP is fullymediated by TMB. To assimilation is partially mediated by TMB and TMP.

2007

Institutional Control
Top
... x. nar%
Mimetic o.28o*
4* TMB
Absorptive
-+ Capacity
?-216*
I_-X_i_- ->I Z ~[. I
\I I T Organization
0.104 0.415* Size: Employees J
| |
o.oeo _+, | .
._lM_U
hi_i_ | _I_ I Assimilation Organization
~~ 0287* II I!
I04or : IR2= 0.395 Size:Revenue
Coercive TMP *
"f* "f
[V I Organization
>i Compatibility
0.091 . I_._j
11?;?K
Normative j-L
0.219*> i-1
Tjme
*
p < 0.05
Note: To achieve adequate statistical power, a simplified alternative model was created inwhich all control variables were excluded. This
simplified model is qualitatively equivalent to a model which includes all of the control variables. When we included absorptive capacity, the
magnitude of the mimetic-assimilation, normative-assimilation, and TMP-assimilation paths decreased but remained significant and the
coercive-assimilation path remained not significant. The same result was observed when we included any other control variable. Given that
the purpose of testing the alternative model was to examine whether the direct paths between institutional forces and assimilation were
significant, excluding the control variables will not lead to biased conclusions.
Figure 4. Results of the Alternative PLS Model
The significant path between coercive pressures and TMP in lation, based on the logic ofHypothesis 2, we conclude that
Figure 3 provides support forHypothesis 4. This finding sug partial evidence is obtained which implies the impact of
gests that the effect of coercive pressures on assimilation is coercive pressures on ERP assimilation.
mediated by TMP. To examine the independent effect of
coercive pressures on ERP assimilation, we tested themodel As toHypothesis 5, Figure 3 shows that thenormative-TMP
after excluding TMP from it and found that the coercive link is nonsignificant, failing to confirm thatnormative pres
assimilation linkwas insignificant (b =. 186, p > .05). Results sures affect top management's participation in activities
of the alternative model testing (Figure 4) reveal that this advancing ERP assimilation. Test results of the alternative
direct link is still nonsignificant when theTMP-assimilation model (Figure 4) show support for the direct link between
link is simultaneously included in themodel. These results normative forces and assimilation, suggesting that top
suggest that coercive pressures do not seem to have a direct management may not be a mediator of normative pressures on
impact on ERP assimilation. However, it indeed significantly ERP assimilation. Perhaps normative pressures affect ERP
influences TMP. Even though there isno empirical evidence assimilation through other human agency, such as middle
suggesting that the portion of TMP's variance explained by levelmanagers, power users, and operational level knowledge
coercive pressures is related with variance of ERP assimi workers.

2007 73

With regard to the five control variables included in the alternativemodel (Figure 4) also suggest thatmimetic pres
model, all but absorptive capacity are not significantly related suresmight directly affectERP assimilation. There are two
with ERP assimilation. The exact role of absorptive capacity plausible explanations to this finding. First, ourmeasure of
in the assimilation and its relationships with other constructs TMP may not fully capture the active influences of senior
remain interestingquestions for futureresearch. managers. For example, allocating
resources or
aligning in
centives is not measured by the TMP construct. So it is

