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Journal of Enterprise Information Management
Emerald Article: A profile of ERP adoption in manufacturing SMEs
Louis Raymond, Sylvestre Uwizeyemungu
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of Enterprise Information Management, Vol. 20 Iss: 4 pp. 487 - 502
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http://dx.doi.org/10.1108/17410390710772731
Louis Raymond, Sylvestre Uwizeyemungu, (2007),"A profile of ERP adoption in manufacturing SMEs", Journal of Enterprise 
Information Management, Vol. 20 Iss: 4 pp. 487 - 502
http://dx.doi.org/10.1108/17410390710772731
Louis Raymond, Sylvestre Uwizeyemungu, (2007),"A profile of ERP adoption in manufacturing SMEs", Journal of Enterprise 
Information Management, Vol. 20 Iss: 4 pp. 487 - 502
http://dx.doi.org/10.1108/17410390710772731
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A profile of ERP adoption in
manufacturing SMEs
Louis Raymond and Sylvestre Uwizeyemungu
Institut de recherche sur les PME, Université du Québec à Trois-Rivières,
Trois-Rivières, Canada
Abstract
Purpose – This paper seeks to build and validate a typological profile of manufacturing small to
medium-sized enterprises (SMEs) in regard to their eventual adoption of an enterprise resource
planning (ERP) system, based on the predisposition of their environmental, organizational, and
technological context.
Design/methodology/approach – Provides cluster analysis of secondary questionnaire data
obtained from a benchmarking database of 356 Canadian manufacturing SMEs.
Findings – Three types of SMEs were obtained: 140 “internally predisposed” SMEs, 60 “externally
predisposed” SMEs, and 156 “unfavourably disposed” SMEs.
Originality/value – Provides a valid framework for analysis that can serve ERP vendors and
consultants, as well as SME owner-managers, the first to better target their offer of products/services,
and the second to better position their firm before contemplating the implementation of an ERP
system.
Keywords Manufacturing resource planning, Integration, Small to medium-sized enterprises,
Computer integrated manufacturing, Advanced manufacturing technologies
Paper type Research paper
1. Introduction
An analysis of the expanding roles being assigned to information systems (IS) shows
that they have gradually spread to all organizational levels and to all forms of business
management, affecting a greater number of users and managers. However, the
development of IS has followed the different operational units or functions of the
enterprise, each function developing its own applications to such an extent that various
systems coexisted in the same business without there necessarily being
communication between them. This meant the existence of “informational
fragmentation” (Muscatello et al., 2003) or of “functional silos” (Beretta, 2002), with
all that this implied in terms of dysfunction, redundancy, and waste. The need for IS
integration thus became more and more urgent. This is when enterprise resource
planning (ERP) systems, or more recently enterprise systems (ES), were perceived by
various organizations as a solution to this problem.
If the first implementations of ERP occurred in large enterprises (LE), the demand
for such systems in small and medium-sized enterprises (SME) has mushroomed in
recent years (Everdingen et al., 2000; Greenemeier, 2001). However, these systems
remain linked with large-scale organizations to such an extent that their adoption by
the SME resembles an incursion into the world of the large firm, an incursion that
requires some foresight. White (1999) speaks of ERP systems for the SME as a large
The current issue and full text archive of this journal is available at
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The authors would like to thank the Canada Research Chairs Program and the Canada
Foundation for Innovation for their financial support of this research.
ERP adoption
487
Journal of Enterprise Information
Management
Vol. 20 No. 4, 2007
pp. 487-502
q Emerald Group Publishing Limited
1741-0398
DOI 10.1108/17410390710772731
enterprise solution for small businesses, and Pender (2001) suggests that the challenge
to SMEs confronting ERP is to learn how to deploy the technology of large enterprises
without incurring their expenses.
Even if we are aware of the evident interest shown by SMEs and ERP vendors for
the development of enterprise systems that are better adapted (Gable and Stewart,
1999; Greenemeier, 2001), we do not know very much about the profile of SMEs likely
to adopt them. We are also unaware of the typical traits of SMEs that would allow
them to implement ERP with a good a priori chance of success. The answer to these
questions is of obvious interest. First, the ERP system vendors and consultants will
better adapt their offer to the SMEs who might eventually be interested. Moreover, to
better prepare SMEs to adopt and effectively exploit ERP systems, it is necessary to
target specifically those that show the required profile. The SMEs for their part will
know if they meet the essential conditions that would make the adoption and
exploitation of an ERP system less risky.
