University of Wollongong Research Online University of Wollongong Thesis Collection 1954-2016 University of Wollongong Thesis Collections 2005 Information technology adoption by companies in Thailand: a study of enterprise resource planning system usage Santipat Arunthari University of Wollongong Recommended Citation Arunthari, Santipat, Information technology adoption by companies in Thailand: a study of enterprise resource planning system usage, PhD thesis, Information Systems, University of Wollongong, 2005. http://ro.uow.edu.au/theses/338 Research Online is the open access institutional repository for the University of Wollongong. For further information contact the UOW Library: research-pubs@uow.edu.au
Information Technology Adoption by Companies in Thailand: A Study of Enterprise Resource Planning System Usage A thesis submitted in fulfilment of the requirements for the award of the degree of DOCTOR OF PHILOSOPHY from UNIVERSITY OF WOLLONGONG by SANTIPAT ARUNTHARI B.E. in Civil Engineering., M.B.A. in MIS and International Business INFORMATION SYSTEMS 2005
CERTIFICATION I, Santipat Arunthari, declare that this thesis, submitted in fulfilment of the requirements for the award of Doctor of Philosophy, in the School of Economics and Information Systems (the Discipline of Information Systems), University of Wollongong, is wholly my own work unless otherwise referenced or acknowledged. The document has not been submitted for qualifications at any other academic institution. Santipat Arunthari March, 2005 Certification ii
ACKNOWLEDGEMENTS Acknowledgements I would like to express my deepest gratitude to my parents, Mr. Sattaya and Mrs. Monthira Arunthari, and my aunt, Miss. Poungsri Pariyavatee. Without their continued love, firm support and constant encouragement, the successful completion of this study could never have been possible. I also want to dedicate my thesis to my grandmother who surely sees my achievement in heaven. I would like to express my appreciation to my principal supervisor Associate Professor Helen Hasan for her invaluable advice and helpful guidance. I am also grateful to Professor Paul Robertson as initially my principal supervisor and as later my cosupervisor for his constructive criticism and invaluable advice. I wish to thank my former supervisor Associate Professor Charles Harvie for his useful advice in the early stage of my research. I am very grateful to Dr. Pajaree Polprasert, who gave me important advice on statistical analysis and interpretation. I also want to thank Asst. Prof. Dr. Prawit Ninsuvannakul for his stimulating discussion. I am indebted to those friends and colleagues in Australia, Thailand, the United States and England, who have been instrumental in willingly assisting me at different stages of my research: particularly Miss. Bejamas Weerapolchai, Miss. Onuma Lertamnueylap, Miss. Onsurang Namsiri, Mr. Sukit Jitwiriyanon, Miss. Piyanath Santhana, Miss. Monthida Karthunyacharoen, and Miss. Sopitta Chotechuang for their generous help during the data collection and documentation, and my fellow Ph.D. buddy Wannapa Suratmethakul for sharing and keeping up motivation. In particular, I wish to express my great appreciation to Miss. Waraporn Chatratichart, who managed to find time to give me assistance in million ways. Thank you for the real friendship and regular support. Miss. Boseung Choi deserves particular mention and special thanks. She believed in me when I did not believed in myself. Her companionship, kindness and warm encouragement are greatly appreciated and acknowledged. I would also like to record heartfelt gratitude to Miss. Warintorn Theerachartphaet for her love, care and tolerance of my distance. I am very appreciate of Alisa Percy and Emily Purser s incredible help. They contributed time to edit the drafts of my thesis, and gave me outsiders perspectives. Last but not least, I must thank all survey respondents and interviewees who participated in this study, although I cannot reveal their names. Santipat Arunthari August, 2005 iii
ABSTRACT Abstract Throughout the world, contemporary business organisations rely heavily for their operations on various software packages. The choice of particular operational systems and software can have a significant influence on a company s competitive advantage. Managerial decisions regarding all aspects of IT (computer hardware, software and human resources) are central to the success of a company, and cannot be made without a good understanding of available software options. By the same token, the success of the software companies designing software solutions for such companies depends on a rich understanding of the very specific needs of contemporary businesses. The more shared understanding between the needs of a specific type of company and the possibilities of software development, the better the outcome for both sides. This study has identified a problematic lack of knowledge regarding how companies identify their system needs and choose appropriate software vendors and products for one of their most significant areas of operation. The primary purpose of this study was to develop a rich picture of the basis upon which Thai-owned and multinational companies in Thailand make major decisions regarding the software underpinning their various business operations, and what they need to know in order to make the most effective decisions. The study aimed to identify issues, factors and problems as critically involved in IT adoption, and reveal any significant factors in the needs of Thai-owned and multinational companies in Thailand. Specifically, the study began by examining typical application software used to serve major business functions. These include accounting, human resources (HR), customer iv
