International Journal of Social Science Research eISSN: 2710-6276 [Vol. 2 No. 2, June 2020]
http://myjms.moe.gov.my/index.php/ijssr
INNOVATION FACTORS INFLUENCING THE SUPPLY CHAIN TECHNOLOGY (SCT) ADOPTION: DIFFUSION OF
INNOVATION THEORY
Shafiennawanie Mohamad Faisal1* and Sidah Idris2
1 2 Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Sabah, MALAYSIA
*Corresponding author: shafiennawaniemohamadfaisal@gmail.com Article Information:
Article history:
Received date : 22 February.2020 Revised date : 29 June.2020 Accepted date : 29 June 2020 Published date : 30 June 2020
To cite this document:
Mohamad Faisal, S., & Idris, S. (2020).
INNOVATION FACTORS
INFLUENCING THE SUPPLY CHAIN TECHNOLOGY (SCT) ADOPTION:
DIFFUSION OF INNOVATION THEORY. International Journal Of Social Science Research, 2(2), 128-145.
Abstract: The use of technology in business operation has been encouraged for many years. However, according to the Department of Statistics’ Economics Census (2020), a total of 93.1% of SMEs in Malaysia used the computer in 2019 73.1% use the Internet, only 57.4% of 907,065 SMEs were involved in e-commerce transactions, and only 67.0%
have web presence in their businesses. It shows the level of technology usage still very low within business operation especially in supply chain that discourage the firm to digitalise their business. Thus, effort required to identify the factors affecting supply chain technology (SCT) among SMEs as SMEs are the key industry in Malaysia. This paper use Diffusion of Innovation (DoI) theory as underpinning theory, three variables were proposed to help predict SCT adoption which were perceived usefulness, complexity and compatibility. Data was collected from 106 SMEs in Sabah regardless in manufacturing, services and agriculture industry was tested using Structural Equation Modelling (SEM) via Partial Least Squares (PLS). The results and implications included in this study contribute to an expanded understanding of the innovation factors that influencing SCT adoption among SMEs.
Keywords: Supply chain technology, Diffusion of innovation, SMEs, Sabah, Malaysia.
1. Introduction
The slow and unexpected adoption of innovation among SMEs has leads many researchers and practitioners to seek to predict and understand the diffusion of innovation (Alam, 2009;
Kamaruddin and Udin, 2009; Dahnil, Marzuki, Langgat and Fabeil, 2014). Kossai and Piget (2014) highlighted that the technology has been the main tool for economic growth in every country. As developing country, Malaysian government is well recognized with the importance of technology to the country’s economic growth, thus, announced 2017 as “years of internet economy” (Ministry of Finance Malaysia, 2017) and continued with the Fourth Industrial Revolution in 2018 which known as digital transformation of industrial market (Ministry of International Trade and Industry Malaysia 2017, 2018) in order to help the business participants especially the SMEs in Malaysia in term of innovation aspects (SME Corporation, 2018).
Technology has been widely playing a crucial role in supply chain (SC) activities. This is because SC requires technology support to enhance its traceability and transparency (Akkermans, Bogerd, Yucesan and Wassenhove, 2003). Collins et al. (2010) highlighted that SCT could help the firms’
SC become more effective and efficient. SCT also helps the firm to be more competitive in the marketplace. However, Mangir, Othman, & Udin (2016a) argued that the firms in Malaysia still facing great challenges to remain competitive and still searching to identify potential opportunities to growing-up in the uncertainty and borderless market environment.
2. Literature Review 2.1 Supply Chain
Figure 1: Basic Supply Chain
SC is a network of organization that involved various process to produce products and services and deliver the value-added to the consumer (Christopher, 2016). The process in SC including procurement, manufacturing flow management, product development and commercialization, order fulfilment, customer relationship management, customer service management, demand management and return (Croxton, García-dastugue, Lambert and Rogers, 2001). Along the chain, there have suppliers, manufacturers, producers, wholesalers, retailers, service logistics and consumers (Nagurney, 2013; Rajgopal, 2016) as shown in figure 1.