The aim of the present study is first to propose the elements of the required profile
for SMEs likely to successfully adopt an ERP system. It also initiates a partial test of
this profile by comparing it to actual characteristics of the environmental,
organizational, and technological context of 356 Canadian manufacturing SMEs.
2. Conceptual foundation
There are potentially many factors that can motivate or persuade SMEs to adopt an
ERP system. While the ERP phenomenon has long been associated with large
enterprises, we do not find many empirical studies dealing specifically and in depth
with the ERP adoption factors in SMEs. Indeed, Ariss et al. (2000) lament the absence
and/or the fragmentation of the research on the factors that influence the introduction
of modern technologies in small businesses, despite the admittedly crucial role these
factors play in the survival of these businesses. It is however possible to study these
ERP system adoption factors by having recourse to the literature dealing with IT
adoption factors in general, and on the incentives for ERP system adoption in
particular.
Examining the factors that influence the decision to adopt advanced manufacturing
technology in SMEs, Ariss et al. (200) proposedthe following classification:
. factors related to the product/market (improvement of product quality,
improvement in product design);
. financial reasons (cash flow, availability of financing, government programs of
financial assistance);
. managerial and organizational reasons (strategic orientation with regard to
technology, exposure of management to technology, relations between
management and employees, competence of employees, increase in
productivity); and
. factors related to the sector of activity (competitiveness in terms of cost,
environmental requirements).
When compared to earlier classifications (Grover and Goslar, 1993; Cooper and Zmud,
1990), the last one added certain interesting elements in the SME context: financial
considerations, given the often prohibitive cost of new technologies, especially ERP,
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and the limited means of SMEs, and managerial factors such as the strategic
orientation regarding technology and the exposure of management to this technology,
factors that, in the case of SMEs, can be grouped with individual factors, given the
concentration of decision-making vested in the entrepreneur or the owner-manager.
As have already noted Cooper and Zmud (1990), most studies on the implementation
of IT consider these technologies in a general fashion, and thus do not emphasize the
specific technological characteristics of one IT in particular. It is to avoid this limitation
that in the present study, which deals specifically with ERP systems, the factors
mentioned above are reanalyzed in a context of ERP system adoption by SMEs. In
order to do so, reference is made to studies having to do with the motivations for ERP
system adoption. Indeed, we could try to establish the profile of SMEs likely to adopt
an ERP system by starting from the analysis of the reasons that lead to this adoption.
The question of the motives for ERP system adoption has been taken up in different
studies (Oliver and Romm, 2000; Ross, 1999), with some dealing specifically with SMEs
(Dolmetsch et al., 1998; Oliver and Romm, 1999; Gable and Stewart, 1999). Oliver and
Romm (2000) divide the factors that determine the investment made in seeking out
information with a view to an eventual ERP system adoption into three categories:
(1) The need to improve the performance of ongoing operations.
(2) The need to integrate data and systems.
(3) The need to avoid a competitive disadvantage or to avoid that a business risk
becomes critical.
Ross (1999) classifies the reasons for ERP system adoption into three categories:
(1) Infrastructure.
(2) Capability (improvement of processes, data visibility).
(3) Performance (cost reduction, strategic decision making, adaptability to client
requirements).
Furthermore, she demonstrates the overlapping character of these reasons: the new
integrated enterprise systems infrastructure makes it possible to acquire new
capabilities, which in turn are supposed to allow the business to generate improved
results. For Dolmetsch et al. (1998), the reasons for using standard integrated software
packages can be traced back to corporate strategy, business processes, or IS
applications. In a study having to do with medium-sized non-profit organizations,
Oliver and Romm (1999) propose that these organizations adopt ERP systems for gains
in efficiency or for technical, economic, or strategic reasons.
Caldas and Wood (1999) call for a broadened perspective to comprehend the ERP
phenomenon, thereby removing it from the technological reductionism and
determinism that have tended to characterize it previously. Hence, they propose
three groups of factors that, either alone or in interaction in a complex dynamic
process, influence the adoption, the implementation, and the evaluation of ERP
systems in an organization:
. substantive factors;
. institutional factors; and
. political factors.