possible that there are other effects operating through senior
management. Second, operational level employees may be
Discussion _ _ _ _ __ _ _ _ __ _ _ directly exposed to isomorphic pressures, which results in a
higher degree of ERP assimilation. This explanation, how
Our interest in investigating the role of external institutional ever, presumes a significant level of exposure of the
pressures inERP assimilation was triggeredby two facets of operational level employees to external pressures. That is, the
the assimilation processes for large-scale IT innovations: operational level knowledge workers and managers experi
first,the inherentuncertainty inusage and outcomes of ERP ence the pressure to use more ERP functionalities in their
initiatives widely noted in the practitioner literature, and work routines and processes due to the perceived success of
second, the institutionalnature ofmanagerial practice as theo theirpeers or competitors, an assumption difficult to verify
rized by Swanson and Ramiller (1997). A couple of decades from existing studies.
ago when packaged ERP systems were newly offered by
vendors, we note thata learningperspective would have been Our analytical distinction between topmanagement beliefs
more appropriate forunderstanding how pioneering organiza and participation also helps us to refine the argument that
tions identify and assimilate such innovations.9 However, coercive pressures are likely to be mediated by topmanage
ERP systems have now become so common that, over time, ment participation. This finding is consistent with our
organizations have engendered an organizing vision (Swanson discussion about the main source of coercive pressure for
and Ramiller 1997) at the industryor vendor level,which is using ERP being government policies in the context of this
now a source ofmuch of the institutional influence on adop study. In this typeof institutionalenvironment, topmanagers'
tion and usage of ERP systems. Under these circumstances belief structuresare not likely tobe affected by coercion from
we argue that the institutionalperspective is equally, ifnot government agencies and industry association, rather these
more, relevant for understanding IT assimilation. To lend coercive pressures result in higher level of topmanagement
furthercoherence to our conceptual model, we also identified participation which in turn positively affects ERP assimi
topmanagement as the primary human agency which me lation. This interpretation is consistent with the findings by
diates the effect of isomorphic pressures on the ERP assi Hu et al. (2006) that the pressure to implement information
milation process. The mediation offered by a human agency security policies and procedures due to government regula
is useful to explain the variability in the level of ERP assi tions has themost significant impact on thebehavior (and not
milation even across those organizations embedded in similar the belief structures) of senior executives.
institutional contexts. Of course, a
rigorous test of the use
fulness ofmediating constructs could be ascertained only if For similar reasons, we hypothesized that normative pressures
the studyhad been restricted to a single industrysector,where should affect top management participation since norms carry
all companies face the very same institutional pressures. with themaccepted practices pre-evaluated within theorgani
zational fieldwithout needing furthercognitive efforton the
By elaborating our conceptual model in terms of the three part of topmanagement. Thus, we hypothesized that top
distinct isomorphic pressures and two topmanagement con management participation shouldmediate theeffectof norma
structs,we offer a rich set of results. Broadly, we find that tive isomorphic pressures on ERP assimilation. Surprisingly,
isomorphic pressures affect ERP assimilation in different this hypothesis was not supported. Rather we find a direct
ways, and to some extent are partiallymediated by topman linkbetween normative pressures and ERP assimilation tobe
agement. First,we find that the effect ofmimetic pressures significant. Perhaps this is a reflection of successful user
on ERP assimilation ispartiallymediated by topmanagement. training programs and the dissemination of best practices
This supports our conceptualization of the interactionbetween through the extensive network of local ERP user groups and
institutional forces and topmanagement. Results from an vendor sponsored ERP user conferences. We must be
cautious about this conjecture since no end user data was col
lected in our survey.We hope that in futurestudies this type

This is not to say that a learning perspective is not relevant today. In view of data will be collected and hypotheses about the extent to
of the extensive adaptation required post-implementation, a learning perspec
tive remains just as useful.
which end users yield to normative pressures can be tested.
74 MIS Quarterly Vol. 31 No. 1/March 2007

Yet topmanagement may not be the only mediating factor. management beliefs and participation), we show that such
The significant direct paths between mimetic and normative decomposition helps enrich the understanding of IT phe
pressures and ERP assimilation in the alternative model nomena. We discover that while mimetic pressures influence
(Figure 4) suggest that there are alternative firm-level factors thebeliefs of topmanagers and thus theirbehavior indirectly,
mediating external influences. For example, inaddition to top coercive pressures may directly influence the managerial
managers, the mid- or lower-level managers, and behavior.
perhaps
even power users and workers, may also be
knowledge
exposed tomimetic pressures and thus imitate competitors'

