ERP Misfit: Country of Origin and

Organizational Factors
ERIC T.G. WANG, GARY KLEIN, AND JAMES J. JIANG
T.G. WANG is Dean and Professor of the School of Management at National
Central University, Taiwan (R.O.C.). He received his Ph.D. in Business Administration, specializing in Computer and Information Systems, from the William E. Simon
Graduate School of Business Administration, University of Rochester. His research
interests include electronic commerce, supply chain management, outsourcing, organizational economics, and organizational impact of information technology. His research has appeared in Information Systetns Research. Management Science, Decision
Support Systeni.s, Information & Matiagement, European Journal of Information Systems, Information Systems Joumal. Omega, European Journal of Operational Research, International Journal of Information Management, International Journal of
Project Management, and others.
ERIC

GARY KLEIN is the Couger Professor of Information Systems at the University of

Colorado in Colorado Springs. He obtained his Ph.D. in Management Science from
Purdue University. Before that time, he served with the company now known as
Accenture in Kansas City and was director of the Information Systems Department
for a regional Fmancial institution. His research interests include project management, technology transfer, and mathematical modeling, with over 100 academic publications in these areas. He teaches programming, project management, statistics,
management science, and knowledge management courses. In addition to being an
active participant in international conferences, he has made professional presentations on Decision Suppon Systems in the United States and Japan, where he once
served as a Guest Professor to Kwansei Gakuin University. He is an active member of
the Institute of Electrical and Electronic Engineers, Association for Computing Machinery, Decision Science Institute, INFORMS, American Society for the Advancement of Project Management, and Project Management Institute.
JAMES JIANG is Professor of Management Information Systems at the University of
Central Florida. He is also the honorary Jin-Ding Professor at the National Central
University in Taiwan. He was a Visiting Research Professor in Tshing-Hwa University, National Taiwan University, and City University of Hong Kong. He obtained his
M.S. in Applied Mathematics, Computer Sciences, and Management Sciences. His
Ph.D. in Information Systems was granted by the University of Cincinnati. His research interests include IS project managemeni, IS human resources management,
and IS service quality management. He has published over 100 academic articles in
these areas in journals such as Journal of Management Information Systetns, Decision Sciences, Commtmications of the ACM, IEEE Transactions on Systems, Man,
and Cybernetics, IEEE Transactions on Engineering Management, IEEE Transactions on Professional Communication, Journal of the AIS, and MIS Quarterly. He
teaches programming, project management, and software engineering courses.

Journal oj Management Information Systems / hammer 2Vf.)b.\i.i\. 2.1. Nn. I. pp. 263-292.
2t)06 M.E. Sharpe, \nc.
0742-1222 / 2006 $9.5U + 0.(10.

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WANG, KLEIN. AND JIANG

ABSTRACT: There are many benefits of enterprise resource planning (ERP) systems,
but their implementation is both complicated and ditTicult because the product spans
functional silos and involves many internal and external entities. An ERP system is
the outcome of social processes, and ditferent ERP systems can embody distinct social arrangements when developed in different cuUural contexts. Such social arrangements are difficult to change due the closure effect of technology stabilization. This
leads to various misfit problems, both during and after ERP implementation, causing
adverse effects on delivered ERP quality. With a survey of S.'S ERP implementation
cases in Taiwan, this study derives and empirically tests the main as well as the interaction effects of the country of origin of the ERP package, consultant quality, top
managetTient support, and user support of the ERP system quality as perceived by the
client after implementation. The results demonstrate the important role of the country
of origin of the ERP package and consultant quality in conflgtiring a high-quality
ERP system and alleviating the negative effect of misfit problems.
KEY WORDS AND PHRASES: consultant quality, country of origin, enterprise resource
planning (ERP), implementation, misfit, social shaping.

(ERP) systems continually attract companies that

hope to realize the old managerial dream of integrating all the information systems
(IS) into one single system 111. While an ERP system holds much promise forrevitali/^ing information technology (IT) infrastructures and enabling business process integration, difficulties in implementation lead to significant numbers of ERPs being late
or over budget \53. 79|. In addition, evidence is accumulating to show that many
implementing firms failed to achieve the promised benefits |82, 86). Cases abound
where firms abandon implementation and even claim ERPs to be contributors to financial disaster [37.52]. Consequently, adopting an ERP system has been considered
a make-or-break decision, requiring a careful exercise of concerted efforts, from internal staff and external experts. Given the difficulty of ERP implementation and its
fundamental difference from traditional systems development and use [21, 571, understanding the factors that influence the extent to which an ERP package can be
implemented to satisfy the adopter's requirements is both practically important and
theoretically significant.
ENTERPRISE RESOURCE PLANNING

Successful implementation of an ERP system requires a strategic fit between the

product and the organization [88|. Barriers to accomplishing this are high, however,
involving a large network of internal and extemal stakeholders applying untried technology and forcing best-practice models that may not be a good match to the organization [26, 47, 76, 80], These issues of misfit can be particularly pronounced in Asia
when firms adopt a Western ERP system and business practices have been shaped by
one culture while the imposed solution has been shaped by another [16. 54. 58, 76].
Such barriers can be problematic in the deployment of complex technology [25]. Consequently. ERP systems are not universal, and their "country of origin" may imply
principles of managing data and processes as many administrative heritages are tia-

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265

tionally bounded [I I]. Thus, an assumption of universal best practices for information
management by ERP vendors is questionable, and may be a prime cause of misfit.
Although research on ERP implementation has become one of the hottest areas in
the management infonnation systems (MIS) tield. broad-based empirical research in
this area has been lacking [24. 77]. We empirically address the misfit issue by adopting the social shaping of techtiology (SST) perspective 116. 84] within the larger
context of technology deployment [25]. This study, involving 85 Taiwane.se manufacturing finiis. contributes to the literature by demonstrating the significant, persistent adverse effect of an ERP package's initial misfit on the delivered system quality
after implementation and showing that the country of origin of an ERP package and
the quality of ERP implementation consultants are important in influencing the ERP
system quality perceived by the client.