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Substantive factors include the actual requirements, problems, or opportunities that
organizations face and for which ERP systems are an adequate response. Institutional
factors refer to all external forces present in the organizational environment that apply
pressure for the adoption of ERP systems, which are often presented as a “panacea”.
Political factors reflect the interests of the various power groups within the
organization.
With regard to the adoption of computer-integrated systems, a taxonomy has been
developed by Forest (1999) who categorizes the firm’s system needs on the basis of its
type of production. Firms whose production process is characterized by high input
diversity (e.g. many kinds of raw materials) but low output diversity (e.g. few types of
finished goods) will concentrate on better managing their supply chain, thus opting for
MRP type systems. Those with low input diversity but high output diversity, requiring
advanced manufacturing technology, will focus on better control of their
manufacturing process and thus adopt production scheduling systems. Whereas
firms who type of production is characterized as “make-to-order” must conciliate
output diversity with a flexible manufacturing process (Koh and Simpson, 2005), hence
the need for an ERP type of system that integrates both supply chain management and
production scheduling.
The preceding review of the literature leads one to conclude that little is known as to
the environmental, organizational, and technological factors that actually predispose
SMEs to adopt an ERP system. While some insights can be gained from studies of IT
adoption in general, the previously-cited studies of ERP adoption in SMEs have
focused on the “generic” motivations or predispositions associated with the purported
benefits or advantages to be obtained from ERP systems. While these are the a priori or
prescriptive reasons for which a SME is ready to adopt ERP, the a posteriori or
empirical reasons such as pressure from customers, the availability of resources and
expertise, and the existing level of computer-integrated manufacturing have yet to be
examined in depth.
3. Research model
While researchers have categorized in various ways the motivations that lead
organizations to adopt an ERP system, an analysis of these categories shows that the
motives put forward are quite similar from one study to another (Oliver and Romm,
1999; Ross and Vitale, 2000; Stewart et al., 2000). In the present study, these
motivations are of interest to the extent that we can deduce from them, as a
complement to IT adoption and assimilation factors, the characteristics of the
manufacturing SME’s environmental, organizational and technological context that
may lead it to adopt an ERP system. A number of studies have in fact successfully
used Tornatsky and Fleischer’s (1993) technology-organization-environment (TOE)
framework to explain the adoption and assimilation of information technology,
emphasizing three groups of determinants or predictors:
(1) Characteristics of the environmental context such as external pressures from
the firm’s business partners.
(2) Characteristics of the organizational context such as the firm’s structure and
resources.
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(3) Characteristics of the technological context, including the computer-integrated
manufacturing technologies already implemented by the firm (Raymond et al.,
2005).
3.1 Environmental context
The adoption of an ERP system can be the result of pressure exerted on the enterprise
by its environment. On this subject, the SME cases studied by Dolmetsch et al. (1998)
are very revealing. A business that operates in a market very sensitive to price
variations cannot afford high margins, and it depends on its IS for tight control of its
production costs; it is a matter of cost transparency, and integrated systems are meant
to satisfy this preoccupation (Dolmetsch et al., 1998). An enterprise operating in a
strong growth market is made to reconsider its business processes in order to deal with
its rapidly increasing size; the same is true of a business operating in a verydynamic
sector, such as in high technology: the need to react rapidly to change accentuates the
need for integration (Chalmers, 1999; Dolmetsch et al. 1998). That is similar to the
environmental uncertainty construct, measured in its three components, heterogeneity,
dynamism, and hostility (Grover and Goslar, 1993).
The need to optimize the supply chain is one of the factors that lead to the
adoption of an ERP system: large manufacturing companies exert pressure on
their suppliers, mainly SMEs, so that they will meet world standards in terms of
cost, efficiency, and quality; this very often obliges these SMEs to restructure their
processes, and in so doing they generally need an ERP system capable of real-time
sharing of detailed information with their partners in the value chain (Chalmers,
1999). It is in fact the existence of very close logistical links between an SME and
its business partners that creates an urgent need for integration (Dolmetsch et al.,
1998). It is perhaps the absence of these links in the SMEs studied by Bernroider
and Koch (2001) that may explain why these firms considered extra-organizational
links with clients and suppliers less relevant in the process of selecting an ERP
system, even though “extended” enterprise systems are specifically meant to
integrate these links (Møller, 2005).
