ERP use and value: Portuguese and Spanish SMEs
| Date | 17 August 2012 |
| Pages | 1008-1025 |
| Published date | 17 August 2012 |
| DOI | https://doi.org/10.1108/02635571211254998 |
| Author | Pedro Ruivo,Tiago Oliveira,Miguel Neto |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
ERP use and value: Portuguese
and Spanish SMEs
Pedro Ruivo, Tiago Oliveira and Miguel Neto
Instituto Superior de Estatı
´stica e Gesta
˜o de Informac¸a
˜o,
Universidade Nova de Lisboa, Lisbon, Portugal
Abstract
Purpose – Consistent with the diffusion of innovation (DOI) model and resource-based view (RBV)
theory, the purpose of this paper is to develop a research model for measuring enterprise resource
planning (ERP) post-adoption and its consequence on small and medium enterprise (SME) performance.
Design/methodology/approach – The model links six determinants based on DOI to explain “ERP
use” and three on RBV to explain the “ERP value”, on which nine hypotheses are postulated. Testing
was conducted through structural equation modelling, utilizing data from 558 web-surveyed firms in
Portugal and Spain.
Findings – Full sampleanalysis finds that competitivepressure, training, best-practices,compatibility,
and efficiencyare important antecedents of “ERP use”.Together with usage, collaborationand analytics
capabilities contribute to “ERP value”. Cross-country analysis reveals that complexity is an important
inhibitor for “ERP use” in Portuguese firms whereas it is a facilitator for Spanish firms. In addition,
whilefor Portuguese firms, compatibilityand efficiencyare significant, they arenot for Spanish firms. For
“ERP value”, while use and collaboration are more important for Portuguese firms, analytics is more
important for Spanish.
Research limitations/implications – The paper provides insight into how SMEs use and value
ERP; however, the authors cannot speak empirically on the issue of whether value is sustained, or on
maturity stages, or on the impact of different industries.
Originality/value – The paper describes the first empirical research study on Iberian SMEs, thus
adding a cross-country dimension to the innovation diffusion literature. Unlike the typical focus on ERP
adoption found in the literature, this paper focuses on post-adoption stages, linking usage with value.
Keywords Portugal, Spain,Resource management, Small to medium-sized enterprises,
Enterprise resourceplanning, Diffusion of innovation,Resource-based view, Post-adoption,Use, Value
Paper type Research paper
1. Introduction
As suggested in the literature, innovation is identified more and more as the
transformative force that creates and shapes new economies in today’s digital world.
Firms often adopt information systems (IS) to upgrade or improve their business
performance and be more competitive (Ho and Tai, 2004). Davenport (1998) qualified
enterprise resource planning (ERP) systems as the most important development in
enterprises’ use of information technology (IT). ERP’s main purpose is to integrate
functions of financial management, supply chain management, and customer
relationship management to the greatest extent possible. Such systems manage both
information and resources by supporting execution of operational transactions and
advanced planning, alongside real-time data access (Klaus et al., 2000).
As with many other technological innovations, ERP systems were initially
implemented mostly in large organizations, and this has probably been the main reason
for research to focus on large enterprises. Although small and medium enterprises
(SMEs) have been adopting ERP systems for many years, the literature reveals that little
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IMDS
112,7
1008
Received 30 December 2011
Revised 27 March 2012
Accepted 28 March 2012
Industrial Management & Data
Systems
Vol. 112 No. 7, 2012
pp. 1008-1025
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571211254998
attention has been given to research on ERP in SMEs, and less on cross-national studies.
Moreover, according to the European Commission (2011), 99 per cent of all European
firms have fewer than 250 employees, and both Portugal and Spain adhere to this profile,
and with the same percentage. Because SMEs are the backbone of the economy,
important for increasing productivity and gaining competitive advantage, as well as
being important drivers of innovation and transformation, it is valuable to study ERP at
the SME level across countries (Hitt et al., 2002; Raymond and Uwizeyemungu, 2007;
Chuang et al., 2009; Maguire et al., 2010).
As the impact of IT systems on a firm’s performance is mostly long term and indirect,
measures of the value to business are linked primarily to system usage (Devaraj and
Kohli, 2003; Zhu and Kraemer, 2005). The current investigation explores an alternative
way to understand and measure IT value by studying ERP in its post-adoption phases;
use and value. We develop and test a model based on the diffusion of innovation (DOI)
model and resource-based view (RBV) theory.
The theoretical perspectives and research model proposed to explain use and value
are outlined in next two sections. The appropriateness of the model is then tested using
a sample of 558 firms. Tests for differences based on Portugal and Spain are also
conducted. Finally, we discuss our results and offer implications and conclusions.
2. Theoretical perspectives
2.1 ERP use and DOI
Whereas ERP implementation refers to the stage of system planning, configuration,
testing, and “going-live”, ERP use means ERP utilization. It refers to the experience of
managing the operation of the system software throughout the system’s
post-implementation stages (Nah et al., 2004; Liang et al., 2007). In line with the
literature we consider ERP to be a type of innovation that is implanted in a firm’s core
business processes in order to leverage performance (Rajagopal, 2002; Zhu and Kraemer,
2005). Not only does it extend basic business and streamline integration with suppliers
and customers, it also directs system usage to the firm’s performance. Rogers’ (1995) DOI
model seeks to explain and predict if and how an innovation is used within a social
system, with regard to performance at the firm level. Research conducted by Bradford
and Florin (2003), Waarts et al. (2002) and Light and Papazafeiropoulou (2004) verifies
DOI determinants regarding ERP use. Considering their findings, we believe that DOI
has the potential to provide a favourable framework for explaining ERP use.
2.2 ERP value and RBV
While ERP userefers to the production stageof system usage among firms actuallyusing
ERP in their daily business activities, ERPvalue refers to firms’ ability to utilize ERPto
create a competitive advantage. It refers to the ERP impact on a firm’s performance,
throughout the system life in the post-adoption stages (Rhodes et al., 2009). Since ERP’s
value relies on how firms strategically exploit the system, firms’ performance in a
competitiveenvironmentis a subject that draws muchattention and some authorsattempt
to build explanatory theories. Oneof the most recognized is the RBV theory,which states
that firm-specific resources determine the firm’s performance. It is linked to the
competitive advantage approach to strategic management and can explain sustained
advantages (Hedman and Kalling, 2003). In the IS literature, the RBV has been used to
analyseIT capabilities as a resourceand to explain IT businessvalue. That is, IT business
ERP use
and value
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