assimilation strategies at the department or process level. Managerial Implications
Isomorphic pressures from such a channel aremore likely to
take effect through end users since mutual adaptations Many of our findings offer guidance tomanagement and IT
between ERP and the users involve business operational practitioners. The mediating role of topmanagement parti
details and thus are usually performed by linemanagers and cipation clearly highlights that concrete meta-structuring
knowledge workers who actually use theERP systems. actions by the top management play a significant role in
assimilating IT innovations in organizations. Conversely, if
managers lower their level of participation in instituting meta
Theoretical Contributions structuringactivities, assimilation is likely to sufferor even
stop. Since our study is in the context of post-implemen
The role of institutional forces in affecting adoption of tation, seniormanagers should be well aware of the level of
innovations iswell discussed in the organizational literature their participation thatwill be required even after a tech
(Pennings and Harianto 1992). What is less understood is nology implementation project has been declared a success.
how institutional forces affect process innovations and
particularly IT innovations. Three key aspects of this study The finding that institutional forces strongly influence assi
signifyour contribution to the theoryof IT innovation assimi milation is revealing for ERP consultants, vendors, and
lation. First is the focus onpost-implementation assimilation government agencies. Traditionally, an ERP contract is over
in the context of enterprise systems. These findings extend when the system implementation is completed. Consequently,
thework of Teo et al. (2003b) from the adoption phase to the the involvement of vendors and consultants inERP assimi
assimilation phase of IT innovations. Furthermore, con lation isusually reduced. Our findings suggest thateven after
sidering thatERP systems are probably themost challenging the contract expires, ERP vendors could and should still exert
to assimilate among various enterprise systems, our findings significant influence on theirclients in termsof best practices
are particularly noteworthy. The finding that institutional and norms of ERP usage. The active online forums and chat
forces play a significant role indicates that it is not just the IT rooms of ERP users groups and vendor-sponsored ERP user
systems deployed at the interfaces of organizations such as conventions are prominent examples of the benefits of post
EDI, but also IT artifactsdeployed within organizations, that implementation support and influence. In the same vein,
are exposed to the external institutional pressures. These since themimetic and normativemechanisms are found tobe
forces can be interpretedas guiding the assimilation process effective indirectly influencingERP assimilation, we suggest
by proxy, that is, the mimetic and coercive pressures still that top management should encourage their line managers
influence thebehavior of seniormanagers and thus impact IT and end users to exchange informationwith theircounterparts
assimilation. in other organizations by actively participating in industry,
trade, vendor, and professional events.
Second, this study integrates institutional forces and the

influence of topmanagement on the assimilation process into We recognize that the idea of recommending organizations to
onemodel and reconciles what had previously been presumed actively expose themselves to institutional influences sounds
tobe independent in the literature. In theprevalent literature, ill-advised because the recentmanagement and IS literature
topmanagement and the threeforces of institutional influence blames institutionalpressures for organizational "mindless
are rarely studied together. In this study,we show that at ness" in terms of adopting innovations (Fiol and O'Connor
least some of the external forcesmanifest their influence on 2003; Swanson and Ramiller 2004). However, it should be
organizational behavior through changing the beliefs and noted thatour findings are based on those organizations that
behavior of top management. had already invested significant resources in implementing
ERP systems. Presumably, it is in the best interestfor such
Finally, by adopting the approach of decomposing topman companies to endeavor to completely assimilate theirERP
agement construct into two distinct sub-constructs (top systems. From this perspective, we view institutionalpres