The status of a business expressed in terms of independence from or affiliation with
a group or network of firms is significant in the adoption of technology (Julien and
Raymond, 1994). For an SME to be part of a larger group leaves it practically no other
choice than to adopt an integrated system of the same type as that adopted by the
group (Dolmetsch et al., 1998). It also seems that the relational environment of small
business managers exerts a dominating influence on their decision on whether or not to
adopt IT (Monnoyer-Longé, 2002): this influence comes from individuals within
communities marked by informality and trust rather than by structure as is the case
for large firms.
To summarize, we could express the effects of the environmental context as follows:
. SMEs operating in a price-sensitive market will be more predisposed to adopt an
ERP system.
. SMEs operating in a very dynamic sector or in a high-growth market will be
more predisposed to adopt an ERP system.
ERP adoption
491
. Close logistical links between SMEs and their business partners
(partnership-network) would necessitate the integration of information in the
value chain, thus increasing their motivation to adopt an ERP system.
. Membership or affiliation of SMEs in a network of business partners will
motivate them to adopt an ERP system.
3.2 Organizational context
The introduction of an IS can be seen as the diffusion of technology in a social system
(Stewart et al., 2000). It is then important that there be adequate alignment between the
technological and organizational requirements. This explains why the congruence or
fit between an ERP system and the organization’s processes heads the list of criteria in
the selection of an ERP system for SMEs (Everdingen et al., 2000). This congruence
allows the SMEs to avoid the shock of an in-depth process re-engineering. This
suggests that the nature of business processes of in a SME will weigh heavily in its
decision to adopt an ERP system: if business processes are very idiosyncratic, there is
much less of finding ERP software on the market whose design fits the organization.
Studies show that for SMEs, the affordable cost of software packages and short
implementation times are among the most important selection criteria (Bernroider and
Koch, 2001; Everdingen et al., 2000). Ariss et al. (2000) note the importance of cash flow
and access to financing, whether by way of financial institutions or through
government subsidies, in the decision to adopt advanced technologies for SMEs. In
fact, Buonanno et al. (2005) found financial constraints to be the main cause of the
non-adoption of ERP systems among SMEs. In circumstances of acute scarcity of
resources (qualified manpower, technical capacity, time), management is less inclined
to invest in long-term IT projects, worried are they to obtain visible short-term gains
from their investments in ERP (Gregory, 1993).
In a study analyzing the differences between medium-sized enterprises and large
ones in the matter of defining the needs and selection in the implementation of their
ERP system, Bernroider and Koch (2001) report that criteria relative to flexibility (e.g.
increase in organizational flexibility, improvement of processes, and improvement of
the capacity for innovation) were judged aspects of lesser importance by SMEs,
probably because these firms already have a tendency to be more flexible and thus
there is no need to resort to an ERP to achieve this. We could then conclude that the
degree of organizational flexibility plays a significant role in the decision to adopt or
not an ERP system.
Size, centralization, formalization, and specialization are some of the elements listed
in the category of organizational factors in studies on IT adoption. On size, we could
suppose that the larger the organization, the greater will be its resources to facilitate
the initiation, adoption, and implementation of new technologies (Grover and Goslar,
1993). Specialization is defined as the diversity of technical specialists within the
organization: thus, it is taken into account in the availability of resources.
Centralization, defined as the degree to which the decision-making power is
concentrated, is taken up in the individual factors. Formalization would correspond to
administrative or bureaucratic complexity (Gregory, 1993). The relation between
formalization and IT adoption is ambivalent: on the one hand, the effect of the
bureaucracy would handicap innovation initiatives (Gregory, 1993), but on the other,
bureaucratic complexity would lead to the search for a solution through IT (Julien and
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Raymond, 1994). Since enterprises are often motivated by the need for data visibility
(Ross, 1999), the relationship between formalization and adoption in the specific case of
the adoption of an ERP system tends to be considered, that is, in an institutional sense.
