ERP Adoption in Developing Countries in Asia: A Cultural Misfit
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ERP Adoption in Developing Countries in Asia: A Cultural Misfit Jayantha Rajapakse and Peter B Seddon Department of Information Systems The University of Melbourne, Australia. Abstract. The ERP adoption rate in developing countries in Asia is very low. Apart from obvious differences in relative wealth of organizations in Western versus most Asian countries, the literature suggests that national cultures of the Asian countries, which are quite different to the culture of the Western world—the birth place of ERP—may be one reason for such low adoption rates in developing countries in Asia. This paper explores and confirms that view by contrasting dimensions of the cultural practices embedded in ERP software and the national cultures in Asia. The analysis is grounded theoretically on Hofstede’s dimensions of national cultures. The cultural differences identified by Hofstede are explored through six case studies carried out in Sri Lanka, a developing country in Asia. The case studies reveal a clash of cultural forces between the culture embedded in Western ERP products and the culture of Asian ERP adopters. 1 INTRODUCTION Enterprise Resource Planning (ERP) software packages provide enterprise-wide generic solutions to many organisations. An enterprise system imposes its own logic on a company’s strategy, culture, and organisation (Davenport 1998). After two decades of ERP experience, organisations are still facing problems with ERP systems. Some of the problems are identified globally as: the misalignment between ERP features and organisational requirements (Markus & Tanis 2000; Brehm, Heinzl & Markus 2001; Shang & Seddon 2003; Swan, Newell & Robertson 1999; Sia & Soh 2002; Volkoff, Strong & Elmes 2002), cultural issues (Soh, Kien & Tay-Yap 2000; Heeks 2002; Tang, Furnhham & Davis 2003; Liang, Xue, Boulton & Byrd 2004; Reimers 2002; Martinsons 2004; Davison 2002), integration (Soh, Sia, Boh & Tang 2003; Rajapakse & Seddon 2005) and the level of economic development of various countries (Huang & Palvia 2001; Rajapakse & Seddon 2005). An analysis of customer “success stories” of three mainstream ERP vendors’ websites (www.sap.com, www.oracle.com, www.peoplesoft.com) suggests that fewer than 7% of ERP implementations worldwide have been in developing
countries in Asia. Organizations in the developing-country context pursue ERP
systems for similar reasons to organizations in the developed countries: mainly to
support their growth beyond what their previous in-house developed systems
allowed, and to stay competitive (and link strategically) with other organizations
globally (Huang & Palvia 2001; Markus & Tanis 2000). ERP systems were
mainly initiated by large organisations in the West. However, today ERP vendors
are concentrating more effort on small and middle size enterprises (Everdingen,
Hillegersberg & Waarts 2000). Reasons for low adoptions in developing
countries in Asia appear to be as follows:
• Relative to national per-capita incomes, ERP systems (including hardware,
software, and support) are much more expensive for organizations in most
Asian countries than in the West. Higher relative costs lead to lower
relative demand.
• Limited national infrastructure further restricts adoption e.g., due to lack
of skills to implement ERP systems and lack of telecommunications
infrastructure.
• The level of integration provided by ERP is too high compared to
expectations of individuals and organisations.
• National- and organizational-cultural issues may inhibit adoption. Even in
the west, reasons for not adopting ERP software include lack of “feature-
function fit” between the company’s needs and the packages available in
the marketplace. Because of different cultural and business practices in
developing countries, these problems of fit may be more pronounced in
developing countries.