2007 75

sures as positive and beneficial to companies struggling to users of ERP systems, such as the line managers and
reap benefits from their sunk ERP investments. knowledge workers, to confirm such impact directly and to
understand why and how such impact occurs. Future studies
could extend the currentmodel to the end-user level and
Limitations and Future Research Directions furtherdeepen our knowledge of IT innovation assimilation.
In addition, our attempt to contextualize themeasures for
While we believe we have developed a sound and rich theo institutional forces may affect the interpretation of our
reticalmodel and tested itwith a reliable survey instrument findings. Caution should be used when generalizing our
and data, we also enumerate next some limitations and un findings to other contexts inwhich institutional pressures
answered First, we did not have an avenue to emerge from different sources.
questions.
collect data from a random sample of companies and all of
our data was collected from the clients of a single ERP vendor
in China. Therefore, we are limited in generalizing our
Conclusions wammmmmmmmmmmm
findingwidely. An interestingfollow-up studywould be to
collect data from a random sample of firms thathave imple
Drawing broadly on institutional theory, the influence of top
mented ERP products frommultiple vendors and ina difficult
management, and the extant literature on IT adoption and
part of the globe. The comparison of the resultswould most diffusion,we developed and tested an IT assimilation model
certainly shed some interesting lighton theERP assimilation in the context of ERP systems. Our theoretical framework
processes under various institutionaland organizational con reconciles the independent contributions of two well
texts. On the other hand, the single vendor choice does make established streams in the literature: studies that explain the
data collected from different companies more comparable
impact of topmanagement on IT assimilation and those that
since they implemented similar ERP modules. Ifmultiple
explain the effect of institutionalpressures. We attempt to
vendors are considered, theirmodules may vary toomuch to
explicate how top management mediates the influence of
allow meaningful interpretationof thedata ormay require an institutional forces on ERP assimilation. Analyses based on
impossibly large sample and variables forcontrol. Thus, there 77 Chinese firms largely support the hypothesized relation
is a tradeoffbetween generalizability and meaningful data ships in the model. This research contributes to the IT
interpretationwith respect to choice of vendors. Another innovation literature by focusing on the much neglected
possibility for a follow-up studywould be to investigate the assimilation stage and extending and enriching the extant
potential impact of ERP products and vendor characteristics literature on IT innovation. It confirms that institutional
on the assimilation process. pressures, which have been shown to be important for IT
adoption and implementation, are also significant in the
Our theorizing is heavily driven by the institutionalperspec assimilation stage. It highlights the importance of topman
tive and not by the learning perspective whereby the top agement in facilitating ERP assimilation by complying with
management and other organizational members engage in institutionalpressures. Although institutionalpressures are
active learning in order to adapt the IT application. Con accused of giving rise tomindlessness in IT adoption, this
research suggests that suchmindlessness might be beneficial
ceptualizing how organizational learning contributes to this
to organizations thathave already implemented ERP systems
process is outside the scope of thisparticular study, although
and would like to ensure that all of the features of the ERP
existing literatureoffersa solid conceptual grounding in terms
of constructs such as managerial IT knowledge (Armstrong system are integrated into theirbusiness processes.
and Sambamurthy 1999) or IT competence of business
managers (Bassellier et al. 2003). Future studies can be con
ducted to studyhow institutionalpressures interactwith such Acknowledgments
learning-related constructs to affect ERP or other IT inno
We the constructive comments provided by the
vation assimilation processes. Specifically, the interactionof gratefully appreciate
senior editor, associate editor, and three reviewers, who have helped
topmanagers' tendency to passively conform to institutional con
improve the quality of this paper significantly by providing
practices and theirability to actively learn from other firms' structive feedback the review process. This paper has
throughout
failures (Denrell 2003) should be investigated. benefitted from an informal conversation with John Stephen and
discussions with participants of the University of British Columbia
We also noted thatwhile our alternative model indicates MIS Workshop Series. We thank the senior marketing
cordially
direct impact of mimetic and normative forces on the assi manager at UFIDA, Xingbin Wu, for his tremendous help during the
milation of ERP, we did not have data collected from the end data collection process.

2007

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Qing Hu is a professor of Information Systems in the Department

of Information Technology and Operations Management in the
About theAuthors College of Business at Florida Atlantic University. He received his
Ph.D. in Computer Information Systems from the University of
Huigang Liang is an assistant professor in the Department of Infor Miami. His research interests include the economics of information
mation Technology and Operations Management at Florida Atlantic and management strategies, primarily in the areas of the
technology
University. His current research interests include IT adoption and of information on structure,
impact technology organizational
assimilation in organizations, organizational IT investment decision strategy, and performance. He has published in academic journals
making, online trust, IT threat avoidance, and healthcare infor Research, Journal ofManagement
including Information Systems
matics. His research has appeared in scholarly journals including Review, IEEE Trans
Information Systems, California Management
Communications of theACM, Communications of theAIS, Decision actions on Software Engineering, Communications of theACM, and
Support Systems, Harvard China Review, Journal of Strategic Communications of the AIS.
Systems, IEEE Transactions on Information Technology
Information
inBiomedicine, International Journal ofProduction Economics, and
Yajiong Xue is a visitingassistantprofessorofMIS in theCollege
International Journal ofMedical Informatics. He received his Ph.D. of Business at Florida Atlantic She was an assistant pro
University.
from Auburn University. fessor at theUniversity of Rhode Island. She holds a Ph.D. inMan
agement Information Systems from Auburn University. Her research