Conceptual Framework
has always faced barriers |25].
Such barriers can arise from behavioral and procedural concerns and be addressed by
looking at the adaptability of the technology. Tbey reside at the individual, organizational, and cultural levels. Each step in the deployment process requires an analysis to
determine what factors will promote effective deployment |4. 46|. To overcome any
barriers, the process of implementation must be cracked open to better understand the
nature of the "black box" of technology transfer. In this study, we utilize an SST
perspective to better understand the barriers that exist in ERP implementation across
cultures and examine established principles of organizational commitment to determine their ability to overcome these barriers.
THE DEPLOYMENT OF ANY COMPLEX TECHNOLOGY

The Social Shaping of Technology Perspective

Theoretically, this study is based on the SST perspective, in which the historical,
culttiral.andpoliticalelementsplay .significant roles in shaping the design and implementation of technology [ 16. 84]. From the SST perspective, the design of technology is seen as the outcome of social processes of negotiation between complicated,
heterogeneous networks of diverse stakeholders who have different commitments,
perspectives, or positions in tbe structure 116|. This perspective insists that the "black
box" of technology must be opened to allow examination of the socioeconomic patterns embedded in both the content of technology (models in ERP systems) and the
processes of implementation [84]. A characteristic of ERP packages is that the processes of development and use are accomplished in different organizations. Thus,
actions that constitute a system are often separated in time and space from the actions
that are constituted by the system, with the former occurring in the vendor organization and the latter occurring in the user organization |6I ]. This separation is a likely
indicator of potential misfit. A conceptual framework for the remainder of this discussion on SST is shown in Figure I. which shows the deployment of the ERP from
lefl to right and the implementation from top to bottom.

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WANG. KLEIN, AND JIANG

Perceived Initial Misfit with a Vanilla System

Country Level

Organizational Level

Individual Level

(Company-Specific)

Origin of ERP
System
{Select a socially
shaped closure)

Consultant Quality
(Reverse the design choices
to arrive at a new closure)

Top Management Support

User Support

External
Facilitators
Internal
Facilitators

{Form a new closure reflecting

local contingencies)

Perceived ERP System Quality Delivered After Implementation

Figure I. Conceptual Framework

ERP Implemetiialioti from the SST Perspective

From the SST perspective, any ERP system, or aversion of it, is the outcome of social
processes in one particular cultural context, the origin of the system, as shown in
Figure 1. Embodied within any ERP system is a set of practices, assumptions, values,
and rules, reflecting the requirements of this social context and the vendor's choices
at the design stage. After the design stage, the architecture and functionality of the
ERP system becomes stabilized, achieving certain level of closure for changes. Thus,
although the SST perspective does not indicate exactly what social factors are relevant for the analysis of ERP development and implementation, it nevertheless points
out the critical concepts of "choices" and "closure" for such effort. Choices are inherent in both the design of ERP systems and the direction or trajectory of innovation
programs, whereas closure is the way in which innovation may become stabilized,
hindering the possibility of reversing the choices at earlier stages of system development [84]. The choices concerning features of an ERF system span a range of occasions and spaces, reflecting a historical process where stabilized segments of the ERP
are developed [16, 67].
Consequently, selecting a particular ERP package is the acceptance of the set of
stabilized social elements embedded in the system, which reflects a business culture's
beliefs about "how things ought to be done." Customizing the package is an attempt
to reverse the vendor's choices, leading to a new closure that embodies a different set
of beliefs about how things ought to be done in the user environment. Given that
different ERP systems can embody quite distinct sets of social elements, especially
when they were developed in different cultures, the first major choice facing an adopt-

ERP MISFIT

267

ing firm is the selectioti of an ERP package, or a closure, that fits well with its local
needs, as shown in Figure 1. However, the separation of design and implementation
in time and spaee makes the misfit problem inevitable. While all ERP adopters will
face such a problem, the problem may be more pronounced when firms in one social
context adopt an ERP system developed in another social context [54, 58, 76].
Three main sources of misfit related to ERP systems have been identifiedcompanyspecific, industry-sector-specific, and country-specific [76]. Country-specific will be
examined directly in this study. At the organizational and individual levels, we will
focus on the two main parties who interactively shape the final form of the ERP
systemu.sers and consultants. Users are the main source of local business knowledge, whereas consultants are a tnajor external source of information and technical
skills [37, 68], As is often promoted in the field, top management should also play a
primary role in providing a conducive environment for effective implementation [73.
911. Thus, except for the country of origin of ERP packages, people factors during the
implementation process are the focus of the analysis. This approach is reasonable
because ERP implementation involves people more than technology [9] and is consistent with the SST perspective. Consequently, as shown in boldface in Figure 1, five
antecedent constructs were pinpointed to analyze their effects on the ERP system
quality perceived by clients after implementation.

Research Model
Perceived ERP System Quality
IS SUCCESS IS PROBABLY ONE OF THE MOST FUNDAMENTAL a n d extensively Studied

topics inMIS.However, the definition and measurement of IS success remain a thorny

matter 157J, especially for ERP systems that take a long time to implement and even
longer to show their effects [37,71], Quality is based on two .sourcesbehaviors and
uses [23]. A behavior is something that the software exhibits when it executes a given
set of inputs. A use is what is done with or to the system. Clients are more interested
in behaviors, such that the system is accurate, secure, reliable, functional, efficient,
and adapts to new business requirements. This client-based view is not uncommon
and is seen as a crucial measure of system success [42, 87]. Considering ERP system
quality after implementation as perceived by the client to be the target of success, the
research model of this study is depicted in Figure 2.