To summarize, we could state the effects of the organizational context as follows:
. SMEs having very idiosyncratic production processes will be less predisposed to
adopt an ERP system.
. SMEs in a situation of (human, technical, and financial) resource scarcity will be
less predisposed to adopt an ERP system.
. SMEs with greater flexibility will be less predisposed to adopt an ERP system.
. Larger, more decentralized SMEs will be more predisposed to adopt of an ERP
system.
. Greater formalization will predispose SMEs to adopt an ERP system.
3.3 Technological context
The need to improve the performance of ongoing operations is an important incentive
for the adoption of ERP systems (Oliver and Romm, 2000; Ross, 1999). This need often
follows an awareness of the limits of existing systems (inefficiency, inflexibility), as
was the case with a good number of enterprises at the time of the Y2K bug (Dolmetsch
et al., 1998) or the switch to the euro in the countries of the European Union (Kennerley
and Neely, 2001). The expiration of a maintenance contract for an existing “legacy”
system can also motivate a business to contemplate moving on to a more modern
technology (Dolmetsch et al., 1998). The other incentive lies in the need to integrate
data and systems: IS were historically developed as an answer to functional needs,
which resulted in a multitude of applications with problems of incompatibility
(systems that could not communicate with one another), of duplication (the same
datum is entered several times), and of costly support (Oliver and Romm, 2000). The
integration of data and systems then turns out to be an urgent necessity.
Considering the preceding, the elements of the profile that can be extracted with
respect to a technological context couldbe expressed as follows:
. SMEs confronted with the obsolescence (inefficiency, inflexibility, disintegration)
of their “legacy” manufacturing information systems will be more predisposed to
adopt an ERP system.
. SMEs that have implemented and assimilated more advanced and integrated
manufacturing technologies and applications such as CAD/CAM, FMS, and
MRP-II will be more predisposed to adopt an ERP system.
4. Research methodology
In comparing the literature having to do with both the factors for adoption of IT and
the motivations for adopting ERP systems, the present study has established a
theoretical profile of SMEs likely to do so. The comparison of this profile with the
characteristics of manufacturing SMEs in the PDG (performance, development,
growth) database provides us with an outline of the actual ERP adoption profile of
these SMEs. This database was developed by a university research laboratory in
collaboration with an association of over 850 manufacturing SMEs. It now consists of
data on 356 Canadian manufacturing SMEs, whose number of employees range from 7
to 405, with a median of 42. More than 15 industrial sectors are represented, including
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metal products (30 percent of the enterprises), wood (14 percent), plastics and rubber (9
percent), electrical products (8 percent), food (7 percent), and machinery (5 percent).
These enterprises are fairly representative of Canadian manufacturing SMEs in so far
as size and industry are concerned.
The database was created by having the SMEs’ chief executive and functional
executives such as the controller, human resources manager, and production
manager fill out a questionnaire to provide data on the practices and results of
their firm and add their firm’s financial statements for the last five years.
Anonymity and confidentiality is preserved by having the questionnaires transit
through the industry association so that firms are known by the research center
only by an alphanumeric identifier assigned by the association. Once all the
questionnaire data and financial statements have been manually verified by the
research center’s personnel, they are typed in via validation software and entered
in the PDG database as valid data, ready for benchmarking. In exchange for these
data, the firms are provided with a complete comparative diagnostic of their
overall situation in terms of performance and vulnerability (further information on
the PDG diagnosis system and on data collection and validation can be found in
St Pierre and Delisle, 2006).
Figure 1 illustrates the research model based on the TOE framework and
developed by taking into account variables of the theoretical profile that can be
traced in one form or another in the PDG database. Hence, given the secondary
nature of the research data, not all of the variables of the theoretical profile were
included in the research model, and others are apprehended indirectly. As an
example of such a variable, type of production (“make-to-order” mode as opposed
to “make-to-stock”) gauges the flexibility needed by a SME, in the absence of data
on the nature of its sector of activity (e.g. dynamism, market growth rate, price
sensitivity). To render operational the various variables retained, the present study,
for obvious reasons of comparison, was limited to the definitions adopted in the
PDG database.