Nilesh Saraf is an assistant professor at the Faculty of Business has been accepted by or appeared in such journals as Communi
Simon Fraser in Burnaby, British cations Communications of the AIS, Decision
Administration, University of the ACM, Support
Columbia. He received his Ph.D. from the University of Southern Systems, International Journal ofMedical Informatics, International
California. His research is focused on understanding firm-level dif Journal International Journal of Pro
oflnformation Management,
fusion and of enterprise information
technologies. He duction Economics, IEEE Transactions on Information Technology
impacts
the impact of IS capabilities on multi-unit firms and on inBiomedicine, and Journal of Computer Information Systems. Her
investigates
inter-firm relationships. His interest also lies in understanding firm current research interests include the strategic management of
strategies in IT industries and thus the formation of IT standards. information technology, information technology adoption and
Nilesh is an empirical researcher with interest in quantitative

implementation, and healthcare information systems. She worked
including social network analysis. He has published his for Pharmacia & Upjohn, and for Kirsch Pharma GmbH for several
techniques
research in the proceedings for the Conference on Information Sys years. She is currently a senior editor forHarvard China Review.
80 2007

Appendix A
Scales Items 1BI
ERP Assimilation
1. Volume: Percentage of the firm's business processes that are using the ERP system (%)
2. Diversity: Number of functional areas that are using the ERP system
3. Depth: For each functionalarea identifiedabove, identifythe level atwhich theERP systemisused:
a. Operation
b. Management
c. Decision making
= =
Top management belief (1 strongly disagree; 5 strongly agree)
The senior management of our firm believes that
1. ERP has the potential to provide significant business benefits to the firm
2. ERP will create a significant competitive arena for firms
3. it isNOT necessary to use ERP to conduct business activities
= =
Top management participation (1 strongly disagree; 5 strongly agree)
The senior management of our firm actively
1. articulates a vision for the organizational use of ERP
2. formulated a strategy for the organizational use of ERP
3. established goals and standards tomonitor the ERP project
=
Mimetic pressure (1
strongly disagree; 5 = strongly agree)
Our main competitors who have adopted ERP
1. have greatly benefitted
2. are favorably perceived by others in the same industry
3. are favorably perceived by their suppliers and customers
=
Coercive pressure (1 strongly disagree; 5 = strongly agree)
1. The local government requires our firm to use ERP
2. The industry association requires our firm to use ERP
3. The competitive conditions require our firm to use ERP
= =
Normative pressure (1 very low; 5 very high)
Please indicate
1. The extent of ERP adoption by your firm's suppliers
2. The extent of ERP adoption by your firm's customers
3. The extent to which the Government's promotion of Information Technology influences your firm to use ERP
= =
Absorptive capacity (1 strongly disagree; 5 strongly agree)
1. Prior to the ERP implementation, our employees in general had extensive experience in using computer based in their work
applications
processes
2. It iswell known who can help solve problem associated with the ERP package
3. Our company can provide adequate technical support to using ERP
4. Our company provides ERP training opportunities to employees on a regular basis
=
Organization compatibility (1 strongly disagree; 5 = strongly agree)
Using ERP in our company

1. created a disruption in the workplace at first
2. decreased productivity at first due to time to learn
3. required an overall in the values, norms and culture within the company
change

Appendix B
Loadings of the IndicatorVariables (Composite Reliability) (AVE) _M_H_H_H_1