Effect of Perceived Initial Misfit

Unlike tailor-made applications, the mass production of ERP software separates the
critical occasions of design and implementation in time and space. For packaged software such as an ERP, the social choices made at the design stage have inevitably achieved
a certain level of closure and, thus, have heavy influences on the shaping of the system
at the implementation stage [16]. All ERP systems emphasize embedded best practices, which provide generic industry solutions containing a set of event-driven

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WANG. KLEIN. AND JIANG

External
Facilitators

Internal
Facilitators
H4a

Consultant
Quality
Perceived
Initial
Misfit

H4b

H5b

H3b

H6b

Country of
Origin of
ERP System

User
Support

HI

H2

Top
Management
Support

H5a
Perceived
ERP System
Quality
H6a

H3a

Figure 2. Research Model

processes, and are not easy to change, due to the high interconnectivity of the pro*
cesses. Because all fnms have their own specific business cultures, such generic solutions typically can only partially meet the business processes and software functionality
specific to the needs ol the firms.
ERP systems can also be characterized as configuration technology |28. 841. which
conducts a wide range of business activities and can rarely be obtained in the form of
standard solutions. Adopting an ERP system requires customizing certain solutions it
offers to Fit the fimi's specific markets, structure, and operational requirements |84].
Because of the scale and integrative nature of an ERP. the eftbtt required for a client
to tit an ERP system's reference model and functionality by adjusting practices can
be extensive, making the reengineering task difficult and costly, and a prime candidate to encounter strong organizational resistance. Given the various constraints imposed on those implementation alternatives. ERP implementation is usually
characterized by "an apparent absence of choice" [84, p. 871, emphasis in original].
This study therefore holds that the extent of initial misfit of an ERP system has a
lasting, adverse effect on the perceived quality of the system delivered.
Hypothesis I: The e.xtent of perceived initial tnisfit between a "vanilla" ERP
package and the client's requiretnents is negatively related to perceived ERP
system quality delivered after impletnentation.

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269

External Facilitators
Effect of the Country of Origin of an ERP Package
From the SST perspective, the very structure and architecture of contemporary IT is
itself a product of historical processes of social and economic shaping [16, 84|. As
complex business applications, ERP systems are gradually shaped through a cyclic
process of revision within a particular social context. Over time, a locally developed
system should be able to provide functionality that is more consistent with local requirements. Global ERP vendors, striving for generic solutions and lacking development capability locally, have less incentive and ability to incorporate in Iheir systems
the new features required by the local firms in a particular country. This phenomenon
has been characterized as "the liability of foreignness" in the literature of multinational enterprises, arising from foreign firms* higher coordination costs, unfamiliarity
with the local culture and market, lack of information networks, and inability to appeal to nationalistic buyers [78, 89, 90].
Moreover, the packages offered by global ERP vendors reflect European or U.S.
industry practices [76|. Although Western, especially U.S., management philosophies
and practices have affectedthus, shapedbusiness practices in Taiwan (and many
other Asian countries), many unique practices nonetheless remain [54, 58]. Those
Western practices usually require formalized information, operating, and decision
procedures. These procedures are frequently incompatible with more varied practices
that require the operational flexibility and responsiveness, ad hoc data collection, and
unique planning processes of many Taiwanese firms. In contrast, the local systems
have been gradually tailored to the local context, enabling them to match better with
local contingencies than their foreign counterparts.
Hypothesis 2: There is a lower perceived initial misfit when adopting a local
ERP package than when adopting a foreign ERP package.
In addition to initial misfit, adopting a foreign ERP system may also result in lower
system quality even after implementation. The practices embedded in ERP packages
are culture-laden, making foreign systems more difficult to be understood by local
professionals, as people in different nations can have quite distinct beliefs and norms
about "how things ought to be done" and "how things ought to be" 111, p. 682]. With
years of experience in dealing with local issues, the local vendors should be able to
provide packages that can more easily be configured to satisfy local needs, through a
range of alternatives more suitable for local cultural, business, and regulatory requirements. Thus, firms adopting a foreign package might find the models and processes of the system difficult to comprehend. This would add an extra burden when
they attempt to configure or customize a foreign package.
Moreover, to compete with those global vendors that have strong brand names,
local vendors usually follow a strategy of customization [16] to better satisfy their
clients' varied needs, thus opening up their systems for more detailed shaping in user
organizations. Thus, in addition to the main effect of the country of origin of the ERP
package, this study further maintains that the advantages of choosing a local package

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WANG, KLEIN, AND JTANG

are even more significant as the misfit problem becomes more extensive. Consequently,
it is hypothesized that not only does adopting a local ERP package on average tend to
result in higher system quality perceived by the client but also such beneficial effect is
higher than when adopting a foreign package.
Hypothesis 3a: There is a higher perceived ERP system quality when adopting a
local ERP package than when adopting a foreign ERP package.
Hypothesis 3b: The negative relation.ship between perceived initial misfit and
perceived ERP system quality tends to be weaker when the ERP package is local
than when the ERP package is foreign.
Effect of Consultant Quality
Because of the complexity of ERP systems, few firms by themselves have a sufficient
in-house skill and knowledge base to implement one. The technology and business
knowledge relevant to ERP implementation is dispersed and differentiated and needs
to be effectively articulated, gathered, and shared during implementation [62]. The
technological know-how and its implementation are tacit and not easily articulated or
transferred [69]. Thus, the service quality provided hy consultants is critical in lowering the client's knowledge barriers for ERP implementation. A competent consultant
integrates additional skills and perspectives, along with "a genuine desire to help and
serve the interests of the client and can see the client's world through the client's
eyes" |60. p. 396|. High-quality consultants can facilitate communication and mutual
understanding and increase accuracy as well as timeliness of the consulting activities
in the implementation process [72]. Quality consultants also know their limits and act
in accordance with their capabilities. Reasonable compromises, agreements, or shared
understandings can be more easily developed, thus enhancing the effectiveness of
communication and conflict resolution between the client and consultants. Consequently, not only will high-quality consultants have a positive effect on ERP systetn
quality but they will also be able to provide valuable service to alleviate the misfit
problem to a greater extent.
Hypothesis 4a: ERP consultant quality is positively related to perceived ERP
system quality delivered after impietnentation.
Hypothesis 4b: The higher the ERP consultant quality, the weaker the negative
relationship between perceived initial misfit and perceived ERP system quality
delivered.

