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European Journal of Information Systems (2011) 20, 186–200 & 2011 Operational Research Society Ltd. All rights reserved 0960-085X/11 www.palgrave-journals.com/ejis/

From transactional user to VIP: how organizational and cognitive factors affect ERP assimilation at individual level Luning Liu1, Yuqiang Feng1, Qing Hu2 and Xiaojian Huang3 1 Management Science and Engineering, School of Management, Harbin Institute of Technology, Harbin, China; 2Supply Chain and Information Systems, College of Business, Iowa State University, Ames, IA, U.S.A; 3Beijing Seeyon Software Co., Beijing, China.

Correspondence: Luning Liu, Management Science and Engineering, School of Management, Harbin Institute of Technology, 92 West Dazhi Street, Harbin Heilongjiang 150001, China. Tel: þ 86 136-3361-1017; E-mail: [email protected]

Abstract This study extends the enterprise resource planning (ERP) assimilation research from organizational level to individual level with the argument that it is the individual users who transform ERP systems’ capabilities into organizational performance. We employed a multi-case study method in this exploratory research with the objectives of defining individual level ERP assimilation and identifying key influential factors. Interviews with ERP users at all levels in five organizations revealed four key drivers: influence of supervisors, performance evaluation schemes, intrinsic motivation, and perceived usefulness, as well as two significant moderators: job specifications and individual absorptive capacity. Moreover, evidence suggests a potential relationship between individual level and organizational level ERP assimilations. Our findings highlight the importance of individual level assimilation within a firm in the post-implementation phase and provide managerial insights on how firms could improve ERP assimilation at the individual level that could impact the organizational level assimilation. European Journal of Information Systems (2011) 20, 186–200. doi:10.1057/ejis.2010.66; published online 18 January 2011 Keywords: enterprise resource planning (ERP); individual level assimilation; organizational level assimilation; multi-case study

Introduction

Received: 16 September 2009 Revised: 20 May 2010 2nd Revision: 22 August 2010 3rd Revision: 12 November 2010 Accepted: 17 November 2010

The globalization of the economy empowered by information technology (IT) has fostered an unprecedented movement towards integration of information systems and business processes within and across organizational boundaries. One of the consequences of this movement is the widespread adoption and use of enterprise resource planning (ERP) systems in companies large and small. According to a recent report by the market research firm AMR, the worldwide ERP market is expected to grow from $28.8 billion to $47.7 billion from 2006 to 2011, at the annual rate of 11% (Jacobson et al., 2007). With price tags often ranging from $3 million to over $100 million per ERP implementation (Ross & Vitale, 2000), ERP systems have also become the most significant IT investment for most companies with serious financial consequences. While the focus of ERP research by IS scholars so far has been on the adoption and implementation processes and the critical success factors related to ERP projects (e.g., Akkermans & van Helden, 2002; Umble et al., 2003; Lam, 2005; Lim et al., 2005), recent research has begun to address the assimilation phase of the life-cycle (e.g., Liang et al., 2007; Wang, 2008; Liu et al., 2010). This is largely motivated by the recognition that a successful ERP implementation does not automatically translate into

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sustained use of the system by the organization, a critical component for realizing the anticipated benefits from the ERP system. The potential business value of any ERP system cannot be fully realized until it is extensively assimilated into various business processes (Nicolaou & Bhattacharya, 2006; Liang et al., 2007). However, it is interesting to note that in the IT assimilation literature in general and ERP assimilation in specific, the role of individual users is rarely considered. Some scholars even specifically excluded end-users arguing that certain technologies are transparent to end users and thus individuals assimilation is not meaningful (Bolloju & Turban, 2007). But others believed that individuals should not be ignored. For example, when studying IS success models, Petter et al. (2008) separated the studies in the individual context from those in the organizational context. Kositanurit et al. (2006) argued that it is important to examine the factors influencing individual performance when using ERP systems. In this study, we argue that ERP assimilation is a multi-level phenomenon: the assimilation occurs at organization and individual levels simultaneously. At the organization level, assimilation is indicated by the extent of ERP coverage of business processes and degree of ERP usage for decision making (Liang et al., 2007); and at the individual level, assimilation is indicated by the degree of understanding of ERP systems and the ability to use ERP for non-routine tasks. Furthermore, we argue that the extent of individual level assimilation directly impacts the extent of organizational level assimilation. This is because ERP coverage of business processes does not necessarily indicate effective ERP usage in these processes. If the users don’t understand the system and can’t use it for anything other than the prescribed tasks, it is difficult to argue that there is a high level ERP assimilation in the organization. Our primary objectives for this study therefore are three folds. First, we want to address the question whether there are indeed differences among ERP users in terms of understanding of the systems and skills for using the systems for non-routine tasks. Second, we want to find out the ontology of the differences if such individual differences do exist. And finally, we want to know the relationships between individual level and organizational level assimilations. Given the sparse literature on individual level ERP assimilation, we undertook an exploratory multi-case study in which we visited five companies and interviewed 31 individuals ranging from CEOs to frontline ERP users by following the case study protocols and guidelines as specified in Yin (2003) and Pare´ (2004). The patterns that emerged from these interviews across the companies and individuals are remarkably consistent and clearly suggest that there are indeed different levels of individual ERP users in organizations and the extent of ERP assimilation within an organization can be attributed to the composition of these user groups in the organization. We also explored the factors that contributed to the formation of these

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user groups in the hope of providing prescriptive insights for managing ERP assimilation in organizations and achieving deeper understanding of ERP assimilation and technology assimilation in general.