Construct Indicator Mean SD ~ T-value
Loading
TMB1
3.77 .65 .706 4.226
b6lief
4.10 .893 12.137
.50
^SgTS6"16"1 ___?_
'_TMB3_ 3.88_.49 .783_7.626
3/78
TMP1_ .74_^29_16.509
Jn?^QfS?fntPartiCiPati0n
TMP2 3~82 .866 24.730
.66
(0.839) (0.636)
_TMP3_3_37_73_7_6_4.515
MIM1_3_34_72_728_6779
.63
.856 18.513
_M^_3.61 (O^fSST
_MIM3_3_35_?0_.844_16.492
Coercive pressure COE1_^23_76_.902_5.590
(0.902)
(0.821)_COE2_Z82_70_.9V\_5.332
" NOR1_Z43_^3_^74_17.704
NOR2 277 .84
^22 icTJ5i
T^0?eTUre
'_NOR3_3_35_.84_.821_9.457
~
OC1_3^8_^8_^03_11.543
OC2377 .54 33.3^
J971
f^T?^mPMtm
'_OC3_371_.54_712_4.553
AC1
3.58_.88_799_10.060
Absorptive capacity AC2_375__34_.847_13.410

(0.875) (0.585)
AC3_3__5_.90_.810_9.253
~~
3.44_.88_.801_14.650
_AC4_
54%
Volume_ 21%_n/a_9.866
2.92 1.68
Diversity_ n/a_12780
frS) fn7ai)mi,atl0n 2.60 .63 n/a 3.086
_Depth_ | | I
82 2007

Appendix C
ItemLoadings and Cross Loadings . - IHHI
"
I TMB I TMP I MIM I COE NOR I AC OC
~
TMB1_.706__173_-?35_?85_-_187_?24_-.099
.893 TMB2
" .350
.302__108_-?74_?05_.058
.783 TMB3
" .346
.224_?12_?27__057_-.026
.386 TMP1 .829
.302_-222_?30_?54_-.197
~" .336 TMP2 .866
.179_-?95_?10_?65_-.254 "~"
TMP3
.236 .716 .026 -.237 .207
.140_-.144
"" .254 MIM1 .090 ~~ .728_.181_?91_?61_-.042
~mTm2 .251 .130 .048
.856 .237 .110 -.046
~~ .236 .260 .053
MIM3_?25_?28_?44_.020~~ "~
~COE1 .057 -.340 .120 .901 .108 .059 .144
COE2_?92_-?67_?79_?1J_?50_-?36_.070
~~ ~"
NOR1_-.105__168_?37_-.035_.874
.238 .019
~"
"nOR2 ~~ -.063 .020 ~~ .269 .073
.922 .225 ~ -.064
NOR3 .052 .027 .360
.121 .821 .210 .056
~~ J99 -.049 ~"
^135
AC1_.128_?46_?15_.001~~
~AC2 .129 .309 .307 -.068 " .269 .847 -.109
.279 .810 -.024
AC3_?57_.157_?96_-.008
~
AC4_J31_?69_?48_.007 ^83
^801 ^28
-.071 ~ -.112 -.258 ~ .040 ^03 -.049
ioi
OC1_
-.242 -.008 .091 -.004 .034
^971
OC2_.028 ~" "
-.194 -.077 .094 .009
-.046
.712
OC3_-.036
Note: TMB = = =
topmanagement beliefs; TMP topmanagement participation;MIM mimetic forces;
COE = coercive forces; NOR = normative forces; AC = absorptive capacity;
OC = organizational compatibility. Bold numbers indicate item loadings on the assigned constructs.