Internal Facilitators
Effect of Top Management Support
Top management support has been considered one of the most important institutional
factors that influence technology adoption in organizations [2, 73, 91]. Specifically,

ERP MISFIT

271

the critical role of top management support in successful ERP implementation is

widely emphasized [49, 85]. This is due to the aggressive nature of ERPs in that they
are considered to be major investments and have a large potential to impact organizational culture. ERP investments are. in many ways, similar to investments in physical
facilities, but there are also strong elements of organization development and social
change, often producing corporate-wide effects that contradict existing organizational
value, culture, and practices [ 16, 84). Organizational culture constitutes the forces of
organizational stability. Traditional ways of operation often constrain sense making
and create cognitive resistance to change. Changing people is the key to changing the
culture, a task in which the leadership of top management is crucial [33J.
Although formal, hierarchical authority may not be automatically translated into
actual power [36], top management, nevertheless, has the greatest capacity and social
status in intiuencing the behavior of other members and in resource allocation in
organizations. With strong support from top management, necessary resources ean be
mobilized and the project put on top priority by altering the political agenda. Top
priority encourages the entire company to focus on the ERP Implementation and
motivates users to learn the new system and truly participate in the project. Senior
executive involvement can also help define the goals of the system clearly, frame the
required changes properly, and push for resolution of disputes [20.34]. Consequently,
misfits between system functionality and user requirements can be more clearly identified and articulated, and thereby effectively resolved duting the implementation. As
such, a new stable system, or a new closure, can be constructed to better suit the
client's local contingencies. Therefore, this study holds that top management support
will not only have a positive influence on ERP implementation but is also valuable in
alleviating the negative effect of initial misfit on ERP system quality delivered.
Hypothesis 5a: Top management support for the ERF system is positively related
to perceived ERP system quality delivered after implementation.
Hypothesis 5b: The greater the top management support for the ERP system, the
weaker the tiegative relationship between perceived initial misftt and perceived
ERP system quality.
Effect of User Support
User support includes both positive attitudes toward the system and willingness to
participate in the implementation as well as accept the change brought about by the
system. Although user support is not a panacea, especially when implementing packaged software, it nonetheless is important in eliciting user commitment and enabling
new business procedures for system fine-tuning and customization [27]. Unlike inhouse IS development projects, user participation occurs long after the system desigti
phase for packaged ERP systems. As a result, users* ability to influence the design,
functionality, and look and fee! of an ERP system, and the range of process models to
be implemented, is limited. However, ERP systems are still open to redefmition and
renegotiation in the implementation process of technical exploration and articulation

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WANG. KLEIN, AND JIANG

[84]. Without the willingness to cooperate, change, and learn, users are unlikely to
share their functional expertise with each other and wiih consultants and thereby
absorb sufficient system knowledge and skills |60, 80]. From the SST perspective,
this choice amounts to acceptance of the cultural elements embedded in the system or
customization of the system to 111 the client's local contingencies. As a result, this
study holds that user support will not only have a positive effect on implementing a
higher-quality ERP syslem but is also valuable in mitigating the negative effect of
initial misfit during implementation.
Hypothesis 6a: User support for the ERP system is positively related to perceived ERP system quality delivered after implementation.
Hypothesis 6b: The greater the user support for the ERP system, the weaker the
negative relationship between perceived initial misfit and perceived ERP system
quality.

Research Methodology
Sample and Data Collection
that were most likely to have implemented an ERP system, the sample was drawn from the CommonWealih directory of
the 500 largest manufacturing firms in Taiwan 117]. ERP project leaders were chosen
as the key informants because, according to our interviews with many ERP practitioners, they are the individuals most knowledgeable about every aspect of the ERF
project in their company.
The questionnaire was constructed based largely on existing measures that were
identified as suitable for this study, once properly adapted to the ERP implementation
context. An English version of the questionnaire was first compiled and modified to
suit the context of ERP implementation and then translated into Chinese by a bilingual research associate. The Chinese version of the questionnaire was verified and
refined for its translation accuracy by one MIS professor and two senior doctoral
students who were familiar with and had done extensive research on ERP systems.
The draft questionnaire was pretested for face and content validity with two IS executives who have led their company's ERP project and two consultants who have extensive experiences in ERP implementation consultation of both local and foreign ERP
packages. This procedure resulted in some modifications of the wording of several
survey items and dropping two dimensions (out of seven) from the consultant quality
scale, as detailed later in this section.
IN AN ATTEMPT TO INCLUDE ONLY THOSE FIRMS

The identification of the ERP project leaders was through the help of the firms'
chief operating officer (COO). Each COO was sent a letter of solicitation, which
included a brief description of the study and its purpose and a copy of the questionnaire to be completed by the ERP project leader. The confidentiality of the responses
was assured. A follow-up was conducted two weeks after the first mailing, ln total, 85

ERP MtSFIT

273

questionnaires were received and usable for analysis, yielding a 17 percent response
rate, which is typical for similar surveys conducted in Taiwan.
Table t shows that about half of the respondents are smaller firms with total assets
less than NT$2 billion and fewer than 500 employees. ERP systems such as SAP/R3
might be too expensive for those smaller firms, but local ERP systems in Taiwan
usually offer sufficient funcfionality at much lower prices. In fact, 54 out of 85 firms
(63.5 percent) chose a local package, with a majority of them choosing the package
offered by the biggest Taiwanese ERP vendor. Data Systems. The package offered by
Oracle was the most frequently adopted foreign system.
Because the subjects were all manufacturing firms, we checked if there was nonresponse bias in terms of firm si/e. We first compared the responding and nonresponding firms in terms of company assets, number of employees, and annual sales.
No significant differences between the two groups were found based on independent
sample Mests {p > 0.05). The respondents were then divided into two groups based
on the dates of return [3|. The comparisons on the three size measures between the
two groups again showed no significant differences. Accordingly, there were no apparent problems that might skew responses f5].