Individual level assimilation: a research gap The study of ERP assimilation stems from research on technology diffusion and assimilation. There are multiple streams of research on IT innovation assimilation at the organizational level. One stream of research focuses on identifying the internal and external drivers and organizational mediators to the assimilation processes. For example, Armstrong & Sambamurthy (1999) examined the impacts of senior leadership, sophistication of IT infrastructure, and organizational size on IT assimilation. They found that CIOs’ business and IT knowledge and the sophistication of IT infrastructure significantly impact IT assimilation. Chatterjee et al. (2002) studied organizational assimilation of Web technology, and found that top management championship, strategic investment rationale, and the extent of coordination significantly affect Web assimilation. Liang et al. (2007) considered the effect of external institutional pressures and the role of top management team (TMT) in ERP assimilation, and found that mimetic and coercive forces significantly influence the level of ERP assimilation in organizations, but such influence is mediated by top management beliefs and participation in ERP assimilation. In a longitudinal study of ERP assimilation in Fortune 1000 companies, Wang (2008) found that in addition to institutional forces, external partners also exerted significant influence on the assimilation of ERP technology in the focal firm. Another stream of research primarily focused on the assimilation patterns and processes within organizations. For example, by using the K-means clustering algorithm, Rai et al. (2006) revealed four different patterns of electronic procurement innovation assimilation: none, focused niche, asymmetric, and broad-based deployment. In another study, Bala & Venkatesh (2007) conceptualized four distinct stages of interorganizational business process standards assimilation: awareness, adoption, limited deployment, and general deployment. Bajwa et al. (2008), based on the concepts of IT acquisition and utilization, presented an assimilation framework that highlights four states – limited, focused, lagging, and pervasive – to capture the assimilation of conferencing and groupware technologies. What is absent in the technology assimilation literature, and ERP assimilation especially, is research at the individual level. A few studies examined user satisfaction with ERP systems in the post-implementation phase (e.g., Calisir & Calisir, 2004). The only study that touched individual user assimilation of ERP knowledge is by Park et al. (2007) who focused on how individual absorptive capacity influenced ERP usage. With the best of our effort, we did not find any relevant literature that explicitly defines and systematically examines individual

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level assimilation of technology in general and ERP systems in specific. We submit that individual users must play significant roles in technology assimilation in organizational settings for some critical reasons. Individual users are responsible for any implemented technology that becomes ‘routinized’ and ‘institutionalized’. Without the active involvement of users, technologies implemented in business processes would be superficial and functional at best. The anticipated deep impacts by the technology, such as change of organizational culture, innovative organizational climate, active organizational learning, and the ultimate goal of better organizational performance, would be unreachable. Therefore, we believe that there is a significant gap in the assimilation literature without the understanding of individual level assimilation and its impact on organizational level assimilation. In this study, we attempt to address this gap via an exploratory case study. Given the intricate connections between individual and organizational level assimilations, we first define the concept of ERP assimilation at organizational and individual levels before we start our analysis. The concept of ERP assimilation has its root in the concept of technology assimilation. Purvis et al. (2001) defined technology assimilation as ‘the extent to which the use of technology diffuses across the organizational projects or work processes and becomes routinized in the activities of those projects and processes’. This definition is often used in subsequent assimilation studies, especially in ERP assimilation studies (e.g., Liang et al., 2007 and Wang, 2008). Other scholars have further refined the use of technology in terms of breadth and depth (Gallivan 2001; Liang et al., 2007), where breadth refers to how many business processes or functions use the technology in an organization and depth reflects how extensively the technology is used by the users and the business processes in the organization. We argue that the depth of use is more meaningful than the breadth of use, especially to ERP assimilation studies. Using ERP modules and functions broadly in an organization does not necessarily indicate a higher level of ERP assimilation, only a wider range of adoption of the technology. In contrast, it would be impossible to conduct in-depth analysis of production and sales data for long-term production planning without the extensive use of Purchasing, Inventory, MRP, Sales, and Financial modules in the organization. Thus, in this study, we define ERP assimilation at organizational level as ‘the extent to which ERP technology is used for facilitating business processes and supporting business decision making at operational and strategic levels’. Since individual users in general do not have influence or control over how widespread a technology is implemented in an organization, it is only logical that individual level assimilation be defined in terms of the depth of ERP use for work activities as well. Thus, we define the individual level ERP assimilation as ‘the degree of cognitive understanding of ERP technology and the extent to which the technology is used beyond

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routine tasks by an individual user’. This definition consists of two related components: understanding and use. If an individual user has no knowledge of how the technology works and can only do the routine tasks he or she is trained to do, then the degree of assimilation in this individual is the lowest on the assimilation spectrum. On the other hand, if the user completely understands how the technology works and is able to use the technology in new and innovative ways beyond routine activities, then the degree of assimilation of this technology in this individual is at the highest level of the assimilation spectrum. In order to accomplish our research objectives and lay the foundation for future research on individual level assimilation, we commenced a case study using an exploratory multi-case analysis methodology. In the following sections, we describe the methodology and the research design in detail and present the evidence we collected and the results of our analyses.

Research design and methodology Multi-case study design Case study approach is considered as appropriate when ‘how’ or ‘why’ questions are asked about a focal phenomenon over which the researchers have little or no control (Yin, 2003). Further, case studies are considered as appropriate for researching contemporary questions in natural settings where little or no previous research has been done (Dube´ & Pare´, 2003; Pare´, 2004). These features of case study method fit well with our objectives of understanding individual level assimilation and how it may impact organizational level assimilation in the context of ERP systems. ERP systems in organizations vary in terms of complexity, functionality, modules installed, number of users, industries, vendors, and many other characteristics (Gattiker & Goodhue, 2005). Thus it is critical that a multi-case design is adopted for this study in order to have some degree of generalizability for the findings of the study. Our multi-case design called for visiting companies that had successfully implemented ERP systems with various sizes and in different industries, representing a spectrum of ERP users both in organizational and individual terms. Individuals with diverse organizational roles and background would be desirable as subjects of study. Before the actual field visits started, a research protocol was developed that specified the ideal profiles of companies and individuals, the interview protocol, and the open-ended questions based on the literature and the focal phenomenon of interest. Table 1 provides the ideal profiles of the individual users we would like to interview. In design the interviewing questions, we were guided by the research objectives and the theories related to innovation and technology assimilation, as well as the philosophy of cross validation, as strongly recommended in the case study literature (Dube´ & Pare´, 2003; Yin, 2003).