SC connect the business participants each other to achieve a common objective (Lee, Udin and Hassan, 2014). SC participants become networking to exchange the information to deliver the products and services to the end consumers (Cutting-Decelle et al., 2007). Bozarth, Warsing,
6. Supplier 5. Manufacturer 4. Producer 3. Wholesaler 2. Retailer 1.Consumer
7. Service Logistic
Flynn, & Flynn (2009) stated that SC is a complex process due to the SC participants are connected with numerous SC that produce various products and services, facing a hard-to-forecast situation and diverse consumers behaviour. Thus, it should have a good planning in SC activities because this information allows the firm to have better access to the host country and exploit global opportunities through various sources (Senik, Isa, Scott-Ladd and Entrekin, 2010).
The SC has been highlighted as a critical area for the firm’s success (Patterson, Grimm and Corsi, 2003). Holmberg (2000) emphasized that the firm who concern in SC able to create a competitive advantage. It is because SC give a high impact on operational efficiency in the business operation (Dobie, Glisson and Grant, 2000). SC perspective must be well-concerned to ensure the business participants could respond efficiently and minimize the surprise as (Towill and Mccullen, 1999) mentioned that the successful of SC is when there have less uncertainty and variability in SC, so that the business participants could improve their competitive position.
2.2 Supply Chain Technology Adoption
Technology is a tool that helps in improving the effectiveness and the efficiencies of SC, thus, become a competitive weapon to the firm strategy (Bakar, Yaacob and Udin, 2015). Since the Malaysian government is well recognized with the importance of technology, Industrial Revolution 4.0 (IR 4.0) has been established (Ministry of International Trade and Industry Malaysia 2017, 2018). With IR 4.0 establishment, firms can enrich their business operation in order to enhance the traditional methods to the new views like innovation. Knight (2000) asserted that innovation happens when firms suggest and support a unique idea and the latest processes that encourage the firms to produce new physical products and technologies. Therefore, infrastructure influence business directly is composed of public and private physical improvement of transportation, roads, sewage, water, electric, hospital, school and telecommunication such as internet connection and broadband speed (Idris et al., 2019).
The SCT is an innovation that can influence the organizational productivity, competitiveness, flexibility and has been recognized in SCM area (Deitz, Hansen and Glenn Richey, 2009). It has been emphasized that SCT give a significant impact to enhance firm performance when the effectiveness of this kind technology meets organizational goals (Collins et al., 2010). This has been supported by (Jadhav, 2015) where technology plays an important role in SC decision phase, thus achieving the main objective of SC, in which, to enhance SC profitability.
SMEs knows that relying on SCT within their SC could help them achieve a strategic opportunity (Collins et al., 2010). Albaladejo (2001) emphasized that strong technological capabilities can help firms to generate a better network. This has been supported by Idris and Mohezar (2019) that technology capabilities were important for the successful global supply chain. This is because technology plays a role as a “connectivity” (Power, 2005), therefore, helps the firm to be more competitive in the marketplace (Mangir, Othman and Udin, 2016b).
Table 1: Type of Supply Chain Technology
Technology Type of Technology Example
Integrative Technology Enterprise Resource Planning Oracle, PeopleSoft Supply Chain Planning System Manugistics, Logility Functional Technology Warehouse Management System (WMS) EXE, Catalyst
Transportation Management Systems (TMSs) Manugistics, Descartes Radio Frequency Identification (RFID) NORAND
Product Data Management (PDM) SRDC
Customer Relationship Management (CRM) system
Vantive
Manufacturing Execution System (MES) CAMSTAR, CINCOM Automated Quality Control (AQC) systems Pilgrim Software Computer-Aided Design (CAD) systems PTC, AutoCAD
Geo-coded Tracking system Qwest
Bar-coding technologies Intermec, NORAND
Electronic-commerce technologies EDI Source: (Patterson et al., 2003)
2.3 Diffusion of Innovation (DoI) Theory
DoI theory has been widely used in social science for a wide perspective (Brown, Venkatesh and Hoehle, 2014). This theory first developed by Rogers (1962) during his PhD, has brought many contributions to other researchers especially in innovation diffusion. The DoI theory discuss about four important elements in diffusion of innovation which were communication channel, social system, innovation characteristics and time (Rogers, 2003). The term of innovation explained by Rogers also could be referred as technology (Aizstrauta, Ginters and Eroles, 2015).