Appendix D
Common Method Bias Analysis WKKmamKmmtaKmmmamK^KKtmKKaKHKKmm
Substantive Factor Method Factor Loading

Construct Indicator Loading (R1) R12 (R2) R22
TMB1 0.851** 0.724 -0.311** 0.097
Top management TMB2 0.774** 0599 0.205** O042
belief_
~ 0.712** 0.507 -0.061 0.004

TMB3_
TMP1 0.723** 0.523 0.147 0.022
Top management TMp2 0.908** 0.824 -0.092 0.008
participation_
TMP3 0.760** 0.578 0.056 0.003
MIM1 0.621** 0.386 0.101 0.010
Mimetic pressure MIM2 0.970** 0.941 -0.143 0.020
MIM3 ~ 0.816** 0.666 0.065 0.004
Coercive COE1 0.912** 0.832 0.036 O001

Pressure COE2 0.901** 0.812 0.037 0.001
NOR1 0.861** 0.741 0.010 0.000
Normative
NOR2 0.930** 0.865 -0.021 0.000
pressure_
NOR3 0.827** 0.684 0.013 0.000
AC1 0.828** 0.686 0.097 0.009
Absorptive AC2 0.830** 0.689 0.004 0.000

capacity AC3 0.828** 0.686 0.100 0.010
AC4 0.688** 0.473 0.011 0.000
Volume 0.982** 0.964 -0.169 0.029
ERP assimilationDiversity 0.668** ~ ~
0.446_-0.250*_0.063
Depth 0.723** 0.523 -0.117 0.014
Average 0.815 | 0.674 | -0.013 | 0.016
< .05; < .01
*p **p

2007

Appendix E
Using PLS toAssess Common Method Bias IMHH
We took a statistical by Podsakoff et al. (2003) to address concerns regarding common method bias. To our knowledge,
approach suggested
this is thefirsttime theapproach has been applied using PLS. Podsakoff et al. recommendthatthisad hoc approach shouldbe taken if the
independent and dependent variables were not obtained from different sources and not measured in different contexts and the sources of the
method bias cannot be identified, because it controls for any systematic variance among the items that is independent of the covariance due
to the constructs of interest. In this approach, the variance of a specific observed indicator is partitioned into three components: trait,method,
and random error. To assess method variance, a latent method factor needs to be added in the structural model. Each indicator is specified
to be determined by its substantive construct, themethod factor, and measurement error. Figure El shows a simple model which includes an
independent variable, A, and a dependent variable, B. Indicators are represented by al, a2, bl, and b2, whose measurement errors are
represented by el to e4 and factor loadings represented by XI to A4.
Using covariance-based SEM methods (e.g., LISREL and AMOS) to execute the above model may result in problems with identification
(Podsakoffet al. 2003). To avoid thisproblemwe used PLS (Fornell and Bookstein 1982). However, we recognize thatPLS does not
accommodate random errors. Further, PLS Graph 3.0 does not allow an indicator to be determined by more than one construct. To finesse
this constraint, we converted each indicator to a single-indicator construct. As a result, all major constructs of interest and themethod factor
become second-order constructs. Figure E2 shows the model converted from the model in Figure El.
This conversion is valid because an observed indicator in a structural equation model is statistically equivalent to a construct which ismeasured
solely by that indicator. Little et al. (2002) explain that "with respect tomeasurement error, a single-indicator latent variable is essentially
equivalent to a manifest variable" (p. 162). Marcoulides and Moustaki (2002) suggest that a single-indicator latent variable determined by an
independent latent variable can be viewed as an indictor of the independent variable and the regression coefficient between the two variables
is the factor loading (p. 90). In Figure E2, for example, when al is converted into construct Al, itsmeasurement error and loading have to be
constrained to zero and one, respectively. Its original loading (Al) and measurement error (el) become the A-Al path coefficient and A I's
error term, respectively. Hence, there is no information loss after the conversion.
0 ?i1/\X2 '0
^3/\A4
a2 a1 b2b1
e1 e2 e3 e4
^^^^_^^^^
C Method)
Figure E1. An Example Model with a Latent Method

^????-^?-_?__???????_?_?___-????_________-?_?__-?_?_?_?_?_?_?_?____?_
Factor

2007 85

A B
( J-*A )
e1 V \ e2 eZ y NT e4
Al j A2 j B2 j
( ( (Bl j (
Ti n^
|i\ /I1 y\^
a1 a2 \ / b1 b2
0 0 ? ?
^3-^C
Method
( )
Figure E2. An Example of Converting Indicators to Single-Indicator Constructs
(^MM J- (^TMBJ)
Figure E3. The PLS Model for Assessing Common Method Bias
86 2007