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Three sets of questions were developed targeting the three groups of research subjects (see Appendix). Some questions were specifically designed for cross validation purposes (e.g., identical questions for interviewees at different levels). These questions were first developed in English, and then translated by the authors into Chinese. The English and the Chinese versions were then compared one to one by the authors to ensure minimal loss of accuracy.

Case companies and interviewees The research team collaborated with one of the top ERP vendors in China in identifying the initial set of target firms. The alumni network of a major Chinese university was also utilized to identify potential targets based on the criteria the research team had formulated. In the end, five companies were selected based on their industry,

Table 1

Ideal profiles of interviewees in each company

Interviewees

Ideal profile

Members of Top Management Team

| Have intimate knowledge of their company’s vision and strategy regarding ERP systems. | Have intimate knowledge of how top management team uses ERP systems.

Divisional or Departmental Managers

| In charge of a business division or department where ERP systems have a significant impact on its operations. | Have intimate knowledge about how ERP systems are used in their units.

ERP Users

| Use ERP applications for daily works. | Have some knowledge about how ERP works | Are knowledgeable about other ERP users.

Table 2 Company

Number of interviewees

A

5

B

7

C

7

D

6

E

6

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ERP history, ERP vendor, availability of top managers, and their willingness to cooperate. All of these companies had implemented manufacturing modules as the core components of their ERP system, with other modules integrated together (e.g., sales, purchase, inventory and finance modules). The data collection then took two weeks in March 2009 in three major Chinese industrial cities where these companies were located. The research team visited each company and spent from half to one day in each location. All interviews were recorded using digital recorders and later transcribed into text using a professional transcription service. Each interview started with the prepared open-ended questions, and was often followed up with questions that explored the ideas and thoughts as they emerged. A typical interview lasted about 45–60 min, with interviews with managers usually longer than the ones with frontline users. In a couple of occasions, the participating companies sent two or three users together due to work schedule constraints, so group interviews were conducted. In such occasions, the research team made sure that each interviewee had opportunities to express his or her views. In total, the research team interviewed 31 middle and top managers and frontline users from a variety of business departments and divisions. For the purposes of confidentiality, the five companies are referred to as A, B, C, D, and E in this paper. Table 2 shows the profiles of the interviewees, and Table 3 shows the profiles of the case companies.

Case analyses and findings ERP assimilation at individual level During the interviews and the post-hoc review of the transcripts, a clear pattern of ERP users emerged. In almost every company we visited, the ERP users quite naturally fall into three categories and we labeled them as transactional users, power users, and VIP users.

The profiles of interviewees

Descriptions of interviewees | | | | | | | | | | | | | | |

Top managers: CEO, COO Middle-level managers: manager of finance department and manager of product management department ERP end users: a user from inventory management department Top managers: CEO, CIO Middle-level managers: manager of marketing department ERP end users: a user of IT department, and three users from operational departments Top managers: CFO, COO Middle-level managers: manager of finance department and manager of product management department ERP end users: three users from operational departments Top managers: Board chairman, CEO Middle-level managers: manager of quality management department and manager of finance department ERP end users: two users from factories Top managers: Vice President, CIO Middle-level managers: ERP manager ERP end users: three users from operational departments

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UFIDA

UFIDA

UFIDA

External contractors

50–60 1300 300

Private

Joint venture

Oversea Investment

Shanghai

Suzhou

Hangzhou

C

D

E

Cosmetics

300–400 3000 1200

Joint venture Shanghai B

Electronics

20 160 150

Joint venture Shanghai A

Industrial Paint

188 280 300

Type

Gas Equipment

200

2200

300

Finance, Manufacturing, Purchase, Inventory, Sales, MRP Finance, Manufacturing, Purchase, Inventory, Sales, CRM, PDM, BI, KM, HRM, AM (Archives Management) Finance, Manufacturing, Purchase, Inventory, Sales, HRM Finance, Manufacturing, Purchase, Inventory, Sales, MRP, HRM, Workshop Management, OA Finance, Manufacturing, Purchase, Inventory, Sales, MRP, Quality Management, HRM

Developed in house

VIP Users

Location

Plastics

Number of ERP users Number of employees Annual revenue (million RMB)

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Deep

Company

Industry

Table 3

Profiles of the case organizations

ERP modules in use

ERP vendor

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Level of Assimilation

Power Users

Transaction Users Shallow # of Users

Figure 1

The hierarchy of individual level ERP assimilation.

Coincidently, these three categories of users also correspond to the three levels of ERP knowledge and usage at the user level, forming a natural hierarchy of ERP assimilation. Intrigued by the ideas of Hardgrave et al. (2007), we graphically represent the hierarchical model in Figure 1. In this hierarchical model, shallow assimilation is characterized by users who use the functionality of an ERP system only for routine tasks they are trained to perform and have little knowledge about how the ERP system works system-wide. In contrast, deep assimilation is characterized by users who can use an ERP system in new and innovative ways and have intimate knowledge about the ERP system and its inner workings within an organization. The pyramid structure of the hierarchical model also approximates the ratio of users at each level: there are usually more transactional users than powers users who usually outnumber VIP users in a typical company. Table 4 summarizes the characteristics of the users and the evidence supporting this classification scheme. In summary, we found strong evidence to support the idea that ERP users can be classified into three categories: transactional users, power users, and VIP users. The value of the hierarchical model of individual user assimilation is at least twofold. First, it shows the migration path for ERP users in an organization, which can be useful to both individual users and management in terms of career development and human resource management. Second, the actual shape of the pyramid, if drawn proportionally based on the number of users at each level, may be used to gauge the level of ERP assimilation in the organization. More discussion on this topic is presented later. Thus, we propose: Proposition 1:

In organizational settings, there exist different levels of individual assimilation of ERP technology. These levels can be classified as transactional users, power users, and VIP user, with the degree of assimilation increasing in the same order.