Table I presents the research variables retained, their operational definitions, and
the principal source in previous empirical work from which they were taken or
adapted. For the dependent variable, the study uses the advanced manufacturing
technologies taxonomy developed by Brandyberry et al. (1999). In this taxonomy, the
technologies are divided into three categories according to their degree of integration:
Figure 1.
Research model
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the first category comprises “stand-alone” technologies such as industrial robots,
computer-assisted design (CAD), numerical control machines (NC), and automatic
handling of materials; the second is that of the functionally-oriented technologies, that
is, computer-assisted manufacturing (CAM) and flexible manufacturing systems
(FMS); and the third comprises integrated technologies and systems of the
computer-integrated manufacturing (CIM) type, including CAD/CAM, MRP, MRP-II,
and eventually ERP. We can see that an SME whose technologies are in the third
category has already shown a clear interest for the advantages offered by an ERP
system, integration being the principal feature of such systems.
Table II illustrates the presence of different technologies in the SMEs studied, as
well as their own estimation of the degree with which they have assimilated these
technologies. ERP systems and preceding computer-integrated systems such as
materials requirements planning (MRP), MRP-II (“manufacturing resource planning”),
are not very present: in 18.5 percent of the sampled firms for MRP, 12 percent for
MRP-II, and 8 percent for ERP.
5. Results and discussion
Cluster analysis was used to group the SMEs on the basis of their principal
motivations for adopting ERP. The SPSS TwoStep algorithm was used as it can handle
a large number of cases and determine the optimal number of clusters, three here, as
shown in Table III.
Looking at the results presented in Table III, the first cluster comprises 140
manufacturing SMEs that can be characterized as “internally predisposed” to adopt an
ERP system. In terms of their environmental context, firms in this first group are
Variable Operational definition (source)
Environmental context
Commercial dependence Percentage of sales to the three principal customers (Freel, 2000)
Networking intensity No. of design/R&D, production, marketing, and distribution
partnerships with prime contractors, customers, suppliers,
competitors, research centers, colleges and universities, and other
SMEs (D’Amours et al., 1999; Sohal et al., 1998; Yuan-Chieh, 2003)
Organizational context
Size No. of employees
Administrative intensity No. of managers/No. of employees (Damanpour, 1991)
Type of production Percentage of production in “make-to-order” mode (Mechling
et al., 1995)
Operational capacity Perceived attainment of production objectives having to do with
quality, flexibility, and cost reduction (King and Ramamurthy,
1992)
Innovation capacity Percentage of sales attributable to new or modified products
(Freel, 2000)
Financial capacity Average net margin for the last three years (St Pierre, 1999)
Technological context
CIM systems assimilation Proficiency in the use of CAM, CAD/CAM, FMS, MRP, MRP-II,
ERP (Brandyberry et al., 1999)
Table I.
Operational definition of
the research variables
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495
characterized on average by a higher level of commercial dependence than the other
two groups, and by networking that is significantly less intense than the second group
and relatively similar to the third group. These SMEs distinguish themselves however
by their organizational context, in that they show the greatest operational capacity
among the three groups in terms of production quality, cost reduction, and flexibility.
Note that in the case of flexibility, this difference is significant with the third group
whereas it is not with the second. Similarly, “internally predisposed” firms show the
highest capacity for innovation in terms of designing new or modified products. Again,
this difference is significant with regard to the third group but not with the second.
Finally, these SMEs have assimilated CIM systems to the same extent as the second
group, but to a much higher extent than the third group.
The second group comprises 60 SMEs characterized as “externally predisposed” to
adopt ERP. These firms are on average significantly less dependent on a few major
customers than the second group, but more so than the third group. They show
however a higher propensity for networking than the other two groups, having
established a significantly greater number of design/R&D, marketing, and distribution
partnershipswith business partners. Firms from this group are also of greater size
than the other two, and are more decentralized than the third group with regard to
administrative intensity.
