Post-implementation enhancements in ERP use and diffusion of innovation

According to Nicolaou and Bhattacharya (2006) ERP enhancements (upgrades/add-ons) that occur early in the post-implementation period (during the year of completion or in the year following) may signify that the post-implementation review process is well managed and has either identified deficiencies in the initial implementation that need correction or has identified areas of improvement and the system is expanded to better fit needs. This improves system acceptance and system reach, promoting ERP use.

Literature on IT suggests that ERP use means ERP utilization, referring to the experience of managing the operation of the system software throughout the system’s post-implementation stages (Nah et al., 2004, Nicolaou, 2004a). Through greater use and diffusion, ERP systems not only extend basic business and streamline integration with suppliers and customers, they also tailor system use to the firms’ performance (Zhu and Kraemer, 2005, Nicolaou and Bhattacharya, 2006). According to Oliveira and Martins (2011), both Rogers’ (1995) DOI model and Tornatsky and Fleischer’s (1990) Technology-Organization-Environment (TOE) framework explains firm performance at firm level. While the TOE dependent construct is

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based on likelihood to adopt IT, DOI is based on implementation success for IT use. Studies conducted by Bradford and Florin (2003) verify some DOI determinants regarding successful ERP use, more precisely, compatibility, complexity, training, and competitive pressure. Light and Papazafeiropoulou (2004) and Waarts et al. (2002) add best-practices and transactional efficiency constructs as important dimensions for ERP use. With this in mind, it our belief that DOI has the potential to provide a more favourable framework to explain the ERP use with regard to performance at the firm level. Therefore, in this study we postulate that all six factors embedded in the DOI context: Compatibility, Complexity, Efficiency, Best-practices, Training, and Competitive pressure explain the ERP use (Figure 2.1). Next, theorized constructs and hypotheses relationships for ERP use are explained.

Figure 2.1. Research model to explain ERP use

The compatibility construct is measured by the degree to which the ERP system matches IT features, such as compatibility with hardware and other software. According to Bradford and Florin (2003) and Elbertsen et al. (2006) the degree of compatibility of ERP systems with existing software and hardware will positively impact system adoption and use. We thus formulate the first hypothesis:

Training Best Practices Efficiency Compatibility H1 H2 H3 H4 H5 H6 Complexity Competitive pressure ERP use

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H1. Firms having ERP systems with greater compatibility are likely to use ERP more.

The complexity construct is measured by reversing the item-questions scale of how intuitive the application is; how quickly users can become proficient with the application; and how comfortable they are using it. According to Cooper and Zmud (1990), Kositanurit et al. (2006) and Chang et al. (2011a), the ERP complexity is a major factor affecting user job performance. Additionally Bradford and Florin (2003) and (Chiang, 2009) concluded that ERP complexity has a strong relationship with success or failure of implementation and its use. Based upon this, the second hypothesis is:

H2. Firms having ERP systems that are perceived to be complex are likely to use ERP less.

The efficiency construct is measured by how easy it is for users to execute common and repetitive tasks, the effectiveness of the user interface, and the speed and reliability of the software. Gattiker and Goodhue (2005), Bendoly and Kaefer (2004), and Rajagopal (2002) assessed that transactional efficiency has a direct influence on ERP use, in particular, that data posting and its communication over the ERP improves the firm’s overall performance. Taking this into account, we construct our third hypothesis:

H3. Firms having ERP systems of greater transactional efficiency are more likely to use ERP.

The best-practices construct is measured by how easy it is for users to set up the application and map workflows based on local requirements, and the system’s adaptability to business needs. According to Velcu (2007), Chou and Chang (2008), and Wenrich and Ahmad (2009), firms that implement industry best-practices dramatically reduce risk and time consuming project tasks such as configuration, documentation, testing, and training, and the main reason for firms to adopt standard ‘best practice’ is the belief that ERP design does things in the

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right way. Also, Quattrone and Hopper (2005) conclude that ERP diffuse best-practices embedded in the system (e.g., ABC and stock accounting methods: FIFO, LIFO, Average, etc.) and through built-in benchmarking drive homogeneity and standardization. It is also a fact that as the number of ERP systems sold is enormous, similar solutions are adopted globally with minor or no variation. Thus, we postulate that firms that opt to implement ERP based on standard best-practices will use the system more. Based on these considerations, we formulate the fourth hypothesis:

H4. Firms with standard best-practices in their ERP systems are more likely to use ERP.

The training programme construct is a measure of how easy it is for users to be trained on the system, to understand the content material, and to navigate through topics applied to daily tasks. O’Leary (2000) and Bradford and Florin (2003), state that the degree of preparedness of ERP users to meet situations and carry out a planned sequence of actions without upstream errors has an instantly positive impact on business. Teaching how to use the system will improve familiarity and boost its use. We therefore postulate that firms with a higher degree of training tend to enjoy greater readiness to use ERP. In line with research, we construct the fifth hypothesis:

H5. Firms with greater user-training programmes are more likely to use ERP.

The competitive pressure construct is a measure of the degree of pressure that firms feel from competitors in the industry to use ERP. Competitive pressure is recognized in the innovation diffusion literature as an important factor of technology diffusion (Bradford and Florin (2003), Zhu and Kraemer, (2005). These authors have shown that innovation diffusion is accelerated by the competitive pressure in the environment. Thus, we postulate that

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competitive pressure is an important determinant for firm use of ERP systems. In line, we construct the sixth hypothesis:

H6. Firms facing higher competitive pressure are more likely to use ERP.