Factors affecting the extent of e-procurement use in small and medium enterprises in New Zealand : a thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Business Information Systems at Massey University, Manawatu Campus, New Zealand

Abstract

Organisations practicing e-procurement rely on a range of information technologies to facilitate contracting and purchasing. Even though e-procurement is widely in use, factors shaping the use of e-procurement are poorly understood, because the existing studies relied on limited models of e-procurement practice. In particular, none of the studies took into account both the range of e-procurement functionalities used (breadth of e-procurement use) and the extent to which an organisation relies on e-procurement (depth of e-procurement use). Therefore, the purpose of my study was (a) to extend the existing measures of the extent of e-procurement use to better account for the richness of the existing practice, and (b) to examine the main factors affecting the extent of e-procurement use. An explanatory model of the extent of e-procurement use was formulated by conceptualising the extent of use as a two-dimensional construct comprising the dimensions of breadth and depth. The factors hypothesised to affect the breadth and the depth of e-procurement use were derived based on technology-organisation-environment (TOE) framework and diffusion of innovation (DOI) theory as well as on prior empirical studies of e-procurement adoption and use within an organisation. The factors from the technological context were relative advantage, compatibility, and complexity; from the organisational context, top management support and employee knowledge; and from the environmental context, partner readiness and external pressure. The model was tested against quantitative data obtained in a survey of 1,000 small and medium enterprises (SMEs) in the manufacturing industry in New Zealand. The response rate was 15%. Structural equation modelling was used to test the model. Qualitative data obtained in a series of follow-up interviews and in the survey were analysed via constant comparative method. Qualitative results were used to help interpret the quantitative findings. The model explained 39% of variance in the breadth of e-procurement use and 32% of variance in the depth of e-procurement use. Of the technological factors, relative advantage affected the breadth of e-procurement use (ß = .26) and compatibility affected the depth of e-procurement use (ß = .33). An environmental factor, external pressure, affected the breadth of e-procurement use (ß = .37). None of the factors from the organisational context of TOE framework had effect. Findings suggest that the breadth and the depth of e-procurement use are affected by different factors and, thus, lend support to conceptualising the extent of e-procurement use as a two-dimensional construct. However, the support for using DOI theory in context of explaining e-procurement use was mixed; of the three factors derived from DOI theory, relative advantage, compatibility, and complexity, only relative advantage and compatibility had effect. Keywords: E-Procurement, TOE Framework, DOI Theory, SMEs, New Zealand.