Measures
Except for the country of origin of the ERP package, the other five constructs were
measured with a mu]ti-item scale, as shown in Table 2.
Perceived ERP System Quality
Eor ERP implementations, organizational impact can occur long after implementation, but users (clients) of the system have more immediate impressions |37]. Thus,
tJiis study focuses on perceived ERP behavioral quality, which includes consideration
for both performance and information |221. Such a quality dimension is fundamental
for assessing the outcomes of ERP implementation and can avoid the problem of
performance lag. More specifically, functionality (performs required tasks), reliability (provides quality information without failure), security (controls access and
changes), and efficiency (improves task performance) were measured. The construct
is consistent with Baroudi and Oriikow ski's quality of information products [8]. Based
on this conceptualization, perceived ERP system quality was measured with a fiveitem scale adapted from Shin and Lee [74].
Perceived Initial Misfit
In line with the traditional software application perspective, it has been suggested that
the issue of misfit be examined in terms of data, process, and output [76|. Because
there are no established measures for ERP misfit, the seven dimensions of misfit
identified in Soh et al. |76] were adapted to develop a seven-item scale for assessing
the extent of perceived initial misfit.

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WANG, KLEIN. AND JIANG

Table 1. Demographic Characteristics of the Responding Firms (n = 85)

Sector
Electronics
Information and communication
Metals
Automobiles and parts
Other
Total assets (NTS)
Less than 2 billion
2 billion-3 billion
3billion-5 billion
Over 5 billion
Number of employees
Less than 500

501-1,000
1,001-3,000
Over 3,000
Annual sales (NT$)
Less than 2 billion
2 billion-3 billion
3 biltion-5 billion
Over 5 billion
Country of origin of ERP package
Foreign
Oracle: 18
SAP: 5
Other: 8
Local
Data Systems: 29
Proyoung: 11
Other: 14
Time after implementation
Less than 6 months
6 months-1 year
1 year-2 years
Over 2 years
Number of adopted modules
Maximum
Minimum
Average
Standard deviation

Number of
firms

Percentage of
firms

22
13
10
7
33

25.9
15.3
11.8
8.2
38.8

43
17
12
13

50.6
20.0
14.1
15.3

44
17
14
10

51.8
20.0
16.4
11.8

28
17
18
22

32.9
20.0
21.2
25.9

31

365

54

63.5

10
28
27
20

11.8
32.9
31.8
23.5
8.0
2.0
5.5
1.3

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275

Table 2. Items in Survey

Perceived ERP system quality
(SQ1)
(SQ2)
(SQ3)
{SQ4)
(SQ5)

Extent to which the ERP system can be maintained to operate without failure
under abnormal conditions.
Extent to which the ERP system can provide reliable, precise, accurate,
consistent information,
Extent to which unauthorized access and modifications can be controlled.
Extent to which the ERP system exactly performs its tasks as required.
Extent to which the ERP system can provide useful information and improve
task-performing efficiency.

Perceived initial misfit

(MF1)
(MF2)
(MF3)
(MF4)
{MF5)
{MF6)

Data format.
Relationships among entities as represented in the underlying data model.
Access requirements needed to perform a task.
Validation procedures or checking routines.
Standard operating procedures.
Presentation format of the output.
Information content of the output.

Consultant quality
(CQ1)
(CQ2)
(CQ3)
(CQ4)
(CQ5)
(CQ6)
(CQ7)
{CQ8)
{CQ9)
(CQ10)
(CQ11)
(CQ12)
(CQ13)
(CQ14)
(CQ15)
{CQ16)
(CQ17)
(CQ18)
(CQ19)
(CQ20)

When consultants promise to do something by a certain time, they do so.

The consultants return phone calls and inquiries promptly.
The consultants can fell us, to within one day, when services will be performed.
We do not receive prompt service from the consultants, (r)
The consultants are often too busy to respond to our requests promptly (r)
We can trust the consultants.
The consultants treat us with respect.
The consultants get adequate support from their firm to do their jobs well.
The consultants treat information about us with complete confidentiality.
The consultants try to maintain a lasting and trusting relationship with us.
The consultants are helpful with advice on ways to reduce our ERP implementation effort.
Through training, fhe consultants effectively transfer their knowledge of ERP
implementation and operation.
The consulting firm closely supervises any consultants when they are doing
work for us.
The consultants give us personal attention.
The consultants really understand my needs.
The consultants always have our best interests al heart.
When we have a problem, the consultants are sympathetic and reassuring.
The consultants would make themselves available outside regular office hours if
we truly needed them.
The consultants' work is error free.
The consuitanfs would not "stick to the rules" if we requested some flexibility.
t continues)

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WANG. KLHIN, AND JIANG

Table 2. Continued
Top management support
(TS1)
(TS2)
(TS3)
(TS4)
(TS5)
(TS6)
(TS7)

Top management actively engages in selecting the ERP vendor and consulting
firm.
Top management actively engages In recruiting the personnel needed for
implementing and operating the ERP.
Top management actively engages in selling the ERP system to the users.
Top management is very concerned with the performance of the ERP system.
Top management makes an effort to provide stable and sufficient funding for
ERP implementation and operation.
Top management tries to take parf in deciding in what order the modules of the
ERP system should be implemented.
Top management emphasizes managing and controlling the processes of ERP
implementation and operation effectively.

User support
(US1)
(US2)
(US3)
(US4)
(US5)

Users are not enthusiastic about the ERP project.

Users are not an integral part of the ERP implementation team.
Users are frequently not available to answer questions.
Users have a negative opinion about the ERP system.
Users are not ready to accept the changes brought about by the ERP system.

(r) is reverse ended.

Consultant Quality
Although service quality has no direct guidelines for measurement 144], measures for
assessing professional and infonnation services quality have been developed largely
based on the SERVQUAL .scale [63]. Since ERP implementation consultation is professional service, the measure of ERP consultant quality was adapted from the scale
developed by Freeman and Dart [30] for assessing professional service quality from
a client's perspective. This scale was originally designed for assessing the service
quality of accounting firms, with seven dimensions containing 28 items. The scale
was llrst adapted to the context of ERP implementation consultation and then pretested as described earlier. When examining the scale, all the interviewees, however,
suggested dropping two of the seven dimensionstangibles and fee-related. Although
the tangibles dimension belongs to both the original SERVQUAL scale and the Freeman and Dart scale [30]. they considered it irrelevant to how they would perceive the
service quality provided by the consultants. This dimension has also been dropped in
studies related to information services function [44]. The interviewees also believed
that lee-related issues would not affect ERP system quality, even though they might
influence the "value" of the consulting service [48]. Following the interviewees' suggestions, these two dimensions were dropped from the scale, leaving 20 items for
measuring consultant quality. Further, the original SERVQUAL scale is gap-based
[63]. Yet the superiority of performance-only service quality measures has been suggested and demonstrated [ 10, 19]. Consequently, the performance-t)nIy approach was

