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Investigating the Moderating Role of Environmental Uncertainty between Institutional Pressures and ERP Adoption in Jordanian SMEs

Abdalwali Lutfi ()
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Abdalwali Lutfi: Department of Accounting, College of Business Administration, King Faisal University, Al-Hassa 31982, Saudi Arabia

JOItmC, 2020, vol. 6, issue 3, 1-19

Abstract: Small and Medium Enterprises (SMEs) are struggling to survive in the present competitive environment. Enterprise resource planning (ERP) technologies have great potential to facilitate firms in achieving sustainable competitive advantages and to survive in such situations. However, the adoption of ERP among Jordanian SMEs has been reported as relatively low, which, in turn, does not affect SMEs effectively. Therefore, this study aims to examine the roles of the external forces (mimetic pressure (MP), coercive pressure (CP), and normative pressure (NP)), and Environmental Uncertainty (EU) on the adoption of ERP. Through the use of institutional theory and contingency theory, this study includes the role of EU as a moderating variable in the relationships between institutional factors (MP, CP, and NP) and ERP adoption. Data were collected from small- and medium-sized enterprises operating in Jordan. A total of 741 questionnaires were distributed to the selected SMEs, of which 192 were returned and used for analysis. The empirical data were analyzed using Partial Least Square-Structural Equation Modelling (PLS-SEM). The results show that MP, CP, NP, and EU have significant direct relationships with ERP adoption; however, contrary to our expectations, EU did not moderate the relationships between institutional factors and ERP adoption. These findings provide important insights for managers, researchers, and policy makers, helping them to understand the importance of ERP system adoption in enhancing firm performance. One limitation of this study is that it is based only on SMEs. Therefore, future studies can concentrate on the development of such research not only in SMEs, but also using larger organizations.

Keywords: ERP; environmental uncertainty; institutional theory; contingency theory; SMEs; Jordan (search for similar items in EconPapers)
JEL-codes: M (search for similar items in EconPapers)
Date: 2020
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