ERP Implementation Among Manufacturing Based SMEs and MNCs: A Malaysian Case Study

Abstract

Given the significant impact of implementing enterprise resource planning (ERP), many small and medium sized enterprise (SMEs)have started adopting the ERP system for their manufacturing processes. This paper aimed at making a comparative analysis on enterprise resource planning (ERP) system implementation among manufacturing based multinational corporations (MNCs) operating in Malaysia and small and medium sized enterprises (SMEs). The partial least squares (PLS) modeling technique was used to assess the cause- effect associations between technological, organization and environmental (TOE) factors and successful ERP adoption in these two manufacturing sectors. The empirical result suggests that the causal relationship between technological factor and successful ERP adoption is statistically significant for SMEs. This implies that successful ERP system adoption in the sample SMEs seem to be facilitated by the existence of adequate technological and environmental factors exclusively. The findings show that Malaysian government has been very supportive in equipping SMEs with ERP system. The analysis further revealed significant associations between organizational and environmental factors with successful ERP adoption for MNCs. This suggest that MNSc with distinctive size and operational complexity leverages extensively on their organizational and environmental factors to experience successful ERP adoption as opposed to smaller sized SMEs. Based on the empirical findings, several theoretical and practical implications are highlighted in this study.