Factors affecting ERP system adoption: A comparative analysis between SMEs and large companies

Abstract

Purpose Proposes providing an insight about enterprise resource planning (ERP) adoption, highlighting contact points and significant differences between the way small to medium-sized enterprises (SMEs) and large companies approach such a task. Design/methodology/approach The research is based on a wide literature review, focused on the identification of a taxonomy of business and organizational factors influencing ERP adoption. The deriving research model was incorporated in a questionnaire that was preliminarily tested and finally provided to a sample of 366 companies of any size. Responses were collected through personal interviews made by a dedicated team to a top manager. Findings The analysis of the empirical data shows that business complexity, as a composed factor, is a weak predictor of ERP adoption, whereas just company size turns out to be a very good one. In other words, companies seem to be disregarding ERP systems as an answer to their business complexity. Unexpectedly, SMEs disregard financial constraints as the main cause for ERP system non-adoption, suggesting structural and organizational reasons as major ones. This pattern is partially different from what was observed in large organizations where the first reason for not adopting an ERP system is organizational. Moreover, the decision process regarding the adoption of ERP systems within SMEs is still more affected by exogenous reasons or “opportunity of the moment” than business-related factors, contrary to large companies that are more interested in managing process integration and data redundancy/inconsistency through ERP implementation. Research limitations/implications The research model is based on the assumption that business complexity and organizational change are the most relevant variables influencing ERP adoption, and such variables are explained through a set of factors inherently limited by the results of the literature review. Practical implications The results of the empirical research provide indication to SMEs willing to take into consideration the adoption of an ERP system. The same outcomes could be incorporated into the development strategies of ERP software houses. Originality/value This paper contributes to enhancing the understanding of the factors influencing the evolution of information systems within SMEs with respect to large companies. © 2005, Emerald Group Publishing Limited