ERP MISFIT

277

adopted for measuring consultant quality. The scale cotisists of five dimensions
timeliness, assurance, professionalism, empathy, and exceptions.
Country of Origin of ERP Package
The construct was operational ized by a binary variable, which was coded 1 if the firm
adopted an ERP package developed by a local vendor in Taiwan and 0 otherwise.
Top Management Support
Top management support was operationally defmed as the extent to which top management provides necessary involvement, resources, and authority in guiding and
assisting ERP implementation. The measure was developed by modifying the scale
of Lee and Kim |501 to suit the ERP implementation context and contains seven
items.
User Support
Concepts such as user participation, user involvement, user attitude, and user support
have been proposed theoretically and examined empirically with various research
designs [6. 41. 59]. ERP systems are enterprise business applications; users must
accept and use the systems. Consequently, this study adopted the concept of user
support by focusing on user attitudes toward the introduction of the ERP system and
the extent to which they are willing to engage in the implementation process and be
ready to accept the changes brought about by the system. Based on a subset of the
scales developed by Barki et al. [71, the five-item measure of user support in Jiang et
al. [43] was adapted to assess user support toward ERP implementation.

Analysis
with partial least squares (PLS) analysis
allows empirical assessment of the measurement model used in this study [14|. PLS
is selected because it neither is contingent upon data having tnultivariate normal distributions nor requires the large sample sizes of other methods. Using ordinary least
squares as its estimation technique. PLS performs an iterative set of factor analysis
and a bootstrap approach to estimate the significance (/-values) of the paths. In this
study, PLS-Graph Version 3.01 [13] was used to verify the measurement and test
hypotheses.
STRUCTURED EQUATION MODELING ( S E M )

Measurement Model
Item reliability, convergent validity, and discriminant validity serve to test the measurement model in PLS. Individual item reliability can be examined by observing the

278

WANG. KLEIN. AND JIANG

factor loading of each item, A high loading implies that the shared variance between
constructs and its measurement is higher than error variance |40]. A factor loading
higher than 0.7 can be viewed as high reliability and a factor loading less than 0.5
should be dropped. In Table 3. the loadings of all indicators are larger than 0.68.
Convergent validity should be assured when multiple indicators measure one construct. Convergent validity can be examined by reliability of constructs, composite
reliability of constructs, and average variance extracted (AVE) by constructs [29].
Construct reliability can be assessed with Cronbach's alpha. To obtain composite
reliability of constructs, the sum of loadings should be squared and then divided by
the combination of the sum of squared loading and the sum of the error terms [81 ].
AVE reflects the variance captured by indicators. If the AVE is less than 0.5, it means
that the variance captured by the construct is less than the measurement error and the
validity of a single indicator and construct is questionable. The composite reliability,
AVE, and Cronbach's alpha values in Table 4 indicate high internal consistency.
Discriminant validity focuses on testing whether the measures of constructs are
different from each other. Discriminant validity can be assessed by verifying the factor loading of indicators [14]. To have discriminant validity, indicators should have
higher loading to the defined construct than to other constructs. Because PLS-Graph
[13] only provides factor loadings on one construct, procedures [V.*)] were used to
generate cross-loading values. Discriminant validity is assured when (I) cross-loadings
show all indicators have a higher loading in the defined construct than in any other
construct, (2) correlation between pairs of constructs is below 0.9. and (3) the square
root of AVE is larger than the correlation between constructs. Tables 5 and 6 show
these conditions hold.

Structural Model
Direct Model
The test of the structural model includes estimating the path coefficients, which indicate the strengths of the relationships between the dependent and independent variables, and the ^-square value, which indicates the amount of variance explained by
the independent variables, /^-square represents the predictive power of the model and
interprets the same as in multiple regression. A bootstrap resampling procedure was
used to generate /-statistics and standard errors [14]. The bootstrap procedure utilizes
a confidence estimation procedure other than the normal approximation. In this study,
resamples of 300 is chosen. The bootstrap procedure samples with replacement from
the original sample set and continues to sample until it reaches the specified number
of 300. Table 7 shows the coefficient of path analysis. Based on the results, HI and
H4a were supported.
Moderating Effect
Moderating effects can be assured by comparing the difference between the main
effect and the moderating effect models [12]. We first obtained the /^-square {R^') of

ERP MISFIT

279

Table 3. Factor Loadings and Correlation

Eactors

Items

Loading

r-statistics

Item
construct
correlation

System quality

(SQ1)
(SQ2)
(SQ3)
(SQ4)
{SQ5)
(MF1)
(MF2)
(MF3)
(MF4)
(MF5)
(MF6)
(MF7)
(CQ1)
(CQ2)
(CQ3)
(CQ4)
(CQ5)
(CQ6)
(CQ7}
{CQ8)
{CQ9)
(CQ10)
(CQ11)
(CQ12)
(CQ13)
(CQ14)
(CQ15)
{CQ16)
(CQ17)
(CQ18)
(CQ19)
(CQ20)
(TS1)
{TS2)
(TS3)
(TS4)
(TS5)
(TS6)
(TS7)
(US1)
(US2)
(US3)
(US4)
(US5)

0.77
0.88
0.69
0.86
0.82
0.82
0.88
0.88
0.89
0.90
0.84
0.87
0.86
0.89
0.86
0.73
0.69
0.85
0.88
0.85
0.79
0.87
0.86
0.87
0.86
0.88
0.88
0.89
0.90
0.83
0.77
0.87
0.91
0.89
0.89
0.92
0.88
0.93
0.92
0.74
0.68
0.84
0.85
0.78

16.14
28.96
8.83
23.19
13.82
19.34
24.02
25.29
27.97
31.11
20.19
20.97
24.59
32.92
25.37
8.24
B.17
24.28
23.55
20.37
16.86
31.17
25.29
34.45
23.79
28.30
34.03
39.51
35.40
19.16
12.21
34.40
35.81
33.61
33.87
43.24
26.23
49.24
45.91
8.50
8.09
31.86
31.27
18.25