The 156 SMEs that constitute the third cluster are qualified as “unfavourably
disposed” to adopt an ERP system. These are firms whose environmental,
organizational and technological contexts make it less conducive to an ERP
Manufacturing systems Presence (%) Assimilation *
Manufacturing technologies
Computer-aided drafting 61.2 4.0
Computer-aided design (CAD) 40.7 3.9
Programmable automata 37.9 4.0
Numerical control machines (NC) 34.6 4.1
Computer-assisted manufacturing (CAM) * * 33.1 3.8
CAD/CAM * * 27.0 4.0
Robotized operations 21.1 3.9
Flexible manufacturing systems (FMS) * * 19.4 3.4
Automated handling of materials 17.4 4.0
Manufacturing applications
Computer-based inventory management 62.4 3.4
Computer-based production scheduling 34.6 3.3
Computer-based bar-coding 26.1 3.4
Electronic data interchange (EDI) 24.2 3.3
Materials requirements planning (MRP) * * 18.5 2.9
Computer-based maintenance management 16.6 2.6
Manufacturing resource planning (MRP-II) * * 11.8 2.8
Enterprise resource planning (ERP) * * 7.8 3.4
Notes: *Perceived level of proficiency in the technology or application used (low: 1, . . ., 5: high);
* *Selected to determine the level of assimilation of computer-integrated systems
Source: Brandyberry et al. (1999)
Table II.
Degree of presence and
assimilation of CIM
systems
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implementation in the short term. When compared with the other two groups, these
firms have the lowest level of commercial dependence, that is, their customer base is
more diversified, and they are the least networked in terms of marketing, product
design, and R&D partnerships.
Firms in this last group also require less flexibility as a lower proportion of their
production is done in “make-to-order” mode. In line with this environmental context is
the significantly lower operational capacity that characterizes these SMEs in terms of
production quality, cost reduction, and flexibility. Their organizational context is also
characterized by less administrative intensity, that is, less delegation of
decision-making, and a lower capacity for innovation, that is, a lower proportion of
sales attributed to new or modified products. Finally, SMEs qualified as “unfavorably
disposed” to adopt ERP show a much lower level of CIM systems assimilation; these
firms are much less proficient in the use of computer-integrated manufacturing
technologies and applications such as CAD/CAM, FMS, and MRP-II.
Returning to Table III, it is also worth noting that there is no difference in financial
capacity among the three groups. This could be tentatively interpreted as meaning that
the availability of financial resources is much less important than human resources
and competencies in ascertaining a SME’s predisposition. In summary, the “internally
predisposed” SMEs should be strongly inclined to adopt ERP, based on their
commercial dependency, type of production, administrative intensity, strong
operational capacity, strong innovation capacity, and high level of CIM systems
Variables
All SMEs
mean
(n ¼ 356)
Internally
predisposed
mean
(n ¼ 140)
Externally
predisposed
mean
(n ¼ 60)
Unfavorably
disposed
mean
(n ¼ 156) ANOVA F
Environmental context
Commercial dependence 43.1 51.5a 43.0b 35.6b * *
Networking intensity:
design/R&D partnerships 0.9 0.6b 2.5a 0.4b * *
production partnerships 1.1 0.9b 2.7a 0.6b * *
mrkg./distrib. partnerships 1.1 0.7b 3.6a 0.7b * *
Organizational context
Size 59 48b 100a 53b * *
Administrative intensity 13 0.140a 0.150a 0.109b * *
Type of production 26.7 32.1a 33.2a 19.3b *
Operational capacity:
quality 33.2 40.1a 34.0b 26.2c * *
flexibility 30.9 38.2a 36.0a 22.4b * *
cost reduction 23.3 32.4a 25.9b 14.2c * *
Innovation capacity 33.9 45.8a 35.1a 22.7b * *
Financial capacity 0.041 0.043 0.040 0.041 NS
Technological context
CIM systems assimilation 3.1 4.4a 4.4a 1.5b * *
Notes: *p , 0.01; * *p , 0.001; NS – non significant (p ¼ 0:91); Within rows, different subscripts
indicate significant ( p , 0.05) pairwise differences between means on Tamhane’s T2 (post-hoc) test
Table III.
ERP adoption profiles
resulting from cluster
analysis of
manufacturing SMEs
ERP adoption
497
assimilation. The “externally predisposed” manufacturers should also be rather
strongly inclined, based on their networking intensity, type of production, size and
administrative intensity, relatively strong innovation capacity, and strong proficiency
in the use of CIM technologies and applications. Whereas “unfavorably disposed”
SMEs would be disinclined to adopt ERP on the basis of their low level of
administrative intensity, type of production, weak operational capacity, weak
innovation capacity, and low level of CIM systems assimilation.
