Factors Affecting Adoption of Enterprise Resource Planning Software in Manufacturing Sector in Nairobi Metropolitan Kenya
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Date
2014-03-18
Authors
Nzuki, David Musyimi
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Abstract
The challenges facing the manufacturing sector include low levels of productivity, stiff
competition from cheap imports and counterfeits, and the high cost of production.
Irrespective of the high efficiency levels that are required, most of the firms in the
Kenya's manufacturing sector are still using old and inefficient technology. The
Government of Kenya aims at facilitating efficient productivity through the exploitation
of knowledge in science, technology and innovation. The usage of various automation
hardware and software tools is a sure way of establishing a reliable platform for
enhancing efficiency and effectiveness in different economic sectors. One of such
software tools is the. Enterprise Resource Planning (ERP) software, which is an
organization-wide software that enhances the efficiency through the automation,
integration, and sharing of business processes across the enterprise in a real-time
environment. Additionally, ERP software is commonly chosen because of the need to
focus on customer service, cutting cycle times, reducing idle time, and optimizing the
resources of an organization. The adoption ofERP software is a subject of concern due to
the undesirable situation that is created by factors that constrain its adoption. The purpose
of this study was to examine the extent of ERP adoption and determine the influence of
business complexity, planned organizational change, business environment, and ERP
attributes on, its adoption in Kenya. A cross-sectional descriptive research design was
applied in this study, in which the target population was 417 companies which were
members ofKAM that operated within the Nairobi metropolitan region in the year 2010.
A questionnaire was administered to a sample of 141 corporate members of KAM. The
sample was selected through proportional stratified random sampling technique, as
indicated in the 2009 directory of KAM. Additionally, the interview technique was used
to collect qualitative data from 17 ERP vendor companies that were selected through
snow-ball technique because there was no existing sampling frame for them. The
interview method was meant to complement the questionnaire in capturing qualitative
data. Descriptive and inferential statistical measures were used to analyze the data. Logit
model was used to estimate the relationship between the binary ERP adoption and the
independent variables. A significance level of 0.05 was used in this study. The regression
coefficient of business complexity was found to be significant (B=0.006, t=3.000,
p=O.OII), whereas the regression coefficients of planned organizational change (8=1.293,
t=1.776, p=0.076), business environment (B=0.443, t=0.791, p=0.429), and ERP
attributes (8=2.390, t=1.693, p=0.091) were insignificant and positively related to ERP
adoption. The study recommended that ERP software should be designed to cater for the
business complexity needs of not only the middle and large-sized organizations, but also
the small-sized organizations. The findings of this study are likely to benefit the
academicians, students, KAM, business community, public sector and the government.
Description
Department of Business Administration, 2012