The Determinants of Contract Compliance in E- Procurement and Distribution Industry in Malaysia

Abstract

Purpose – Whilst e-procurement has significant potential to reduce the purchasing costs of an organization, the realization of these savings requires user compliance. The purpose of this paper is to examine the extent to which user-perceived e-procurement quality (EPQ) (operationalized through the dimensions of professionalism, processing, training and specification) influences contract compliance. Design/methodology/approach – Data were collected through a survey questionnaire responded by 100 senior executive in the industry in Malaysia. The relationships proposed in the developed theoretical framework were represented through three hypothesis: H1- there is a significant relationship between professionalism and contract compliance. H2- There is a significant relationship between processing and contract compliance. H3- there is a significant relationship between specification and contract compliance. Linear regression, ANOVA and Pearson correlation were used to test the hypotheses. Findings – Strong evidence was found of a positive relationship between user-perceived EPQ and both system and contract compliance. System compliance was most strongly influenced by professionalism and content dimensions, whilst contract compliance was most strongly influenced by processing, specification, and content dimensions. Research limitations/implications – Data were collected from e-procurement users in four organizations, which may limit the extent to which findings can be generalized. Practical implications – User-perceptions of e-procurement provision significantly influence system and contract adoption. Practitioners should pay attention to management of different dimensions of perceived quality as they may have different effects on both contract and system compliance. Originality/value – This paper is the first to empirically assess the relationship between user-perceived EPQ and compliance. Its findings challenge the assumption that the monopolistic dynamics common within internal services, such as e-procurement provision, are sufficient to ensure compliance. Dissatisfied individuals invariably find ways to circumvent mandatory systems and contracts.