0.78
0.85
0.73
0.84
0.81
0.82
0.88
0.88
0.89
0.90
0.84
0.87
0.86
0.89
0.87
0.74
0.71
0.85
0.86
0.84
0.78
0.86
0.86
0.87
0.87
0.88
0.88
0.89
0.90
0.83
0.77
0.87
0.91
0.89
0.89
0.92
0.88
0.93
0.92
0.73
0.73
0.84
0.83
0.76

Initial misfit

Consultant
quality 1

Consultant
quality 2

Top management
support

User support

2Sl)

WANG. KLEIN. AND JIANG

Table 4. Reliabilities and Variance Extracted

Variables
System quality
Initial misfit
Consultant quality 1
Consultant quality 2
Top management support
User support

Composite
reliability

Cronbach's
alpha

Variance
extracted

0.90
0.96
0.96
0.97
0.97
0.89

0.85
0.95
0.75
0.96
0.96
0.83

0.65
0.75
0.69
0.75
0,82
0.61

the main effect model, which includes the independent variable, moderator, and dependent variable only. Then, the ff-square (R.-) of the moderating effect model was
obtained by including the independent variable, moderator, interaction term, and dependent variable in the model. Interaction terms used in the study were obtained from
two different methods. For those variables tbat contain first-order only (country, top
management support, and user support), the interaction terms are calculated by adding the product of each indicator in the independent variable and each indicator in the
moderator. For a moderator that contains a second order construct (consultant quality), the interaction term is the product of the construct scores of the independent
variable and moderator [ 15|. We then derived an estimated effect size off- from {1 /;.-)/{/;,' -/?,-) and then obtained a pseudo F-vaitie by multiplying/- with
(n-k-\),
where n is the sample size and k is the number of independent variables in the regression equation./- scores of 0.03, 0.15, and 0.35 imply small, moderate, and large
interaction effects, respectively. Finally, we compared the pseudo F-value with F, _^_^.
The above four steps can test the change of variance extracted by adding a new variable {the interaction term) into the model. Based on the result. H3b. H4b. and H5b
were supported as .seen in models 2, 3, and 4 in Table 7. H6b was not (model 5).

Discussion
Implications for Practice and Research
that the overall degree of initial misfit when adopting a local
ERP package is usually lower than when adopting a foreign package. Particular problem areas are the operational procedures and the infonnation content of output provided by the foreign packages, highlighting significant .social effect and different
local contingencies across cultures in these areas. Thus, when a firm adopts a foreign
ERP package, it should pay special attention to whether its requirements in these
areas can be satisfied or whether the package can be easily customized if needed. The
findings also indicate that the adverse effect of initial misfit can persist through implementation, leading to lower system quality even after implementation. This result
demonstrates the closure effect of stabilized systems and suggests that deeply entrenched social elements make ERP systems difficult to be configured or customized
OUR RESULTS INDICATE

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ERP MtSFIT

285

to fit local contingencies of different tiations. It is true that all ERP packages can be
reconfigured through adjusting certain parameters, but the ranges of such configuration are very constrained. Alternatively, firms might change their processes to fit a
package's process models, develop interfaces that meet their needs better, or acquire
add-on applications from third-party providers. These typical alternatives, however,
are not always effective or even feasible inresolving the misfit problem. Our findings
therefore .suggest that it is important for ERP adopters to recognize the cultural differences embedded in foreign business applications and to carefully evaluate the functionality and business practices offered by alternative packages, because it may be
too late to fully resolve all the problem areas during implementation.
Eurther, under a high degree of initial misfit, the problem is more likely to be satisfactorily resolved when adopting a local package. This makes local packages a more
attractive alternative when no system can provide a very good organizational fit. The
implication is that the history, cultures, and institutional mechanisms can be quite
distinct in different countries and thereby lead to significant differences in operational and managerial practices across countries [11,38]. Local ERP packages, after
years of revision in a specific culture, could evolve into systems that match better
with local environments. It is true that those global ERP vendors have enjoyed worldwide brand-name reputation. Yet, due to cultural differences and resource and policy
constraints, their ability to simultaneously satisfy the local business requirements of
many countries is limited. The problem may be caused not only by the systems themselves but also by the difficulties of establishing effective operations abroad. While
modern organizations are converging in terms of technology, people's behavior continues to display cultural dissimilarity [18, 45], and many different administrative
heritages across nations still remain [11, 38]. Thus, when an IS implementation requires integration of culturally diverse system components, such as implementing a
foreign package, a substantial understanding of cultural differences is necessary |70].
Based on the SST perspective, future research may conduct in-depth comparative
investigations, probably qualitatively, to gain additional insights into the social elements of misfit and the difficulties of alleviating them across local and foreign ERP
packages.
The results further suggest that an ERP package offered by a local vendor would
moderate the negative relationship between initial mistit and ERP system quality.
When the package is local, not only is the firm more likely to implement the package
to fit its needs better but the advantage also tends to increase with the severity of
initial misfit. In fact, as the big, global ERP vendors, such as SAP and Oracle, emphasize universal solutions to enterprise integration with imposing features, their systems may be too rigid to many firms operating in a different social and business
context [16]. For example, the majority of manufacturing firms in Taiwan are small to
medium-sized companies, well known for their diverse ways of conducting business;
their sophisticated, adaptive logistic networks; and their flexibility in responding to
buyer demands. Consequently, local software vendors in Taiwan must produce systems that have sufficient flexibility to accommodate those firms' varied, proprietary
information and operations needs.