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Table 4

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Characteristics of ERP users at different assimilation levels

ERP user type

Characteristics

Case evidence

Transaction users

| Use ERP applications for routine operations they are trained to perform. | Do not know much about and/or have little interest of knowing the inner workings of ERP systems. | ERP is just another software application they use every day to do their job. | Not concerned with how the ERP system functions companywide and how it might be used in different or innovative ways.

‘Most of the ERP users in our company only care about their own job assignment. What they do every day is just following their job responsibility to complete their job y They don’t care about the detail of the ERP system and whether or not there are some problems in the ERP system. So they can’t give advices for ERP system improvement’ (IT Manager, Company B). ‘What I care now is just how to input the data into the ERP system correctly. My questions towards the ERP system are all about how to use it, not how to improve it y If I have some questions about how to operate the ERP system, I will tell our manager. I hope that the operations [about ERP] are easier and the speed [of the operations] is faster’ (Finance Department User, Company C).

Power users

| Have proficient understanding of how the system works and how different parts are linked together. | Can solve routine technical problems for other ERP end-users. | Can create analytical reports meeting the need of management on an ad-hoc basis. | Can make suggestions about how the ERP functions may be improved based on problems encountered.

‘One kind of users was operators, because they only did what their supervisors told them to do y But the other kind of users pushed the usage of ERP further. Although they were ordinary employees, they were thinking about how to make themselves working more efficiently when they are using ERP system. Then they come up with ideas about how to improve the ERP system. If the idea was really helpful for us, we would let our developers make the changes to the ERP system following their suggestions’ (COO, Company A).

VIP users

| Have intimate knowledge of both the ERP system and the business processes, and about how they work together. | Capable of recommending and facilitating changes to the system and the business processes. | Involved in the early implementation phase of the ERP system. | Can initiate new ERP projects for the organization when changes happen in the business processes.

‘For one thing, I know all of the business processes in my company very well. For another, I have been involved in the ERP system from the beginning of the project. So I am very clear about how to get some data from the system and how the modules connect with each other’ (Product Manager, Company A). ‘There are a few users who know more about ERP system than most other users. But the number of ERP users at this level is limited. First, these users should know almost all of the business processes. They are accomplished manager and have strategic insight. Second, they should also know information technology especially ERP system very well’ (User, Company B).

Drivers for individual level ERP assimilation If we accept the hierarchical model of individual level assimilation, then some interesting questions should follow: how did an individual user end up at a certain level? And how might the individual move up in the hierarchy? An analysis of the interview transcripts showed that there were a number of factors that drove users towards higher levels of the assimilation hierarchy. Among the many suggested in the transcripts, the following six factors stand out: influence of direct supervisors, performance evaluation scheme, job specifications, intrinsic motivation, perceived usefulness, and individual absorptive capacity. Table 5 shows these influential factors identified by the interviewees at different positions in different companies. The relationships between these factors and the level of individual ERP assimilation can be described using the

model as shown in Figure 2. We submit that these factors can be further grouped into organizational factors and cognitive factors in terms of sources of the influences, and drivers and moderators in terms of mechanisms of the influences. Direct supervisors, performance evaluation schemes, and job specifications are organizational characteristics external to the focal individual, while intrinsic motivation, perceived usefulness, and absorptive capacity are cognitive characteristics internal to the focal individual. In the following sections, we provide a detailed account of these factors and justifications for the proposed relationships shown in the model, with some of the interview quotes to substantiate our propositions.

Influence of direct supervisor In the extant organizational level studies, the important role of TMT in ERP adoption,

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Table 5 Influential factors

Drivers for individual level ERP assimilation

Company A Top

Influence of direct supervisors Performance evaluation scheme Job specifications Intrinsic motivation Perceived usefulness Absorptive capacity

O O O O

Mid O O O O O O

Company B

User

O

Top

Performance Evaluation

P2

User

Top

O O

O O O

O

O

O

P4 P1 VIP Users

P3 Power Users

Intrinsic Motivation Perceived Usefulness

P5 Transactional Users

P6 P7

Absorptive Capacity

Figure 2

Individual level ERP assimilation model.

implementation, and assimilation is well documented (e.g., Al-Mudimigh et al., 2001; Akkermans & van Helden, 2002; Liang et al., 2007). However, our interviews revealed that, from the perspective of ERP users, TMT barely has any significant influence on their assimilation effort. Rather, it is the direct supervisors who have the most influence on the users’ assimilation effort, as described by a user from Company D: I feel that there is a distance between the top managers and me. From the subordinates’ perspective, my direct supervisor’s words and behavior definitely impact my work attitude. Although I respect the top managers in my company a lot, I don’t feel that I am close to them. I don’t know what they are thinking about.

This sentiment is echoed by a user from the finance department of Company B: In my opinion, my direct supervisor is a more important person influencing me than the top management team members and my colleagues in my company. My job assignments are usually given by my direct supervisor. For example, he often asks me to make some statistical reports for him. If I complete my job assignments well, I will be praised for my neat and careful work by the supervisor. This encourages me a lot.

Most of the interviewees confirmed that their superiors were a main driver to their individual level ERP assimilation

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Company C

Mid

Job Specifications Direct Supervisor

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Mid

O O O

Company D

User

O O O

Top

O

O

Mid O O O O O O

Company E

User

Top

O O

O O O O

O

Mid

User

O O

O

O O

O O O O

effort. While this finding is consistent with the basic premise of the theory of planned behavior (Ajzen, 2002), the theory makes no differentiation between peers and supervisors in the concept of subjective norm. Our finding calls for more attention to the influence of supervisors than that of peers on individual behavior in organizational settings. We argue that in organizational context where users are not completely free to choose their behavior and direct supervisors control significant resources and exercise significant power over employees, the role of supervisors in individual level technology assimilation deserves further research in the future. Thus, we propose: Proposition 2:

In organizational settings, director supervisors have a significant influence on the level of individual assimilation of ERP technology. Such influence is stronger than that from the TMT of the organization.