In this paper we explore the importance of the fourth factor listed above,
namely, the impact of national/organisational culture on the adoption of western-
based ERP software in developing countries in Asia. Although the cultural issues
have been discussed in the ERP literature (Soh et al. 2000; Heeks 2002; Liang et
al. 2004; Reimers 2002; Martinsons 2004; Davison 2002) no study to date has
presented an in-depth analysis of such issues. Soh et al. (2003), say that their
review of the ERP literature suggests that developers’ have assumptions, norms
and values about integration, process-orientation, flexibility and domain
specificity. These assumptions, norms and values are built into ERP systems and
have potential to shape the organisations in various ways. Hence, the basic
argument is that the business practices embedded in western-based ERP software
are likely to reflect US and European organisational and national cultures, so
when such systems are implemented in Asia, problems may be experienced due to
mismatch between cultural assumptions and practices embedded in the software
and those in the client organization.Hofstede’s work represents the largest study attempting to classify nations based on broad value differences (McCoy, Galletta & King 2005). Even though his work has been criticised ( e.g., Maznevski, Distefano et al. 2002), his four dimensions of national culture do provide a systematic framework for identifying differences in national cultures. We expect cultural values at national level, transmitted to members of Sri Lankan societies through institutions such as family, religion and schools, to be important influences on the way new technologies, such as ERP systems, are adopted and used by individuals in Sri Lankan organizations. In other words, we believe that Sri Lankan national culture manifests at the organizational level through individuals. Thus, in this study, we use Hofstede’s (2001) framework as a lens for exploring reasons for low adoption of ERP systems in developing countries in Asia. The two dimensions identified as most relevant to ERP systems are Power Distance and Individualism/Collectivism. Using these dimensions, we use data from six case studies in Sri Lanka, to explore (a) the validity of Hofstede’s dimensions to interview respondents, and (b) the extent to which cultural differences explain problems in ERP adoption in these firms, and hence, why ERP systems have not been used often in developing countries in Asia. 2 THEORETICAL FOUNDATION Hofstede (2001) defines national culture as the collective programming of the mind that distinguishes the members of one group or category of people from another, and identifies four dimensions that distinguish different national cultures namely Power Distance, Uncertainty Avoidance, Individualism/Collectivism, and Masculinity/Femininity. Table I shows values, from Hofstede (2001), of these four dimensions for US, Germany, and various Asian countries. The US and Germany—the sources of most packaged ERP software—are shown as relatively low on Power Distance and high on Individualism. Although Sri Lanka is not shown in Table I, it is likely to be similar to other Asian countries such as India and Thailand. A brief description of each of the four dimensions is given below. Power Distance: This dimension is a measure of the interpersonal power or influence between two persons (eg. a boss and a subordinate) as perceived by the less powerful of the two. While the US and Germany have medium values on this dimension (mean = 38 in Table I), Asian countries have relatively high values (mean = 78 in Table I). Uncertainty Avoidance: This dimension is related to the extent to which members of a society feel threatened by uncertain and ambiguous situations and tries to avoid them. As Table I indicates, one cannot see clear systematic differences between US/Germany and Asia.
Individualism and collectivism: This dimension describes the relationship
between the individual and the collectivism that prevails in a given society.
Individualism means mostly caring of oneself and one’s immediate family. In
contrast, collectivism relates to caring for both oneself and other groups. Again, as
shown in Table I, the US is very high on individualism (91), and Germany (67) is
also relatively high compared to Asia (mean = 25).
Masculinity/Femininity: The duality of the sexes is a fundamental fact with
which different societies cope in different ways. In the workplace context, this
dimension relates to gender-like differences in work goal importance. Again, as
Table I indicates, there is no systematic difference in the index between US/
Germany and Asia.
Country Power Uncertainty Individualism/ Masculinity/
Distance Avoidance Collectivism Femininity
US 40 46 91 62
Germany 35 65 67 66
Malaysia 104 36 26 50
Philippines 94 44 32 64
Indonesia 78 48 14 46
India 77 40 48 56
Thailand 64 64 20 34
Pakistan 55 70 14 50
Table I. Index of the Cultural Dimensions (Hofstede 2001).
According to the Hofstede’s data, only Power distance and
Individualism/collectivism clearly differ from Asia to the US and Germany. Since
these two dimensions are directly connected to how people work together, it is
possible that differences in these two dimensions may lead to problems in
implementation of western-based ERP systems in Asian countries, such as Sri
Lanka. Therefore, in this study we concentrate only on power distance and
individualism/collectivism. Furthermore, Davenport (2000) describes two major
elements in ERP implementations as preparing the people and preparing the
technical system. Thus, in the process of preparing the people culture can be
significant.
Table II lists a summary the key differences between low and high Power
Distance work organisations (Hofstede 2001).
Low Power-Distance Index (West - High Power-Distance Index (Asia)
ERP)
1. Organisation pyramids are flat. Organisation pyramids are tall.
Hierarchies are established for Hierarchy in organisations reflects
convenience and for inequality of the existential inequality betweenroles. Hierarchies are not resulted in higher-ups and lower-downs,
salary anomalies and constraining including salaries, use of
information. information.
2. Decentralised decision structures Centralised decision structures
3. Small proportion of supervisory Large proportion of supervisory
personnel. personnel.