286

WANG. KLEIN, AND JIANG

Further, unlike global ERP vendors, who need to maintain a consistetit version of
their systems worldwide, local ERP vendors, by etnploying a strategy of customization,
are less constrained and more willing to modify their systems to satisfy local needs.
As such, the necessary organi/ational changes imposed by ERP are reduced, relieving the client's burden of reengineering. This is particularly important in the presence
of misfit in operational procedures and business models. Unlike general-purpose software packages such as Microsoft Office, which contain less cultural elements in their
functions and operations, business applications must be thoughtfully localized for
easier penetration into foreign markets. Future research may expand on this line of
inquiry to analyze and develop foreign-entry strategies for business applications and
the effect of cultural similarity on the strategies.
Although the importance of ERP implementation consultants has been frequently
raised in the literature, a systematic investigation into tbeir role in delivering quality
ERP systems has been lacking. This study shows tbat consultant quality bas a very
positive effect on perceived ERP system quality, in terms of both main and moderating effects. When consultants are knowledgeable, reliable, and willing to help tbe
client, they will be able to configure the systetn to fit the client's needs more effectively and efficiently, as well as suggest sensible, reasonable recommendations when
necessary organizational adjustments are required. Our findings suggest that higher
consultant quality can benefit ERP implementation, leading to higher ERP system
quality delivered, and that the value of higher consultant quality also increases as the
problem of misfit becomes more severe. Thus, while selecting a suitable ERP package is important, hiring competent consultants might be equally, if not more, critical.
Given the significant role of consultants in ERP implementation, future research may
take a process approach to analyze tbe interactions between consultants and the stakeholders of the client in the consultation process and their implications on system
implementation.
Tbe importance of top management support to ERP implementation has been repeatedly emphasized. This study, however, shows that top management support has
no main effect on perceived ERP system quality. But, as the initial misfit problems
increase, more conflicting situations can arise and the implementation tends to encounter greater organizational resistance. In this case, top management support plays
an increasingly important role in alleviating the negative effect of initial misfit. This
suggests that when initial misfits are more pronounced, top management's leadership
and facilitative roles as well as authority to mobilize resources, adjust organizational
processes, and resolve conflicts become more important for a successful ERP implementation. This is especially true because ERP implementation is a highly political
and social process. Practically, therefore, it may not be necessary for senior executives to be actively involved with the daily operation of implementation, but they
should still guide and oversee the process and be prepared to intervene if any dispute
arises. After all, intervention from management is often necessary to resolve conflicts, bring everybody to the same thinking, and encourage cooperation among the
diverse groups in the organization [91. Top management commitment and leadership

ERP MISFIT

287

have been so underscored in the literature of organizational innovation and change

that their role in shaping a conducive climate for a successful ERP implementation
should still deserve further investigation.
User support shows neither main nor interaction effects on perceived ERP system
quality. This result might indicate that user support plays no role in influencing the
firm's resultant ERP system quality after implementation. Due to the package nature
of ERP systems and their lack of knowledge in ERP technology, users may have only
limited influence on the final form of the system. Even if they have, their contributions to the project may be masked hy the work of consultants, because it is the consultants who do most of the configurations and problem solving. It might be too
strong to claim that user support has no role in influencing ERP system quality; the
result, however, is consistent with prior research in IS development, which shows
little effect of user participation on system quality, especially for mandatory use systems [35]. However, the long and costly process of customization leads many firms to
align their business processes with the functionality provided by the ERP package
instead of customizing the package to match their current processes [51 ]. This creates
a need for user participation during the reengineering to make the system work [64].
Thus, user support or participation may not affect ERP system quality directly, but
the roles of users in effecting implementation consultation, knowledge integration,
and process reengineering could he primarily important and thus deserve further study.

Limitations
This study has a number of limitations. First, although cases in Taiwan provide a
good opportunity for testing the implications of adopting a large-scale business application developed in a diflerent culture, the generalizability of our findings is limited
accordingly. Second, in this study, five factors that are considered critical to ERP
system quality are examined, but other factors such as IT skills of the client may also
affect the outcomes of ERP implementation [83]. Third, even though care has been
taken to identify the project leaders to answer the survey, relying on the self-report of
the single informant may lead to perceptual and common method biases, which cannot be completely screened and eliminated via statistical means. Fourth, consideration of the project leaders was omitted, although previous studies have shown
leadership traits to be important indicators of success. Fifth, measures such as misfit
and consultant quality, though adapted from prior studies and factor-analyzed, still
need further development and refinement. For example, after this study was completed, a more comprehensive measure of misfit based on the conceptualization of
Soh et al. [76] appeared [39]. Finally, cross-sectional surveys have the usual limitation in attributing and substantiating affirmative causality. Process-oriented research
designs based on structuration theory (31, 32] or framed by contextualism [65, 66]
may help us understand the ERP implementation process at different levels and the
dynamic interrelationship between context and action facing different misfit problems at different stages or under different scales of implementation [55,56, 71],

288

WA.NG. KLEIN, AND JIANG

Conclusion
IN THE FIELD OF TECHNOLOGY TRANSFER, adoption of a new technology faces many
barriers. These barriers are considered to be "black boxes"' that require investigation
to explain. One of the barriers is cultural, legal, and procedural differences across
countries. The black boxes of adoption require further theories to fully understand
the mechanisms of transfer and the ways to break the barriers. Asian countries provide a test bed for examining and contrasting the implications of adopting cultureladen business applications developed in different countries, such as the ERP system.
This study, from the SST perspective, contributes to the literature by demonstrating
the importance of the country of origin of the ERP system adopted and showing that
ERP packages developed by local vendors generally have less misfit problems before
implementation, and this advantage tends to persist even after implementation, demonstrating the closure eftect of stabilized systems. To the best of our knowledge, this
is the first systematic investigation of this issue related to ERP software. This study
also contributes to our understanding of the critical role that implementation consultants play in both delivering a high-quality ERP system and alleviating misfit problems. Thus, the presence of local ERP packages and high-quality consultants can be
two valuable external facilitators for a successful ERP implementation. The findings
further indicate that the two internal facilitatorstop management support and user
support^have a relatively minor role in influencing the resultant quality of package
software such as ERP systems. Only when the problem of misfit is severe can top
management support significantly C()ntribute to the ERP system quality delivered.
These results highlight that the frequently posited contributions of senior executives
and users to the outcomes of ERP implementation might not be so obvious and direct,
and thereby require further validation.

Acknowledgments: This research is supported by the Ministry of Education (R.O.C.) Program

for Promoting Academic Excellence of Universities under Grant No. 91 -H-FAn7-1 -4.

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