Response of Small Enterprises to the Pressures of ERP Adoption

Abstract

Decision to adopt ERP by small enterprises is influenced by external forces due to their dependence on the supply chain. However, certain factors mediate the external forces and alter their influences. This article intends to highlight that the response of small enterprises to the institutional isomorphic pressures in adoption decision of ERP depends on the perception of cost-benefit and the complexity of the organization. A conceptual model was developed and empirically tested by a survey among SMEs of the knitwear garment cluster that has a well developed institutional structure. The mediation effect is tested in SEM software and its significance is verified by bootstrapping. The results show that perceived benefit, challenges and organizational complexity confound the external forces. The study reveals how the small enterprises respond to the external pressures so that stakeholders involved in promotion of ERP can plan a right strategy for encouraging ERP adoption among SMEs.