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RAJAGOPAL, R. 2002, "An Innovation Diffusion View of Implementation of

RAJAGOPAL, R. 2002, “An Innovation Diffusion View of Implementation of Enterprise Resource Planning (ERP) Systems and Development of a Research Models" Information & Management 40 s. 87-114, MI.

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144 views

RAJAGOPAL, R. 2002, "An Innovation Diffusion View of Implementation of

RAJAGOPAL, R. 2002, “An Innovation Diffusion View of Implementation of Enterprise Resource Planning (ERP) Systems and Development of a Research Models" Information & Management 40 s. 87-114, MI.

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Can Keles
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© © All Rights Reserved
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Information & Management 40 (2002) 87114

An innovationdiffusion view of implementation of


enterprise resource planning (ERP) systems
and development of a research model$
Palaniswamy Rajagopal*
Department of Information Systems, School of Business and Economics, Michigan Technological University,
1400 Townsend Drive, Houghton, MI 49931, USA
Received 16 January 2001; accepted 13 October 2001

Abstract
Firms around the world have been implementing enterprise resource planning (ERP) systems since the 1990s to have an
uniform information system in their respective organizations and to reengineer their business processes. Through a case type
analysis conducted in six manufacturing firms that have one of the widely used ERP systems, various contextual factors that
influenced these firms to implement this technology were understood using the six-stage model proposed by Kwon and Zmud.
Three types of ERP systems, viz. SAP, Baan and Oracle ERP were studied in this research. Implementation of ERP systems
was found to follow the stage model. The findings from the process model were used to develop the items for the causal
model and in identifying appropriate constructs to group those items. In order to substantiate that the constructs developed to
measure the causal model were congruent with the findings based on qualitative analysis, i.e. that the instrument appropriately
reflects the understanding of the case interview; triangulation technique was used. The findings from the qualitative study
and the results from the quantitative study were found to be equivalent, thus, ensuring a fair assessment of the validity and
reliability of the instrument developed to test the causal model. The quantitative measures done only at these six firms are not
statistically significant but the samples were used as a part of the triangulation method to collect data from multiple sources, to
verify the respondents understanding of the scales and as an initial measure to see if my understanding from the qualitative
studies were accurately reflected by the instrument. This instrument will be pilot tested first and administered to a large sample
of firms.
# 2002 Elsevier Science B.V. All rights reserved.
Keywords: Enterprise resource planning (ERP) systems; Process model; Causal model; Contextual factors; Triangulation; Integration and
performance

$
Due to various problems and issues encountered by the author while pursuing doctoral studies, it took lot of time to finalize the
manuscript and submit to the journal. The author is going to continue working on his Ph.D. in Information Technology Management through
distance learning from a different school while working as a lecturer of Information Systems and Information Technology at Michigan
Technological University.
*
Tel.: 1-906-487-2529; fax: 1-906-487-2944.
E-mail address: [email protected] (P. Rajagopal).

0378-7206/02/$ see front matter # 2002 Elsevier Science B.V. All rights reserved.
PII: S 0 3 7 8 - 7 2 0 6 ( 0 1 ) 0 0 1 3 5 - 5

88

P. Rajagopal / Information & Management 40 (2002) 87114

1. Introduction
When met with high levels of competition and
pressure from the industry, most organizations invariably turn to the information systems department to
help them attain advantages in the market by performing better internally through saving resources and
through becoming adept in responding to these challenges from the environment. Many manufacturing
and other organizations around the world have been
able to achieve high levels of performance during the
recent turbulent decades because of the application
and usage of various IT tools that automated many of
their routine organizational activities. Implementation
and wide usage of IT tools have helped organizations
to function in an organized fashion, thus, alleviating
many redundancies that were ubiquitous across the
entire organization. Venkatraman [57] recently mentioned that We are at an interesting turning point in
our business history: the industrial age is giving way
to the information age and the digital infrastructure is
fast replacing the physical infrastructure. Similar to
how industrial machinery and tools were used at the
transition from Agrarian to Industrial Economy, currently we are at a stage where information technology
tools available and the systems developed using those
tools are at infant or premature stages of development
and usage with more room for research, development
and usage. If we take into account the number of users
and how these users utilize these tools, this statement
becomes more valid. The work force is slowly being
transformed from manual and routine task performing workers to knowledge workers because of the
rapid use of IT that involves information processing,
dissemination and data gathering rather than physical
exertion as explained by Zuboff [59].
Information technology application and usage are
associated with many inherent drawbacks that were
opaque to many of the organizational decision-makers
for many years. The changes in the global economy
and the intense competition during the early 1990s
resulted in a rude awakening to many industrial
organizations to chart new strategies to be successful
if not at least to survive even in local markets. Information technology based tools were seen as one of the
significant enablers of success, and organizations went
on an IT investment binge in the hope that implementation of IT tools would automatically put them in a

comfortable position where all of an organizations


activities were expected to be automated resulting in
an efficient organization. But they were in for a
surprise. Of the US$ 275 billion spent by US firms
in 1996 in software applications, 53% of the projects
failed [23], and these failures were not because the
software were coded incorrectly, rather the companies
failed to understand the real organizational needs and
systems required to solve their problems to improve
performance. After all there was no shortage in the
brainpower required to code programs and definitely it
was not a laggard to stop US firms from designing an
appropriate system. Based on empirical research,
Quinn and Baily [45] found that the investments made
in IT did not result in any improvements in industrial
productivity. The reason for the inability of the firms
to realize competitive gains even after spending billions of dollars is that proper usage of IT necessitates
changes in the design and structure of an organization as mentioned by Brynjolfsson and Hitt [9] in their
paper about productivity paradox. Brynjolfsson and
Mendelson [10] found that organizations might not
be able to realize full benefits of a technology unless
they make the necessary changes in organizational
structure, strategies and processes. Many renowned
scholars in MIS including Grover, Teng, Segars,
Fiedler, Henderson, Venkatraman, Scott-Morton, Lucas
and Baroudi have called for changes in business
processes, organizational structures and such management related issues in order to take full advantage of the implemented information technologies
[25,28, 50,38].
On the technical side of IT, one of the primary
reasons for the inability of many firms to realize the
full potential offered by IT is the incompatibility
among the various computer hardware and software
systems as was found during the case studies and as
reported by Ives and Jarvenpaa [29], Stevens [55] and
others. Individual functions and divisions started
implementing various computer hardware and software systems in their respective functions and divisions during the last decade, which eventually resulted
in organizations characterized by a myriad of different
systems that could not communicate with one another.
Individual functions and divisions were able to realize
better performance and efficiency but at an organizational level they were impeded from performing better
through using all of the available information because

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