Performance evaluation scheme Studies have shown that organizational performance can be improved by using appropriate performance evaluation schemes (e.g., Latham et al., 1993). There is a common saying in management practice: ‘You don’t get what you want, you get what you measure’. In line with this logic, it was not surprising to find out that the job evaluation scheme for ERP users had a significant impact on their assimilation effort. A user from Company D expressed this view: I just do what my manager will check. And I will do my best to complete these job assignments at a high quality level. However, I’m sure that there are people who will never do what their manager won’t check. We believe that the job assignments being checked by the managers are what they really need.

When being asked about how to motivate users to assimilate ERP knowledge, the manager of product management department in Company A also confirmed the importance of evaluation scheme: We have an evaluation scheme to evaluate the performance of users y If an ERP user can give a helpful suggestion to improve our system, he or she can get some rewards. The evaluation scheme plays an important role in our continuous ERP improvement. By using this method, we encourage every user to be involved into ERP improvement.

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Unfortunately, in our interviews, we did not deliberately differentiate the impact of reward vs punishment in the evaluation schemes. Therefore, how to design an effective performance evaluation scheme is still an interesting issue for future research. Nevertheless, we propose: Proposition 3:

In organizational settings, the performance evaluation scheme related to ERP use has a significant impact on level of individual assimilation of ERP technology.

Job specifications Another interesting issue we identified during our interviews was that the assimilation level an ERP user also depended on his/her position and job specifications in a company. If the user had a higher position, he/she was likely to get the opportunity to learn more about the ERP system and had a much better chance to become a power user or even a VIP user. For the frontline users, the opportunities were more limited. A user from the IT department of Company B confirmed that all of the power users in his company were departmental level managers or senior employees. He said that it was because those people had worked in the company for a long time and tended to be dominant figures in some functional areas, thus they not only knew their own business processes but also the ones in other departments. When being asked about whether there were some ERP users who knew a lot about both the business processes and the ERP system, the CEO of Company D stated: There are some employees like that in our company. But the number is limited. And these ERP users are all at the middle level, such as the departmental level managers y At the top management team level, some of the managers are accomplished in both business processes and ERP technology, such as our CFO and COO. Some others only know business processes well, with no complete vision about the ERP system, such as the top managers who are in charge of marketing and human resources.

The users of Company E explained their view on why job specifications matter in ERP assimilation. They said that they would like to learn more about the ERP system, but they didn’t have the extra authorizations and permissions needed. However, technical permissions in the ERP systems should not be the decisive factor that limited users’ ability to learn more and do more. In the majority of our interviews, we did not hear complaints about this limitation, an indication that some users had managed to overcome the technical barrier one way or another and acquired broader skills and knowledge. This leads us to the following proposition: Proposition 4:

In organizational settings, job specifications moderate the influence of organizational drivers on individual level assimilation of ERP technology. Broader job specifications enhance the influences, while narrower job specifications weaken the influences.

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Intrinsic motivation Studies on human behavior and achievement have shown the critical role of self-motivation (Deci & Flaste, 1996). It is believed that employees’ intrinsic motivation occurs when ‘their needs are directly satisfied (e.g., self-defined goals), or when their satisfaction lies in the content of the activity itself’ (Ko et al., 2005, p. 65). In the case of individual level ERP assimilation, we saw clear evidence that a strongly self-motivated user could achieve a higher level of assimilation, other conditions being similar. When being asked about how he became a VIP user in his company, a user in Company A said: On one hand, this is related to my personal interest; on the other, it’s related to my career planning y I want to get a position in operations management. Information management is an important part of the operations management. So I need to learn a lot [about the ERP system].

Interviewees in Company E expressed similar views. For example, the CIO said: We can continually progress in our work. And I often talked with my employees that I felt really happy and satisfied when I had solved some problems for the ERP users y My salary increases very slowly and the job is not exciting to me. However, we can learn more [in our company] everyday, and then have new findings and new success. This is valuable for our own progress.

We found that intrinsic motivation was viewed as an important factor influencing individual ERP assimilation by most interviewees, especially the VIP users. Thus, we propose: Proposition 5:

In organizational settings, an individual’s intrinsic motivation for career and learning has a significant impact on the level of individual assimilation of ERP technology.

Perceived usefulness According to Davis (1989), perceived usefulness is ‘the degree to which a person believes that using a particular system would enhance his or her job performance’ (p. 320). The technology acceptance literature suggests that a system with higher level of perceived usefulness would lead to higher degree of use. This logic can be readily extended to individual level ERP assimilation, and we found plenty of evidence supporting it. When being asked about how he had come to be a VIP user, the manager of product management department in Company C said: What I need to do is to make the production plan more accurate, and I need to get the sales information in a timely manner. The ERP system we are using can ease my work by filling that need. That’s the reason.

The manager of product management department in Company A confirmed the importance of perceived usefulness by individual users when being asked about how to make the training for users more effective: In my opinion, training should let users know that ERP system is useful to them. This is more important than

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training focusing on ERP basic knowledge and how to use the ERP system y For example, I always tell them that using ERP can make your work more effective and with fewer mistakes.

Our evidence suggests that perceived usefulness makes users to trust and depend on an ERP system, motivates them to learn more about the system, and eventually leads to higher levels of assimilation. Thus, we propose: Proposition 6:

In organizational settings, the perceived usefulness of ERP applications by individual users has a significant impact on the level of individual assimilation of ERP technology.