4. The leaders are resourceful Autocrats or good fathers, see self as
democrats, see self as practical, benevolent decision-makers with
orderly, and relying on support can close supervision can lead to
lead to satisfaction, performance, and satisfaction, performance, and
productivity. productivity.
5. Managers rely on personal Managers rely on formal rules.
experiences and on subordinates.
6. Managers are (increasingly) satisfied Managers dissatisfied with career,
with career, salary and involvement in salary and involvement in decision
decision making. making.
7. Subordinates expect to be Subordinates expect to be told.
consulted.
8. Subordinate-superior relations are Subordinate-superior relations are
pragmatic and superiors influence polarised, often emotional and
subordinates through bargaining and superiors influence subordinates
reasoning. Subordinates are protected through authority and sanctions. No
by institutionalised grievance defence against power abuse by
channels from power abuse by superiors.
superiors.
9. Innovations need good champions. Innovations need good support from
hierarchy.
10. Possibilities to escape from role Frequent role ambiguity and
ambiguity and overload. overload.
Table II. The key differences between low and high power distance work
organisations.
Three elements namely decision structures, supervisory staff and nature of
subordinates, have been selected from the Table II as vital differences mainly
because such elements are discussed in the literature. A ‘modern’ management
system may simply be more compatible with the philosophy underpinning an ERP
system which enables decentralized decision making by bringing information
relevant for decision making to the operational level; in contrast, a company
which tries to increase centralized control and decision making through an ERP
system might ultimately find the system ill-suited to this purpose (Reimers 2002;
Soh et al. 2003; Davenport 1998). In Hong Kong, universities tend to employ
more clerical staff in administrative offices than their North Americancounterparts (Davison 2002). Many clerical staff at the bottom of the hierarchy in
a Chinese organization feel much safer if they are told what to do; they know
what is expected (Davison 2002).
Table III lists the key differences between low and high
Individualism/Collectivism work organisations (Hofstede 2001). Collectivism is
concerned with group interest rather than individual interest. The West tends to be
individualist while Asia is collectivist.
Low Individualism Index (Asia) High Individualism Index (West -
ERP)
1. Employer – employee relationship Employer-employee relationship is a
is basically moral, like family links. business deal in a “labour market”
2. Employees act in the interest of Employees are supposed to act as an
their in-group, not necessarily of economic man. Hiring and promotion
themselves. Group thinking is decisions should be based on skills
embedded in hiring and promotion and rules only. Individual level
decisions, intra-group relationships, decision making, reporting,
decision making, reporting styles, organisational success and innovation
organisational success and are favoured.
innovations.
3. Poor performance is reason for Poor performance is reason for
assignment to some other task dismissal
4. Employee commitment to Employee commitment to
organisation low organisation high
5. Employees perform best in in- Employees perform best as
groups and group level training is individuals and individual level
more effective. training is more effective.
6. In business, personal relationships In business, task and company prevail
prevail over task and company over personal relationships
7. Fewer invention patents granted More invention patents granted
8. Less control over job and working More control over job and working
conditions; fewer hours worked. conditions; longer hours worked.
Less social mobility across Greater social mobility across
occupations. occupations.
Table III. The key differences between low and high Individualism and
Collectivism work organisations.
Norms of integration in ERP require at least an increase in knowledge about
other departments to support cross-functional processes, and usually also an
increase in work space (Soh et al. 2003). These requirements can have strong
implications for cultural elements such as performance, commitment and
innovation. ERP systems also demand organisational discipline and strict
adherence to standardised processes (Robey, Ross & Boudreau 2002).All the factors in Tables II and III, particularly those highlighted in bold, could
influence the level of ERP adoption in developing countries in Asia. A detailed
analysis of these factors, as they affect ERP adoption, is presented in Section 5
below.
3 RESEARCH METHOD
A case study is an empirical inquiry that investigates a contemporary phenomenon
within its real-life context, specifically when the boundaries between phenomenon
and context are not clearly evident (Yin 2003). As this paper is also trying to
investigate ERP adoption processes (how cultural misfits could lead to low ERP
adoptions in Asia), which is a contemporary phenomenon within real-life
contexts, we use the case study method. Furthermore, the explanatory nature of
this work well justifies using the case study method.
