Abstract
Small and medium enterprises (SMEs) have played an important role in economic development. The increasing number of SMEs have resulted in the business landscape to become more and more competitive. This has made SMEs to also undergo great challenges to be able to maintain their existence and expand their businesses. It is argued that the enterprise resource planning system (ERPs) can improve business performance. Therefore, the primary purpose of this study is to examine the impact of an ERPs usage on the financial and non-financial performance of the Saudi SMEs. An exploratory study has been used to identify the factors contributing to the effective and successful use of an ERP system. The findings indicate seven contingency factors. Based on the exploratory study results, three hypotheses have been developed and tested in a quantitative study. A survey is constructed and sent to 200 Saudi SMEs that adopted the ERP systems. About 120 valid responses have been received. For data analysis and hypothesis testing, a structural equation modelling (SEM) tool has been adopted. The results depict that management support, user satisfaction, and training significantly impact the ERPs usage. Another significant finding is that ERP systems enhance SMEs’ performance.
Highlights
In the era of the dynamic business environment, organizations and especially SMEs face various challenges such as fierce competition, prominent market power, continuous information technology (IT) advancements, and the relevant innovative usage of that technology in order to gain a competitive advantage
This study examines the relationship between the contingency factors, enterprise resource planning system (ERPs) system usage, and business performance for SMEs in Saudi Arabia
We examine the impact of ERP system usage on business performance
Summary
In the era of the dynamic business environment, organizations and especially SMEs face various challenges such as fierce competition, prominent market power, continuous information technology (IT) advancements, and the relevant innovative usage of that technology in order to gain a competitive advantage. These challenges are affecting the way that organizations are managed. The universal nature of the new marketplace needs active players to globalize their operations [2] To subsist with these challenges, organizations have adopted numerous strategies and change initiatives. Melville et al [4] stated that IT is beneficial, offering a wide range of prospective advantages such as productivity enhancement, flexibility, cost reduction, quality improvement
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