In synthesizing and grounding the results of this research within the broader
literature on the role of IT and its adoption in contemporary enterprises, one arrives at
certain conclusions. First, the three ERP adoption profiles that were derived here can
be seen as supporting a reconceptualization of the role of ERP within three different
strategic perspectives. First, from complementary resource-based and competitive
strategy perspectives (Rivard et al., 2006), the role of ERP for the
“internally-predisposed” SMEs would be in building their operational capabilities
and IT competence to lower manufacturing costs, increase the quality of
products/services, and be more innovative. A second view on the role of ERP would
be based upon the strategic value of IT as “a platform for agility” (Sambamurthy et al.,
2003). Thus, “externally-predisposed” firms would not only enhance their operational
agility through the greater integration of business processes brought about by
adopting ERP, but would also enhance their networking or partnering agility through
the collaborative platforms and the supply-chain/customer-relationship management
systems made possible by an “extended” ERP (Jaiswal and Kaushik, 2005). Finally, the
third perspective is based on institutional theory, that is, on the competitive and
isomorphic pressures that bear upon manufacturing SMEs in their eventual adoption
of ERP (Benders et al., 2006). For “unfavorably disposed” SMEs, whose manufacturing
processes and practices are fundamentally different from the ones that are assumed by
and embedded within an ERP system, these pressures would be a source of
ERP-organisation misalignments if and when the organization is forced to adapt itself
to the ERP and has neither the organizational nor the technological capacity to do so
(Soh and Sia, 2004).
6. Conclusion
In proposing a profile of manufacturing SMEs’ predisposition to adopt an ERP system,
the present study offers a framework for analysis that can serve ERP vendors and
consultants, as well as SME owner-managers, the first to better target their offer of
products/services, and the second to better position their firm before contemplating the
implementation of an ERP system. To the extent that managers want to increase the
competitiveness of their firms through eventual recourse to ERP systems, the empirical
results obtained in the present study suggest that they could start by closely
examining the current level of assimilation of their firm’s manufacturing systems
within their organizational and environmental context. The identification of the
technologies and applications that are assimilated versus those that are less so or not at
all, on the one hand, and the technologies that are integrated with one another by
opposition to those that are autonomous, on the other, would be essential in
determining to what extent the SME’s manufacturing systems are in phase with its
competitive environment, its strategy, and its resources. This could help answer the
question asked of increasing number of manufacturing SMEs, i.e. whether they are
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ready to implementcomputer-integrated manufacturing technologies and an ERP
system.
With the advent of globalization and the appearance of new forms of organization
based on networks of closely cooperating firms, it seems clear that successfully
implementing ERP systems will take on an increased significance for the survival,
growth, and competitiveness of many SMEs. Given existing empirical knowledge in
this regard, the present study has contributed to a better understanding of the nature,
state, and antecedents of ERP implementation in SMEs. It is known that these SMEs
are highly flexible and adaptable to change, whether they are environmental,
organizational, or technological. Some already have implemented enterprise systems,
and, in today’s global context, they must follow suit by implementing manufacturing
practices such as concurrent engineering, just-in-time, value-added production, and
agile manufacturing to improve their competitive position. Enterprise systems should
not be adopted unless they are in alignment with the competitive environment, the
strategic objectives, and the structure of manufacturing SMEs. For this reason, these
organizations must increase their ability to simultaneously manage production and
information technologies and, in order to do so, they will need continuing support from
researchers and practitioners.
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About the authors
Louis Raymond is Professor of information systems at the Université du Québec à
Trois-Rivières. His research has been published in journals such as the MIS Quarterly,
Journal of Management Information Systems, Journal of Information Technology,
Entrepreneurship Theory and Practice, International Journal of Electronic Commerce,
International Journal of Operations & Production Management, and in international
proceedings such as the International Conference on Information Systems and Frontiers of
Entrepreneurship Research. Louis Raymond is the corresponding author and can be contacted at:
louis.raymond@uqtr.ca
Sylvestre Uwizeyemungu is a doctoral student in information systems at the Université du
Québec à Trois-Rivières.
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