DoI theory was developed to focus on the belief of technology perspective, so there were five-step process or stages in technology adoption which were knowledge, persuasion, decision, implementation and confirmation stage (Taherdoost, 2018). These stages or called as communication channel would be passed by individual or organization at a different rate of innovation usage, depends on the characteristics of adopters which include innovators, early adopters, late adopters, late majority and laggard (Sanson-Fisher, 2004). Lyytinen and Damsgaard (2001) has seen to support that adopter characteristics can influence the rate of innovation diffusion, in which, the adopter characteristics also can explain the time aspect in innovation diffusion (Dahnil et al., 2014). It has been emphasized by Chang (2010) that innovative idea, product or system might influence the different level of community, individual and organization.
Thus, every stage has different process of innovation diffusion.
The innovation context in this study refers to the technologies relevant to the firm. This includes the existing technologies, as well as the emerging technologies relevant to the firm. Many innovation characteristics can influence its adoption (Wang, Wang and Yang, 2010). There were relative advantage, complexity, compatibility, trialability and observability (Aizstrauta et al., 2015). However, not all innovation determinants were necessary to be applied for SCT. Prior studies found that relative advantages, complexity and compatibility as the most well-utilized factors for IT adoption (Jeyaraj, Rottman and Lacity, 2006). This has been supported by Mustonen- Ollila and Lyytinen (2003) that relative advantage, complexity and compatibility as important factors in DoI theory. Tornatzky and Klein (1982) conducted meta-analysis research about the
innovation characteristics and innovation adoption-implementation found that relative advantage and compatibility often positively influence the rate of adoption and complexity was negatively influence the rate of adoption (as expected).
For this study, relative advantage would be substitute with perceived usefulness. It is because perceived usefulness considered as the most relevant factor in work setting and has a strong judgement of direct relationship between perceived usefulness and IT adoption (Jeyaraj et al., 2006). In addition, relative advantage and perceived usefulness were considered as an interchangeable factor in technology diffusion (Tarofder, Marthandan, Mohan and Tarofder, 2013). Hence, there were three important innovation characteristics has been highlighted which include perceived usefulness, complexity and compatibility that influence the SCT adoption.
Therefore, the diffusion of innovation theory has been appeared as an underpinning theory for this study to explain the determinant factors. The term of ‘adoption’ has been used to describe the implementation of new ideas or behaviours (Damanpour, 1991). Kaminski (2011) highlighted that implementation stage known as a trial stage where the organization have made a full use of such technology. Thus, this would more focusing on the implementation stage because the SCT adoption by the firm should use the SCT on regular basis.
2.4 Problem Statement
Figure 2: ICT Tools or System Usage (%) Source: SME Corporation (2018)
The survey made by SME Corporation (2018) on ICT tools or system usage showed that the technology adoption in SC, unfortunately, still in a low level of usage among SMEs in Malaysia.
Even the SCT offers various benefits and convenients to the SC, the adoption of SCT is still far from massive utilization (Chong, Liu, Luo and Keng-Boon, 2015). Muhammad, Char, Yasoa’, &
Hassan (2010) highlighted that SMEs still confront with a limited technology access, low productivity as well as poor managerial capabilities. Furthermore, Chong, Darmawan and Ooi
(2010) highlighted Malaysian SMEs often facing a difficulties when using certain technology. This situation will reduce the adoption of technology rate among SMEs, additionally, when that particular technology is not compitable with the users or organization (Chang, Hung, Yen and Chen, 2008).