Individual absorptive capacity The construct of organizational absorptive capacity has been used to explain how organizations assimilate knowledge (Cohen & Levinthal, 1990) as well as ERP technology (Saraf et al., 2006). However, an organization’s absorptive capacity will depend on the absorptive capacities of its individual members (Cohen & Levinthal, 1990). A higher level of individual absorptive capacity makes it easier for an individual to acquire and retain new knowledge (Fichman & Kemerer, 1997). Individual absorptive capacity reflects ‘the ability of a recipient to recognize the importance and value of externally sourced knowledge, assimilate it, and apply it’ (Ko et al., 2005, p. 64). Cohen & Levinthal (1990) further defined individual absorptive capacity in terms of prior related knowledge and diversity of background. For the majority of ERP users in organizations, the prior related knowledge of ERP systems is rare. As a consequence, user training becomes one of the most important ways to enhance individual absorptive capacity. Companies expect implementation consultants to transfer their knowledge of ERP to employees through effective training (Ko et al., 2005). The role of training in ERP assimilation is well supported by the evidence in our interviews. For example, the manager of the finance department in Company A expressed this view: I think that training is essential. We need some professional people to explain what the whole business process is for us. For example, how the data transfer directly from fixed assets to general account y This will reduce our manual entry workload, and make us work more efficiently.

When talked about ERP training during the interview, the CEO of Company D stated: We not only gave the end users technological and operational training [on ERP system] but also some basic knowledge training [about ERP]. Our end users took the training in UFIDA at very early time [of ERP implementation] y We also have a plan to provide continuous training on basic knowledge [of ERP] to end users [after the implementation phase].

On the other hand, educational background of an individual user did not stand out as a significant factor in individual ERP assimilation. We met with users with

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various undergraduate degrees ranging from business to engineering, and none of them emphasized their education background as anything significant in their learning of ERP systems. Our interviews suggest that adequate training can make up, if not completely substitute, the knowledge shortfall due to the lack of prior related knowledge and educational background in related fields. Users with various education backgrounds, if trained properly, can become skilled ERP users and migrate upwards in the assimilation hierarchy. The contingencies associated with the influence of absorptive capacity suggest that absorptive capacity itself would not lead a user to higher levels of ERP assimilation. Rather, individuals with higher absorptive capacity would reach higher levels of assimilation if strong intrinsic motivations exist and if they believe that learning more about an ERP system is useful to their jobs and career. Thus, we propose: Proposition 7:

In organizational settings, individual absorptive capacity moderates the impact of cognitive factors on the level of individual assimilation of ERP technology. The impacts of intrinsic motivations and perceived usefulness are strengthened among individuals with higher absorptive capacity and weakened among individuals with lower absorptive capacity.

The impact on organizational level assimilation One critical question regarding the discussion of individual level of ERP assimilation is: Does it have anything to do with organizational level ERP assimilation? To answer this question, we must be clear about what organizational level ERP assimilation stands for. As discussed in the theoretical background section, organizational level assimilation is often defined in terms of breadth and depth of ERP usage. The main issue with this definition is that the breadth is often constrained by the modules implemented and has more to do with adoption than assimilation, as discussed previously. In this study, we defined organizational ERP assimilation in terms of the extent of use at three hierarchical levels: supporting business processes, supporting decision making, and supporting business strategy, with the degree of assimilation increasing in that order, following a similar concept proposed by Hardgrave et al. (2007). During our interviews, we found evidence that links individual level assimilation to organizational assimilation. When an organization had more users at the power user and VIP user levels, the organization tended to exhibit a higher level of organizational ERP assimilation in terms of decision and strategic use of ERP applications. On the other hand, if an organization was dominated by transactional level, the organization tended to exhibit a lower level of organizational ERP assimilation. Although

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we don’t have direct evidence for making this linkage, there is plenty of circumstantial evidence in our case material. For example, when discussing the reasons why their ERP usage didn’t reach the level of his expectation, the CEO of Company D said: I think we have some problems of our own y Our company’s user team is not very strong. From this perspective, another client of UFIDA has done better than us. That company has a strong user team. So they run their business on UFIDA U9 platform smoothly. When problems do occur, their users understand the problems and can find solutions to individual cases. For us, the next step will be to discuss how to set up our own stronger user teams.

This statement implies that the CEO views a higher level of user assimilation as a critical foundation for a higher level organizational assimilation. Figure 3 depicts this relationship and Table 6 summarizes the supporting evidence across all five companies. These evidence and discussion lead to our final proposition: Proposition 8:

Table 6

In organizational setting, there is a direct relationship between the level of individual assimilation and level of organizational assimilation of ERP technology. More users at the higher levels of the individual assimilation hierarchy tend to indicate higher levels of organizational assimilation.

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Discussion Theoretical implications From the perspective of theory development, this study is among the first of ERP assimilation studies at the individual level. This study describes a framework for understanding the differences among ERP users and the potential migration path for these users. This study proposes an individual level ERP assimilation model that identifies key organizational and cognitive factors that drive users towards higher levels of the assimilate

Deep

Level of Assimilation

VIP Users

Supporting Strategy

Power Users

Supporting Decisions

Transaction Users

Supporting Processes

Shallow Individual

Level of Analysis

Organization

Figure 3 Relationship between individual and organizational assimilation.

Comparative analysis on the relationship between individual and organizational level ERP assimilation

Company

Individual level ERP assimilation

Organizational level ERP assimilation

Company A

| There are multiple VIP users in the top management team, including the CEO and divisional managers. | Every department has at least 2–3 power users. | Many transactional users in different departments.

| The ERP system is used to support business strategy, for example, selecting business partners and developing marketing strategy. | The ERP system is considered as one of the most important strategic assets the company has.

Company B

| CIO is the only VIP user in the company. | Every department has only one power user. | Most users are at the transactional level.

| The ERP system is used at the supporting business process level. | The CEO believed that a company shouldn’t make their decisions mostly depending on ERP system.

Company C

| There are two VIP users in the company. | No power users were identified. | Most users are still at the transactional user level.

| The ERP system is used to support business processes and manage business data resources. | The ERP system can’t support decision making since the analytical functions of ERP system haven’t been fully implemented.

