The Impact of Organizational Commitment on Upgrading ERP for Maintaining the Quality of Information and the ERP Performance

Abstract

This study examines the impact of organizational commitment on upgrading ERP for maintaining the quality of information and the performance. Many manufacturing companies in East Java have been implementing ERP in managing their business. Although the ERP postimplementation has been continuously maintained by these companies, the inevitable changes and development in the current business practices have forced them to upgrade their ERP infrastructure. All ERP system upgrades require a commitment from both management and employees, which is also known as the organizational commitment. This research used the population of 110 manufacturing companies in the region of East Java which have been implementing ERP for more than two years. The response rate is quite good, as many as 90 questionnaires out of 110 distributed questionnaires are completed by the respondents. Data analysis has been performed using partial least square (PLS) technique. The result demonstrated that the organizational commitment brings a significant impact to the ERP infrastructure upgrade. While the organization commitment shows a significant impact on the information quality. The organization commitment does not show a direct impact towards the ERP performance. Similarly, the ERP infrastructure upgrade also shows a significant impact on the information quality. The ERP infrastructure upgrade does not show a direct impact on the ERP performance. The information quality contributes a positive impact on the ERP performance. In total the organizational commitment affects directly and indirectly the ERP performance. The management commitment empowers the key user to be aware of the ERP system upgrading all the time. By keeping the ERP to the most up-to-date condition will contribute to the high quality of the information. Furtherly, the best information quality provides the appropriate information in term of the right time and the right information in the decision making process. The appropriate information enables the top management to decide in the pursuit of improving the company performance.