relationship management (CRM) and supply chain management (SCM); internal IT usage such as the Internet and e-mail; IT platforms, resources and policies or strategies; as well as the specific enterprise system known as an Enterprise Resource Planning (ERP) system. From an initial quantitative study it emerged that ERP systems are currently the most significant IT application of concern for both Thai-owned and multinational companies. As this seems an area of major growth opportunity, a further study was conducted, using qualitative methods, to ascertain exactly how the various companies made their decisions on ERP system adoption. Grounded theory was chosen as a method of qualitative data collection and analysis. The study contributes to the literature on ERP system adoption, which is currently under-researched particularly in developing countries such as Thailand. Even in developed countries where most research into ERP systems has taken place, published research mainly focuses on issues related to the implementation phase of the ERP lifecycle. The study provides insights into adopters attitudes, decisions, implementation and usage of an ERP system. It is believed that attitude and behavioural intention towards ERP system adoption are correlated. The study contributes to attitudebehaviour relationship theory, refining in particular the Theory of Reasoned Action (TRA). Furthermore, not only does this research contribute to the academic literature on this topic but it should be of value to practitioners in large organisations, government agencies and IT vendors at large, but also particularly to those who have business in Thailand or other Asian or developing countries. v
PUBLICATION FROM THE RESEARCH Publication from the research 1. Arunthari, S., & Hasan, H. (2005). Attitudes of IT managers and end-users towards ERP systems: Findings of a study in Thailand. The Ninth Pacific Asia Conference on Information Systems (PACIS 2005). 2. Arunthari, S., & Hasan, H. (2005). ERP system adoption and vendor selection by locally-owned and multinational companies in Thailand. The Ninth Pacific Asia Conference on Information Systems (PACIS 2005). 3. Arunthari, S., & Hasan, H. (2005). ERP System Adoption and Vendor Selection: A Grounded Theory Study of Companies in Thailand. EMT 05 Conference. 4. Arunthari, S., & Hasan, H. (2005). Beliefs and Attitudes Associated with ERP Adoption Behaviours: A Grounded Theory Study from the IT Manager and End- User Perspectives. ISD 2005 Conference. vi
TABLE OF CONTENT Certification...ii Acknowledgements...iii Abstract...iv Publication from the research...vi List of Tables...xi List of Figures...xii Chapter 1...1 Introduction 1.0 Introduction...1 1.1 Background and Statement of the Problem...1 1.2 Purposes and Aims of the Study...5 1.3 Significance of the Study...7 1.4 Organisation of the Thesis...8 Chapter 2...11 Research Design 2.0 Introduction...11 2.1 The Research Design Process...12 2.2 Underlying Philosophical Assumptions or Research Paradigms...14 2.2.1 The Positivist Paradigm...15 2.2.2 The Interpretive Paradigm...16 2.2.3 The Critical Paradigm...16 2.3 Selection and Justification of the Research Paradigm in the Study...17 2.4 Research Approaches...17 2.5 The Quantitative Approach...19 2.6 The Qualitative Approach...22 2.6.1 Acceptance of Qualitative Approach within the IS Field...24 2.6.2 Qualitative Methodologies...26 2.7 Comparing Research Approaches...37 2.8 Selection and Justification of the Approaches, Methodologies and Methods in the Study...39 2.8.1 Phase I (Quantitative): a Postal Survey...44 2.8.2 Phase II (Qualitative): Interviews, Observations, and Secondary Sources...45 2.8.3 Why Grounded Theory?...47 2.9 Summary...49 Chapter 3...50 The Design of the Quantitative Data Collection (Phase One) 3.0 Introduction...50 vii
3.1 Purpose of Study...50 3.2 Sampling Design...51 3.3 Research Design...52 3.3.1 Instrument...53 3.3.2 Questionnaire Design...53 3.3.3 Pre-testing...54 3.3.4 Administering Questionnaires...55 3.4 Summary...56 Chapter 4...57 Results, Findings and Discussions of Survey 4.0 Introduction...57 4.1 Response Rate...57 4.2 Data Analysis Procedures...58 4.3 Profile of Respondent Companies...59 4.3.1 Description...59 4.3.2 Interpretation...60 4.4 IT Capabilities and Resources...60 4.4.1 Description...60 4.4.2 Interpretation...61 4.5 IT Strategies...62 4.5.1 Description...62 4.5.2 Interpretation...62 4.6 Usage of Specific Information Technologies...63 4.6.1 Accounting Software...63 4.6.2 Human Resource (HR) software...65 4.6.3 Enterprise Resource Planning (ERP) System...67 4.6.4 Customer Relationship Management (CRM) Software...69 4.6.5 Supply Chain Management (SCM) Software...70 4.6.6 The Internet...73 4.6.7 Electronic Mail (E-mail)...75 4.7 Discussion and Summary of all Application Software...76 4.8 Implication for Phase Two of the Research...78 4.9 Summary...81 Chapter 5...82 The Design of the Qualitative Data Collection (Phase Two) 5.0 Introduction...82 5.1 Purpose of Study...82 5.2 Research Design...83 5.2.1 Total Quality Management (TQM)...84 5.2.2 The Techniques of Gathering VOC...88 5.2.3 Grounded theory...91 5.3 Data Collection Methods...93 viii