Previously, the rate of SCT adoption among SMEs especially in Sabah still in a worry condition which proven by Bolongkikit, Obit, Asing, & Tanakinjal (2006) that studied the electronic commerce adoption among the SMEs in West Coast Sabah. Additionally, Joseph (2017) also emphasized that Sabah SMEs were witnessing the low level of production and unable to improve the development of products and services because of the lack of technology, lack of financial support and have a limited markets. Even if the SCT can be a tool to enhance the effectiveness and efficiency in SC (Kamaruddin and Udin, 2009), what is the type of SCT has been adopted by Sabah SMEs? And what was a strong determinant that influence its adoption? Unfortunately, very little literature related to the SCT adoption among SMEs (Ahsan, 1970; Migiro, 2006; Alam, 2009), especially in Sabah can be found. With this in mind, this study chose SMEs in Sabah as the main target, as Sabah SMEs have a potential significant to contribute to the country’s economic growth and might be highly relying on technology assisstance, we attempted to assess the current situation of SCT adoption within this industry, identify the factors affecting its adoption, and provide research findings as reference for practitioners in the industry and researchers in the academic field.
With regards to the importance of SC in business operation, it is imperative for this study aims to identify the type of SCT adoption among SMEs and to identify the innovation factors influencing SCT adoption in order to improve the firms’ SC.
3. Method
The method section explains the research framework, the material taken in this study, the measurement of each construct and the data analysis.
Figure 3: The research model for SCT adoption
SCT Adoption Perceived Usefulness
Complexity
Compatibility
3.1 Materials
The main material for this study is questionnaire, in which, it would be distributed to the SMEs in Sabah.
3.1.1 Samples
The sample for this study is small and medium enterprises (SMEs). SMEs can be categorized by two characteristics which were the annual sales turnover and the number of full-time employees.
For small-sized enterprise, in manufacturing sector, there will have the sales turnover from RM300,000 to less than RM15 million or the full-time employees should be from 5 to less than 75 peoples while in services and other sectors, there will have the sales turnover from from RM300,000 to less than RM3 million or the full-time employees should be from 5 to less than 30 peoples. For medium-sized enterprise, in manufacturing sectors, there will have the sales turnover from RM15 million to the limit of RM50 million or full-time employees should be from 75 to the limit of 200 peoples only while in services and other sectors, there will have the sales turnover from Sales turnover from RM3 mil to the limit of RM20 million or the full-time employees should be from 30 to the limit of 75 peoples only. Table 2 shows the classification of SMEs in Malaysia.
The reason of choosing SMEs is due to its biggest contribution to the country’s economic growth (Taylor and Murphy, 2004; Lim and Kimura, 2010). According to the (Ministry of International Trade and Industry Malaysia 2017, 2018), 98.5 percent of the whole business entities were being participated by the SMEs whereby this percentage represented 907,065 of the total SMEs.
Additionally, this study focusing more on small and medium sized of enterprise compared to the micro sized of enterprise due to the small and medium sized of enterprises have a greater number of employees, thus, they were more likely to adopt more technologies in their business (Patterson et al., 2003; Lee and Lee, 2007). Hence, it is vital for this study to adopt SMEs as a sample of study.
Table 2: Classification of SMEs
Category Small enterprise Medium enterprise
Manufacturing Sales turnover from RM300,000 to less than RM15 million
OR
Employees from 5 to less than 75
Sales turnover from RM15 million to not exceeding RM50 million
OR
Employees from 75 to not exceeding 200 Services and other
sectors
Sales turnover from RM300,000 to less than RM3 million
OR
Employees from 5 to less than 30
Sales turnover from RM3 mil to not exceeding RM20 million
OR
Employees from 30 to not exceeding 75 Source: National SME Development Council (Malaysia, 2013)
3.1.2 Site
The site for this study is Sabah, Malaysia. The reason of choosing Sabah, Malaysia is due to Sabah has recorded big changes in the growth of Malaysia such as many infrastructures development and GDP per capita of Sabah were rapidly increased (Idris and Idris, 2017). Additionally, the Sabah SMEs were ranked at the seventh highest number of the whole SMEs in Malaysia (6.14 percent or 55,702 of Sabah SMEs), thus, it shows that Sabah SMEs have a high potential to contribute to the Malaysia’s economic growth (Ministry of International Trade and Industry Malaysia 2017, 2018).
Eventually, this study primarily used Sabah SMEs as a unit of analysis.
3.1.3 Procedures
The procedures taken to confirm on how the data would be collected.