Given that the conversion described above is valid, we created a PLS model (Figure E3) to assess common method bias in this study using the
Podsakoff et al. method. We included in the PLS model a common method factor which links to all of the single-indicator constructs thatwere
converted from observed indicators. It should be noted that assimilation was modeled as a formative construct when we tested our theoretical
model (Figure 3). We tested two versions of our theoretical model: one with assimilation as a formative construct and another with assimilation
as a reflective construct. We found that there are no qualitative differences in statistical results: No
paths gained or lost statistical
significance
and no significant paths changed signs. Based on this finding, assimilation was modeled as a reflective construct when we assessed common
method bias to ensure interpretability of results. For each single-indicator construct in Figure E3, we examined the coefficients of its two
incoming paths from its substantive construct and the method factor. These two path coefficients are equivalent to the observed indicator's
loadings on its substantive construct and the method factor and can be used to assess the presence of common method bias.
According toWilliams et al. (2003), evidence of common method bias can be obtained by examining the statistical significance of factor
loadings of themethod factor and comparing the variances of each observed indicator explained by its substantive construct and the method
factor. The squared values of themethod factor loadings were interpreted as the percent of indicator variance caused by method, whereas the
squared loadings of substantive constructs were interpreted as the percent of indicator variance caused by substantive constructs. If themethod
factor loadings are insignificant and the indicators' substantive variances are substantially greater than theirmethod variances, we can conclude
that common method bias is unlikely to be a serious concern.

2007 87


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Assimilation of Enterprise Systems: The Effect of Institutional Pressures and the Mediating

Role of Top Management

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Assimilation of Enterprise Systems: The Effect

By: Huigang Liang Abstract

planning (ERP) systems. The hypotheses were tested using

Qing Hu degree of ERP usage. Results also suggest that coercive

MIS Quarterly Vol. 31 No. 1, pp. 59-87/March 2007 59

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Introduction _ _ _ _ _ __ _ _ _ the findings of Teo et al. (2003b) that isomorphic processes

assimilation is ultimately achieved by the organization. struct,topmanagement championship. Our thirdcontribution

60 MIS QuarterlyVol. 31 No. 1/March

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engineering are complete at this stage (Luo and Strong 2004).

DiMaggio and Powell (1983) identify three basic types of

MIS QuarterlyVol. 31 No. 1/March

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Coercive _Top ERP

Figure 1. Conceptual Framework

62 MIS QuarterlyVol. 31 No. 1/March

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MIS QuarterlyVol. 31 No. 1/March

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Figure 2. Research Model

64 MIS Quarterly Vol. 31 No. 1/March 2007

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MIS QuarterlyVol. 31 No. 1/March

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This content downloaded from 80.229.1.116 on Mon, 4 Aug 2014 02:14:54 AM

Even though managers of an organization may have assessed

customers throughEDI, the same scheme could not be used

MIS QuarterlyVol. 31 No. 1/March

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Top Management Beliefs

second dimension success of who Organizational Compatibility

68 MIS QuarterlyVol. 31 No. 1/March

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MIS QuarterlyVol. 31 No. 1/March

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Table 1. Types of Participating Firms and Ownership

Types of business Service 2127.3

Table 2. Responding Company Demographics

Table 3. Respondent Demographics

Measurement Model As Chin (1998) states, covariance based estimates such as

70 MIS QuarterlyVol. 31 No. 1/March

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Table 4. Correlations among Major Constructs

Common Method Bias

MIS QuarterlyVol. 31 No. 1/March

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Figure 3. PLS Analysis of Results

72 MIS QuarterlyVol. 31 No. 1/March

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Figure 4. Results of the Alternative PLS Model

MIS QuarterlyVol. 31 No. 1/March

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centives is not measured by the TMP construct. So it is

lected in our survey.We hope that in futurestudies this type

74 MIS Quarterly Vol. 31 No. 1/March 2007

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exposed tomimetic pressures and thus imitate competitors'

Second, this study integrates institutional forces and the