5.3.1 Method 1: Interviews...94 5.3.2 Method 2: Observations...108 5.3.3 Method 3: Documents...109 5.4 Summary...110 Chapter 6...111 Literature Review of ERP System 6.0 Introduction...111 6.1 Overview of ERP...112 6.1.1 ERP Concept...112 6.1.2 Evolution of ERP...114 6.2 Adoption and Implementation Processes...120 6.2.1 Process Models of ERP System Implementation...121 6.2.2 ERP System Implementation Strategies...122 6.3 Success and Failure...123 6.3.1 Reasons Why ERP System Implementations Fail...124 6.3.2 Reasons Why ERP System Implementations Succeed...129 6.4 Summary...133 Chapter 7...135 Data Analysis in Phase Two 7.0 Introduction...135 7.1 Data Analysis Procedures...135 7.1.1 Transcription...137 7.1.2 Open Coding...138 7.1.3 Writing Memos...143 7.1.4 Selective Coding...143 7.1.5 Theoretical Coding...145 7.2 Trustworthiness of the Data...147 7.3 Summary...149 Chapter 8...150 Interpretation and Analysis of Qualitative Data 8.0 Introduction...150 8.1 Findings...151 8.2 Area 1: Images of an ERP system: Expectations and Attitudes...153 8.2.1 Attitude-Behaviour Relationship...155 8.2.2 Positive Images...159 8.2.3 The Expected Tangible Benefits...160 8.2.4 The Expected Intangible Benefits...162 8.2.5 Negative Images...169 8.3 Sub-area: ERP Images Limited to those with an ERP system...177 ix
8.4 Area 2: Reasons for Acquiring an ERP System...180 8.4.1 Thai-owned companies...180 8.4.2 MNCs...186 8.5 Area 3: Selection Criteria for an ERP System Vendor...191 8.5.1 Thai-owned Companies...191 8.5.2 MNCs...195 8.6 Reasons for not Acquiring an ERP System...202 8.6.1 Thai-owned Companies...203 8.7 Summary...211 Chapter 9...217 Discussion, Conclusions and Implications 9.0 Introduction...217 9.1 Phase One of the Research...218 9.1.1 Usage of Specific Information Technologies...219 9.2 Phase Two of the Research...220 9.2.1 Images of ERP systems...221 9.2.2 ERP Images Limited to those with an ERP system...224 9.2.3 IT Adoption and Selection Criteria for an IT Vendor: the Case of an ERP System...224 Note: Company-wide control causes and reasons for selecting an ERP system vendor....226 9.3 Academic Contribution...227 9.4 Implications for Practice...227 9.5 Limitations and Suggestions for Future Research...230 9.5.1 The Quantitative Study...230 9.5.2 The Qualitative Study...231 List of References...232 APPENDIX A...285 APPENDIX B...288 APPENDIX C...308 APPENDIX D...330 APPENDIX E...332 APPENDIX F...333 APPENDIX G...334 x
LIST OF TABLES List of Tables Table 2.1. The Assumptions of Quantitative and Qualitative Paradigms...18 Table 2.2. The Differences between Quantitative and Qualitative Approaches...38 Table 5.1. The Glossary of Terms...88 Table 5.2. Jiro Kawakita s 5 Principles...89 Table 5.3. Four Basic Qualitative Methods for Data Collection...94 Table 5.4. Four Open-Ended Questions...100 Table 5.5. The Sample Groups...104 Table 6.1. The Characteristics of Companies that Implement ERP and MRPII Successfully...116 Table 6.2. Modules Offered by Leading Vendors...118 Table 6.3. The Evolution of ERP Systems...119 Table 6.4. The Phases or Stages of the ERP System Implementation Process...122 Table 6.5. Unified Critical Success Factors Model...132 Table 8.1. Emergent Categories...215 xi
LIST OF FIGURES List of Figures Figure 1.1. Organisation of the Thesis... 10 Figure 2.1. The Research Design Process... 13 Figure 2.2. Approaches Taken in Data Collection, Analysis and Interpretation... 43 Figure 5.1. The Affinity Process... 90 Figure 5.2. The Process of Sampling... 103 Figure 5.3. Diminishing Returns from Customer Visitation... 105 Figure 7.1. A Model of the Non-linear and Iterative Processes of a Grounded theory Method... 136 Figure 7.2. A Concept-indicator Model... 140 Figure 7.3. Sample of Transcript Excerpt... 142 Figure 7.4. Sample of Open Coding... 142 Figure 8.1. A Flowchart of the Technology Acceptance Model (TAM)... 157 Figure 8.2. A Flowchart of the Theory of Reasoned Action (TRA)... 157 Figure 8.3. A Representation of Images of ERP Systems Detected in the Qualitative Study... 159 Figure 8.4. Business Functions vs. Business Processes... 166 Figure 8.5. Models of IT-assisted and Automated Customer Interactions... 179 Figure 8.6. One Type of ERP Configuration... 197 Figure 8.7. Another Type of ERP Configuration... 201 Figure 9.1. A Model of Images of ERP Systems... 223 Figure 9.3. The Reasons of Thai-owned Companies for Adopting an ERP System and Selecting an ERP System Vendor... 226 Figure 9.4. The Reasons of MNCs for Adopting an ERP System and Selecting an ERP System Vendor... 226 xii