Role of cloud ERP on the performance of an organization. Contingent resource-based view perspective

Pages659-675
Date14 May 2018
Published date14 May 2018
DOIhttps://doi.org/10.1108/IJLM-07-2017-0192
AuthorShivam Gupta,Sameer Kumar,Sanjay Kumar Singh,Cyril Foropon,Charu Chandra
Subject MatterManagement science & operations,Logistics
Role of cloud ERP on the
performance of an organization
Contingent resource-based view perspective
Shivam Gupta
Montpellier Research in Management, Montpellier Business School, Montpellier, France
Sameer Kumar
Department of Operations and Supply Chain Management,
Opus College of Business, University of St Thomas, Minneapolis, Minnesota, USA
Sanjay Kumar Singh
College of Business Administration,
Abu Dhabi University, Abu Dhabi, United Arab Emirates
Cyril Foropon
Montpellier Research in Management,
Montpellier Business School, Montpellier, France, and
Charu Chandra
Department of Management Studies, University of Michigan Dearborn,
Dearborn, Michigan, USA
Abstract
Purpose Cloud-based enterprise resource planning (ERP) enables an organization to pay for the services
they need and removes the need to maintain information technology infrastructure. The purpose of this paper
is to empirically test the role of cloud-based ERP services on the performance of an organization. Here, the
performance is categorized as supply chain performance and organizational performance that comprises of
financial performance and marketing performance. Contingent resource-based view (RBV) theory was used
to develop a theoretical framework in which supply base complexity (SBC) acts as a moderating variable on
the relationship between cloud ERP and the performance.
Design/methodology/approach Contingent RBV theory is used to explain the relationship between all
identified variables in this paper. Partial least squares (PLS) based on structural equation modeling (SEM) is
used to empirically test our theoretical framework.
Findings The PLS-SEM analysis of 154 respondents supports the contingent RBV theory. Six hypotheses out
of the eight hypotheses formulated in this paper are supported by data.
Research limitations/implications Given this study was conducted in India where the potential of
cloud ERP has not been fully implemented yet, the results may reflect more of perceived usefulness of this
technology. The authors have attempted to understand the effect of SBC as a moderator in the relationship
between cloud ERP and organizational performance which may not be the only moderator affecting this
relationship among other potential moderators.
Originality/value This paper empirically validates the theoretical framework based on the contingent
RBV theory as it mitigates the static nature of the resource-based view approach suggested in the seminal
article of Barney (1991).
Keywords India, Process management, Structural equation modelling, Organizational performance,
Information technology, Supply chain performance, Supply base complexity, Cloud ERP,
Logistics competences, Supply chain processes, Supply chaincompetences, Contingent resource-based view
Paper type Research paper
1. Introduction
Cloud enterprise resource planning (cloud ERP) provides real-time integration of business
processes, and helps to manage effective cross-functional operations in a business
organization (Xu et al., 2012; Yu et al., 2017). Organizations are currently shifting toward the
The International Journal of
Logistics Management
Vol. 29 No. 2, 2018
pp. 659-675
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-07-2017-0192
Received 22 July 2017
Revised 13 September 2017
Accepted 18 September 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
659
Role of
cloud ERP
use of cloud ERP as it offers cost-effective capabilities due to significantly less capital and
human resource involvement (Repschlaeger et al., 2013; Hashem et al., 2015; Maestrini et al.,
2017). Further, the extant literature shows that integrating supply chain management
systems with ERP can improve supply chain performance (SCP) as it enables timely access
to crucial manufacturing, inventory and logistics-related information (Akkermans et al.,
2003; Gunasekaran and Ngai, 2004; Kelle and Akbulut, 2005; Min et al.,2005;
Addo-Tenkorang and Helo, 2017). Using ERP in order to better integrate suppliers with
any associated organization provides access to information such as supply chain needs,
extent of product customization (Akkermans et al., 2003; Han et al., 2017), delivery schedules
and order status information (Kelle and Akbulut, 2005). Overall, the seamless flow of
integrated information allows for improved SCP in terms of timely delivery, optimum
inventory levels and cost effectiveness (Whitten et al., 2012) eventually affects the overall
organizational performance. Nevertheless, a business organization could have multiple
suppliers forming a supply base (Choi and Krause, 2006) in which the number, reliability,
differentiation and geographic dispersion of suppliers leading to a complex system could
affect the SCP (Whitten et al., 2012), and subsequently the organizational performance.
Based on the resource-based view (RBV) theory (Wernerfelt, 1984; Barney, 2001), an
organization can attain competitive advantage by synergizing resources and capabilities.
A resource may not be beneficial per se but multiple resources collectively emerge as
capabilities when bundled together for a concrete worthwhile task (Hoopes et al., 2003).
These resources and capabilities work in a given context and are influenced by various
contingent factors ( Jeble et al., 2017). RBV talks about the valuable, rare, imperfectly imitable,
and not substitutable (VRIN) framework (Barney, 1991). Nevertheless, in the long run, any
organizationmay lose out to competition becauseof imitation of products andthis will lead to
reduced market share for the organization ( Jeble et al., 2017). Ling-yee (2007) has explained
that RBV suffers from context insensitivitywhere it becomes difficultto identify resources
or capabilities which fall into the VRIN framework. The contingency theory suggests that
unpredictable factors that are both intrinsicand extrinsic to organizations further impact the
final realizable output of these capabilities (Grötsch et al., 2013).
Overall, contingent RBV helps to understand contextual implications on resources and
capabilities that eventually impact the performance of an organization (Brandon-Jones et al.,
2014). Utilizing a contingent resource-based perspective, we attempt to conceptualize
the impact of cloud ERP to SCP and overall organizational performance with supply base
complexity (SBC) acting as a contingent contextual factor. In other words, based on the
seminal work of Whetten (1989), this paper aims to:
(1) develop a theoretical framework based on the contingent resource-based theory to
explain the role of cloud-based ERP services on the performance of an organization; and
(2) empirically validate this framework using structural equation modeling (SEM).
This paper is divided into four sections and associated sub-sections. Section 2 focuses on
academic literature review and showcases the various factors identified for the latent variables
considered in this study. Section 3 presents the research methodology followed in order to
perform empirical analysis on data collected through survey. Section 4 is the discussion section
within which we have discussed outcomes from the perspective of theory and its practical
significance. At the end of this paper, Table AI shows the constructs and measures considered
in this study and the seminal articles from where these factors were drawn.
2. Literature review
In this section, we have uncovered the various latent variables and also the associated
factors that explain these variables.
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