Company D

| There are 3–4 VIP users who are all departmental level managers. | Every divisional site has at least one power user. | Most users are at the transactional level.

| The ERP system is used to support decision making at the operational level, for example, short-term production planning. | No strategic use of ERP is reported.

Company E

| There are three VIP users, including a Vice President, CIO, and ERP manager. | Many of the users are identified as power users. | Most users are at the transactional user level.

| The ERP system is used to support decision marking at operational level. | The MRP functions support the decision making about purchasing, production, and inventory. | No strategic use of ERP yet.

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hierarchy, as well as two significant moderators to the impacts of the organizational and cognitive factors. This study also extends the current research on technology assimilation by showing that there is a direct link between individual level assimilation and organizational level assimilation. In the context of ERP technology, the characteristics of individual level assimilation directly impact the level of organizational level assimilation. The key for organizations to move to the next level of assimilation is to increase the number of power users of the technology, which requires significant organizational level commitment and actions, such as establishing appropriate performance evaluation scheme, monitoring individual progress, removing job specification barriers, and conducting effective user training. This study also raises several questions regarding some of the popular theories in the information systems research. Top management championship has been one of the key concepts and theories in technology adoption and assimilation studies (Purvis et al., 2001; Chatterjee et al., 2002; Liang et al., 2007). While not questioning the significance of top management in the overall picture of technology assimilation, our study shows the critical role of mid-level managers and supervisors in influencing the behavior of employees and ultimately the level of technology assimilation. Managers at different levels will have different priorities and different impact on different issues over the life-cycle of technology diffusion. But, when it comes to technology assimilation at individual level, the mid- to low-level managers are more critical than the top level managers.

Managerial implications From a managerial perspective, this study offers some prescriptive guidance for managing individual level technology assimilation in the post-implementation stages of the life-cycle. To managers, understanding the individual level assimilation model and its relationship with organizational level assimilation is the first step towards higher levels of organizational assimilation. To achieve higher levels of assimilation, managers should focus on transforming more transactional users to powers users, and to a lesser degree, power users to VIP users. To do this, the six factors identified in this study could serve as the roadmap for action. First, we recommend that companies set up detailed performance evaluation schemes that include ERP assimilation indicators, such as providing feedbacks on ERP system performance, suggesting future improvements for the system, and providing ideas for redesigning the work processes. Second, effective training should be provided to all users in which the usefulness of the technology to the users should be clearly articulated and demonstrated in addition to the technical skills. Third, supervisors should encourage users to understand and use ERP system better and in a broader context. Fourth, companies should make every effort to reduce the barriers for ERP users to move up the hierarchy, for instance, by removing

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unnecessary limitations on system access and increasing flexibility of job specifications for individual users. Last but not the least, creating and fostering an organizational-wide learning culture could have significant consequences to ERP assimilation. A strong learning culture in an organization will amplify the intrinsic motivations of users, and lead to higher levels of individual and organizational ERP assimilations.

Future research directions Our findings need to be considered in the light of certain limitations, which also provide opportunities for future research. First, this multi-case study was in a single country setting which has some unique cultural and managerial characteristics. Thus, it necessitates caution when extending the findings to organizations in other nations. Future comparative research in different cultural settings could provide interesting contrasts on and insights into how individual level assimilation might be impacted by organizational and national cultures. Second, the generalizability of the findings may also be restricted by the limited number of firms and industries sampled in this study. Future research could focus on developing empirical tests to validate the findings and the proposed model of individual level assimilation with a larger sample. Third, we had only limited evidence on the linkage between individual level and organizational level assimilations. It would be interesting to conduct a multi-level empirical analysis of the influence of individual level assimilation on organizational level assimilation. Finally, we did not consider a potential feedback effect from organizational assimilation to individual level assimilation. It is possible that a higher level of organizational assimilation, as a result of more powers users and VIP users, could create an organizational climate in which more individual users would be motivated and empowered to move up the ranks of the assimilation hierarchy. One future study could examine the nature and the effect of the feedback effect between individual level assimilation and organization level assimilation.

Conclusions Using a multiple case study design, we conducted interviews with top managers, middle-level managers, and frontline ERP users at five companies, with a focus on understanding the phenomenon of individual level ERP assimilation. We proposed a hierarchy of individual level assimilation in which ERP users are classified as transactional users, power users, and VIP users, where the transactional users represent the lowest level and the VIP users the highest level in the assimilation hierarchy. Based on our findings, we proposed an individual level ERP assimilation model that identifies key drivers influencing individual level ERP assimilation, namely, influence of direct supervisors, performance evaluation schemes, intrinsic motivation, and perceived usefulness, as well as two significant moderators to these drivers: job specifications and individual absorptive capacity. We

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also explored the relationship between individual level and organizational level assimilations and found that organizational level assimilation is directly related to individual level assimilation. The identification and confirmation of individual level technology assimilation in organizations constitute an important extension to the technology assimilation literature which has primarily focused on organizational level factors and consequences. This study calls for more attention to individual level technology assimilation research and to multi-level studies that investigate interactions between individual level and organizational level technology assimilations. The classification scheme of individual users and the assimilation hierarchy

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proposed in this study establish a foundation for future research in these directions.

Acknowledgements This research was partially funded by a grant from the Chinese National Natural Science Foundation (Contract #71028003). The authors would like to express their gratitude to the executives, managers, and users in the case companies for their time and contribution to this study. We are also indebted to the editor, associate editor, and the anonymous review team for their insightful and constructive comments which helped significantly to improve the quality, rigor, and readability of the manuscript.