Design
A quantitative research approach was employed whereby a sample survey was conducted to collect data for this study. So, this study employs a questionnaire as the research instrument. The research hypotheses were tested using cross-sectional data obtained from the field survey of SMEs in Sabah, Malaysia. Eventually, the study would employ a small-size and medium-size of enterprise (without take into account the micro-size of enterprise) as a unit of analysis, in which, one firm would represent as one respondent.
Variables
Perceived usefulness
Perceived usefulness referred to a rational reaction of the user in selecting a particular system (Liao, To, Liu, Kuo and Chuang, 2011). In supply chain management (SCM), it was also well accepted that SCT has a positive relationship with perceived usefulness (Tarofder et al., 2013).
Therefore. This study proposed the following hypothesis:
H1. Perceived usefulness will have a positive effect on SCT adoption.
Complexity
Complexity referred to the difficulty of using a system for the user (Tarofder et al., 2013). Rogers (2002) stress out that the technology that is perceived by users as less difficulty, then it will be used more frequently. Therefore, the following hypothesis is proposed:
H2. Complexity will have a negative effect on SCT adoption.
Compatibility
Compatibility referred to a degree of technology perceived consistent with user’s or organizational needs, existing value and past experience (Sonnenwald, Maglaughlin and Whitton, 2001).
Mahadeo (2009) highlighted that user will adopt the technology if the technology is compatible, or fit, with user’s task. Therefore, the following hypothesis is proposed:
H3. Compatibility will have a positive effect on SCT adoption.
Power and sample size
This study used G-power calculation to compute the minimum sample size. The G-power 3.0 provides many different statistical tests and various type of power analyses (Faul, Erdfelder, Lang and Buchner, 2007). So, by using G-power calculation, the minimum sample size for this study was 85 respondents.
Figure 4: G-power calculation
3.2 Measurement
The principal construct measures were based on existing instruments. Items were modified to fit the SCT context. Items for the SCT adoption were adapted from (Kamaruddin and Udin, 2009).
Seven items pertaining to the perceived usefulness construct were taken from (Davis, 1989; Tan, Ooi, Chong and Hew, 2014). The measures for complexity were adapted from (Premkumar and Roberts, 1999; Chang et al., 2008; Wang et al., 2010; Naicker and Merwe, 2018). Lastly, items for compatibility constructs were adapted from (Oliveira, Thomas, Baptista and Campos, 2016).
A five-point Likert scale ranging from “(1) none” to “(5) to a great extent” was sued for dependent variable items and “(1) strongly disagree” to “(5) strongly agree” was used for all independent variable items. Table 3 summarizes the measurement items of the dependent variable and table 4 summarizes the measurement items of the independent variables.
Table 3: Measurement Items of the Dependent Variable.
Variable Measurement items
SCT Adoption SCTA1. Product Data Management (PDM)
SCTA2. Customer Relationship Management (CRM) SCTA3. Automated Quality Control systems (AQCs) SCTA4. Bar-coding technology
SCTA5. Computer-aided Design (CAD)/ Manufacturing systems SCTA6. Warehouse Manufacturing Systems (WMS)
SCTA7. Manufacturing Execution Systems (MES) SCTA8. Transportation Management Systems (TMSs) SCTA9. Radio Frequency Systems (RFID)
SCTA10. Geo-Coded Tracking System (GCTS) SCTA11. E-Commerce Technologies
SCTA12. Supply Chain Planning (SCP) systems SCTA13. Supply Chain Event Management (SCE) SCTA14. Demand Forecasting Management (DFRM) SCTA15. Enterprise Resource Planning (ERP)
Table 4: Measurement Items of the Independent Variables.
Variables Measurement Items
Perceived usefulness PU1. Using SCT enhances the firm’s productivity
PU2. Using SCT increases the firm’s effectiveness in SCM PU3. Using SCT makes supply chain job easier
PU4. SCT helps to solve the problem quicker
PU5. SCT supports critical aspects of the business operation PU6. Using SCT allows accomplishing more work than would otherwise be possible
PU7. Using SCT helps save time in spending on unproductive activities
Complexity CX1. Firm believes that SCT is complex to be used CX2. Firm believes that there is a complex process for the development of SCT
CX3. The operation of the SCT is considered easy
CX4. Using SCT requires particular skills for the employees CX5. It will be very difficult to integrate SCT into current work practices
Compatibility COMP1. Using SCT is compatible with all aspects of the firm’s working style
COMP2. Using SCT is completely compatible with the current situation
COMP3. Using SCT fits well with the way of firm like to work.