About the authors Luning Liu is a doctoral candidate in the Department of Management Science and Engineering in the School of Management at Harbin Institute of Technology (HIT), China. He received his B.S. and M.S. in Information Systems from HIT. His research primarily focuses on enterprise information systems implementation and assimilation. His work has been published in Management Review and conferences including the Hawaii International Conference on System Sciences and the Americas Conference on Information Systems. Yuqiang Feng is Professor and Chair of the Department of Management Science and Engineering in the School of Management at Harbin Institute of Technology (HIT), China. She received her B.S. in Computer Science, M.S. in Management Engineering, and Ph.D. in Management Science and Engineering from HIT. Her research primarily focuses on management information systems, decision support systems, negotiation support systems, and online auction. Her work has been published in Scientometrics, Journal of Management Sciences in China, System Engineering – Theory and Practice in China and presented at conferences including the Hawaii International Conference on System Sciences, the Americas Conference on

Information Systems, and the Pacific Asia Conference on Information Systems. Qing Hu is Dean’s Professor of Information Systems in the Department of Supply Chain and Information Systems at Iowa State University. He teaches IT management strategy, electronic commerce, and systems development at graduate and undergraduate levels. His research primarily focuses on the impact of IT on organizational strategy, culture, security, and performance. His work has been published in leading academic journals including MIS Quarterly, Information Systems Research, Journal of the AIS, Communications of the ACM, California Management Review, Journal of Management Information Systems, IEEE Transactions on Software Engineering, European Journal of Information Systems, and Information Systems Journal. Xiaojian Huang is Chief Operating Officer (COO) of Beijing Seeyon Software Co. in China. He has over 20 years of experience in management and practice in ERP industry. He was Executive Vice-President of SAP (China) and VicePresident of Kingdee International Software Group Co. His work has been presented at conferences such as the Hawaii International Conference on System Sciences.

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Appendix Sample Interview Questions. Table A1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

How would you describe the vision and strategy of your company regarding to competition and success in the market place? What is your philosophy regarding the role of information technology (IT) in organizations? From your perspective, what are the main roles of ERP systems in your company? In your company, how are ERP systems used in business processes and daily operations? Some examples? In your company, how are ERP systems used for supporting business decision making, such as short-term and mid-term production planning, marketing, and HR planning? Some examples? In your company, how are ERP systems used for strategic purposes, such as long-term planning using BI, new product/service development, and strategic alliances with partners? Some examples? In your company, are ERP systems being used for any other purposes? Some examples? Do you have any plan to expand the ERP systems in your company, such as adding more modules to the system? Why? How would you characterize the degree of ERP assimilation in your company? Please use any words you feel appropriate. How would you compare the level of ERP assimilation in your company to other companies you know in terms of operational, decision support, and strategic purposes? What do you think are the most important factors in ERP assimilation in organizations like yours? What is your thought on the relationship between use of ERP systems and competitive advantage in today’s economic environment? What would be some advises you would give to other managers about how to make ERP systems to create value for businesses? How would you characterize the role of government, including the state, provincial, and city government agencies, in the decision to implement ERP systems in your company? Could you provide some example? How would you characterize the role of government, including the state, provincial, and city government agencies, in the subsequent assimilation of ERP systems in your company? Could you provide some example? How would you characterize the role of top leaders in the assimilation of ERP systems in your organization? Do you think top leaders’ charisma matter?

Table A2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Sample interview questions for top managers

Sample interview questions for middle-level managers

How would you describe the ERP systems used in your company? Some examples? From your perspective, what are the main roles of ERP systems in your company? In your company, how are ERP systems used in business processes and daily operations? Some examples? In your company, how are ERP systems used for supporting business decision making, such as short-term and mid-term production planning, marketing, and HR planning? Some examples? In your company, how are ERP systems used for strategic purposes, such as long-term planning, new product/service development, and strategic alliances with partners? Some examples? In your company, are ERP systems being used for any other purposes? Some examples? In your unit, how do you describe the differences between ERP users in terms of the knowledge they have about ERP. In your unit, how do you describe the differences between ERP users in terms how they use ERP for their work? In your department, are ERP users usually trained about how to use the applications, or they most learn how to use the systems on the job? In you unit, how do ERP users acquire the knowledge about the inner workings of the ERP systems? Are you aware of any ERP user who is the person everyone else relies on when there is a problem with the system? Are you aware of any ERP user who not only has in-depth knowledge about ERP systems, but also knows how to use the ERP to solve new business problems? How would you characterize the degree of ERP assimilation in your company? Please use any words you feel appropriate. What do you think are the most important factors in ERP assimilation in organizations like yours? How would you characterize the role of top leaders in the assimilation of ERP systems in your organization? Do you think top leaders’ charisma matter? How would you characterize the role of government, including the state, provincial, and city government agencies, in the decision to implement ERP systems in your organization? How would you characterize the role of government, including the state, provincial, and city government agencies, in the assimilation of ERP systems in your organization?

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Table A3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

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Sample interview questions for end users

How would you describe your job responsibility in your company? How would you describe your education background related to your work? How would you describe your knowledge and skills related to the ERP systems used in your company? From your perspective, what are the main roles of the ERP systems in your company? From your perspective, how do you describe the differences among ERP users in terms of the knowledge they have about ERP. From your perspective, how do you describe the differences among ERP users in terms how they use ERP for their work? In your unit, how do you learn about using the applications correctly, or do you mostly learn how to use the systems on the job? In you unit, how do you acquire the knowledge about the inner workings of the ERP systems if you are interested? Are you aware of any ERP user who is the person everyone else relies on when there is a problem with the system? Are you aware of any ERP user who not only has in-depth knowledge about the ERP systems, but also knows how to use ERP to solve new business problems? How would you characterize the degree of ERP assimilation in your company? Please use any words you feel appropriate. How would you characterize the degree of ERP assimilation by yourself? Please use any words you feel appropriate. How would you compare yourself in terms of ERP assimilation to other users in your company? Some examples? What do you think are the most important factors in ERP assimilation by users like you? How would you characterize the role of top leaders in the assimilation of ERP systems in your organization? Do you think top leaders’ charisma matter? What motivates you to work extra hard and spend extra time than others to understand how ERP works and how to use ERP to improve your work? What makes you to believe that ERP is good or useful to you? What makes you to believe that ERP is important or relevant to you? What do you think are the single most important factors that help or prohibit you from learning more about ERP systems?

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