3.3 Data Analysis
This section provides the mean and standard deviation, the descriptive analysis and the reliability analysis of constructs based on the respondent sample of 106 (N=106).
3.3.1 Descriptive Analysis
Data for this study was collected using a questionnaire survey administered in Sabah, Malaysia.
The questionnaire consists of five parts: SCT adoption, perceived usefulness, complexity, compatibility and demographics. 402 SMEs from the database of SME Corporation Sabah Regional Office and other government agencies were being selected by using purposive sampling.
The study questionnaires were mailed to the 402 SMEs in Sabah. This study only received 106 useful responses. The response rate was thus 26.37%. Sample profiles are shown in Table 5.
Table 5: Sample Profile
Demographic Variables Categories Frequency Percentage (%) Level of Management Top management level
Middle management level First management level
40 12 54
37.7%
11.3%
50.9%
SCT experience of firm 0 to 5 years 5 years and above
71 35
67%
33%
Industry Manufacturing
Services Agriculture Others
32 52 3 19
30.2%
49.1%
2.8%
17.9%
Firm size (based on the number of employees)
Small Medium
96 10
90.6%
9.4%
Main Business Area West Coast Division Tawau Division Kudat Division Sandakan Division Interior Division
69 20 3 9 5
65.1%
18.9%
2.8%
8.5%
4.7%
3.3.2 Mean and Standard deviation
Table 4 shows the mean and standard deviation of the measures used for the study constructs – SCT adoption, perceived usefulness, complexity and compatibility.
Table 6: Mean and Standard Deviation of the Measures
Variable Mean Standard Deviation
SCT adoption 3.208 0.928
SCTA1 3.57 1.1.47
SCTA2 3.81 1.061
SCTA3 3.10 1.234
SCTA4 3.19 1.500
SCTA5 3.10 1.420
SCTA6 2.83 1.370
SCTA7 2.93 1.340
SCTA8 3.13 1.474
SCTA9 2.63 1.436
SCTA10 2.71 1.407
SCTA11 3.69 1.237
SCTA12 3.41 1.209
SCTA13 3.13 1.250
SCTA14 3.34 1.178
SCTA15 3.55 1.156
Perceived Usefulness 4.064 0.739
PU1 4.08 0.973
PU2 4.03 0.931
PU3 4.25 0.871
PU4 4.17 0.931
PU5 3.84 1.006
PU6 3.98 1.033
PU7 4.11 0.797
Complexity 3.128 0.691
CX1 2.55 1.043
CX2 2.80 1.183
CX3 3.60 1.021
CX4 3.75 1.087
CX5 2.94 1.170
Compatibility 3.817 0.833
COMP1 3.75 1.003
COMP2 3.77 0.918
COMP3 3.92 0.973
The mean level of SCT adoption was moderate at 3.208. The result shows that majority of SMEs in Sabah have adopt customer relationship management (CRM) system in their supply chain (which has mean of 3.81) compared to radio frequency systems (RFID) that has the lowest adoption among them (which has mean of 2.63).
The result also shows that the extent to which the SMEs in Sabah perceived the usefulness in SCT adoption. The mean level of perceived usefulness was 4.064. They were highly perceived that using SCT makes the supply chain job easier, followed by the SCT helps solving the problem quicker, helps save time in spending on unproductive activities, can enhances the firm’s productivity, increases the firm’s effectiveness in SCM, allows more work accomplishment and support critical aspect of business operation with the mean level of 4.25, 4.17, 4.11, 4.08, 4.03, 3.98 and 3.84 respectively.
Next, the mean level of complexity was fall at 3.128. This means that they believe SCT adoption was highly required particular skills for the employees, followed by the operation of SCT is considered easy, it will be very difficult to integrate SCT into current work practices, there is a complex process for the development of SCT and believe that SCT is complex to be used with the mean level of 3.75, 3.60, 2.94, 2.80 and 2.55 respectively.
Finally, the mean level of compatibility indicated at 3.817. They also perceived that the SCT adoption was highly fits well with the way of firm like to work, followed by the SCT adoption was completely compatible with the current situation and SCT adoption compatible with all aspects of the firm’s working style with the mean level of 3.92, 3.77 and 3.75 respectively.
3.3.3 Reliability Analysis
Construct reliability was tested using the Cronbach's alpha (Premkumar and Roberts, 1999).
Cronbach’s alpha is the most common tool to measure the internal consistency, or reliability (Benton, 2013). As shown in Table 6, all the constructs except complexity have Cronbach's alpha above 0.7, in which, suggested that the constructs are reliable (Straub, 1989). The complexity construct that have Cronbach’s alpha less than 0.7 considered as questionable reliability.
Table 7: Reliability Analysis
Variables Cronbach’s Alpha Numbers of Items
SCT adoption 0.931 15
Perceived Usefulness 0.898 7
Complexity 0.613 5
Compatibility 0.829 3
4. Results and Discussion
This study extends our knowledge on the issues relating to SCT adoption among the SMEs especially in Sabah. The research also improves our understanding, by uncovering the internal important factors in term of technology adoption. Consistent with prior empirical works, this study lends credence to technology readiness in supporting SCT adoption to the SMEs in Sabah.
Consistent with prior works, this study shows that perceived usefulness towards SCT adoption is reliable among SMEs in Sabah. This finding confirms the literature by (Davis, 1989; Tan et al., 2014). Compatibility is also viewed as reliable signal towards SCT adoption among SMEs in Sabah, in which, support the findings of (Chang et al., 2008; Oliveira et al., 2016). This mean that SMEs in Sabah also believe that firm must have a compatible system to adapt with the current or the changes in value chain activities (Zhu, Dong, Xu and Kraemer, 2006).
However, the complexity of SCT reported as questionable reliability among SMEs in Sabah. This is contradict with the findings of (Premkumar and Roberts, 1999; Chang et al., 2008; Wang et al., 2010), in which, the RFID adoption could have certain technical restriction that differ from the real application and difficult to integrate RFID into the business operation, thus bring complexity to the firm. Perhaps, SMEs in Sabah just use comparatively easy tool into their operation. This can be proven through the mean result of SCT adoption, in which, the majority SMEs have adopted and use CRM system and RFID was the lowest adoption among SMEs in Sabah.
Thus, this study found that it is not supported the above study (Premkumar and Roberts, 1999;
Chang et al., 2008; Wang et al., 2010). It may suggest that SMEs in Sabah perceive the technology to be simple. Nevertheless, even with SCT offering many benefits for the whole SC process, according to the results, there were only 26.37 percent of SMEs in Sabah that adopted the SCT. It meant that the application of SCT among SMEs in Sabah was still in its infancy stage.
5. Conclusion
This study provides theoretical implications to the information technology literature. The study highlighted the knowledge on the issues relating to SCT adoption among Sabah SMEs.
Furthermore, this study also expressed many benefits of SCT adoption that also have been highlighted by prior studies. Last but not least, this study extends the knowledge on the determinant innovation factors towards innovation adoption, in which, supporting the DoI theory by Rogers (1962) as interesting ground in explaining the diffusion of innovation among SMEs, especially in Sabah, Malaysia.
The present study also has several important managerial implications. Despite the various potential benefits offered by technology, achieving such capabilities is not an easy task. SMEs managers in the local industry must consider adopting SCT in a broader perspective to enhance their organizational effectiveness. Since the adoption of technologies can be influenced by firms’
capabilities itself, this is important for the policy-maker such as SME Corporation to consider the possibilities of SMEs in refusing to implement the SCT due to the lack of knowledge on that and limited financial. Therefore, this study can be a benchmark for the policy-maker to identify, hence, improve the performance of SMEs to be global players as par as the SMEs in developed countries.
Therefore, future research would also benefit by extending the result up to the structural model analysis in order to explore on how the predictors can influence the SCT adoption.
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