As summarized in Table IV, six case studies were conducted in Sri Lanka
during January 2004 to January 2005. Four organisations are from the consumer-
products industry, one is a telecommunications firm and one is a retailer. We use
the pseudonyms TelCo, RetailCo, ConfecCo, TeaCo, AgriCo and RubberCo for
the case organisations. ERP systems were mainly initiated by large organisations
even in the West. However, today ERP vendors are concentrating more effort on
small and middle size enterprises. We chose the case organizations for the
following reasons:
1. These organizations are among the largest in Sri Lanka, and all have the
potential for making IT investments of the magnitude associated with ERP.
2. All organizations had been using ICT in their operations over the past 15 - 20
years, and were adopting ERP to augment or replace existing systems.
3. These cases reflect a range of ERP choices, fully-fledged Mainstream ERP,
Selected mainstream modules, midrange ERP modules and locally developed
ERP modules.
4. The cases reflect a range of ownership options namely public, multinational
and privately owned companies.
In this study, multinational corporations (MNCs) were excluded since Sri Lankan-
based subsidiaries of MNCs usually have different, i.e., developed-country,
business practices compared to local organisations.
Company Turnover IT Solution Ownership
(US$ M)
TelCo 240 Mainstream and other Public listed
ERP modules
RetailCo 40 Single vendor fully- Public listedfledged mainstream ERP
ConfecCo 35 Locally developed MRP Private
modules
TeaCo 26 Mid-range ERP modules Private
AgriCo 25 Single vendor fully- Public listed
fledged mainstream ERP
RubberCo 20 Single vendor fully- Private
fledged mainstream ERP
Table IV. Summary of the six case companies.
Data were collected through (a) interviews with key players in the ERP/IT
adoption process in all six cases, (b) comprehensive system-review studies in two
cases, (c) use of a questionnaire of cultural indicators administered in the course
of the interviews at all six cases, and (d) examination of related documents such
as project plans, user complaints, project reports, budgets etc. and observations.
The first author conducted 20 formal interviews (1 in TelCo, 4 in RetailCo, 1 in
ConfecCo, 2 in TeaCo, 6 in AgriCo, 6 in RubberCo). Formal interviews lasted
mostly for about an hour. Twelve such interviews were audio-taped and
subsequently transcribed. Additionally, detailed notes were taken during the
interviews. The key interviewees include Directors, IT managers, Project
Managers, Business Managers, Production Managers and operational users. In
RetailCo and AgriCo, the first author was actively involved in the preparation of a
‘System Study Report” for top management.
Data were analysed mainly by identifying themes related to cultural and
business practices in the data (Miles & Huberman 1984) such as working styles,
expectations, working relationships, commitments, creativity, teams, decision
making, etc. The themes were identified by using techniques such as open coding,
classifying and pattern matching (Miles & Huberman 1984; Yin 2003). Cross-
case analysis was then used to identify similar themes across the cases (Yin 2003).
Details of the six case-study organizations now follow.
3.1 TelCo
TelCo is the largest fixed-line telephone operator in Sri Lanka. TelCo’s first
information system was developed in 1982 for the billing function when there was
a customer base of about 100,000. Telco currently has a customer base of
850,000. In mid 90’s TelCo implemented an Inventory Management module from
an ERP vendor in Europe. During the same period a Finance module from another
vendor in Singapore was implemented. The Billing and Revenue module
implemented in 1997 was replaced with another billing product in 2003. An HR
Management module was implemented in 2000. All four modules which are now
operational are supported by their different vendors. Thus, Telco doesn’t have an
ERP solution with total business integration.3.2 RetailCo RetailCo is one of the largest retail organisations in Sri Lanka. The company implemented its first in-house-developed accounting software in 1985. In the early 90s, RetailCo installed finance and distribution modules of a foreign (i.e., Western) MRP product without integration. The package went through a significant level of code modifications in order to meet the user requirements. RetailCo was forced to upgrade its hardware twice during life of this MRP software mainly due to the growth in data volumes. Finally, in 1997 RetailCo decided to change the system. Introduction of the ERP system in 1997 forced another total hardware change. In January 1998, the system went live. In 2002, the ERP agent abandoned the agency and another Sri Lankan company took over the agency. 3.3 ConfecCo ConfecCo is one the largest confectionery manufacturers in Sri Lanka. From 1980’s vendor developed and internally developed software modules co-exsist in ConfecCo. In late 90’s it seriously evaluated various ERP products and deferred adoption of such products. Subsequently, in 2001 ConfecCo decided to work with a local IT company to develop an ERP product suitable for their operation. Currently, several modules, i.e., Finance, Sales, Inventory, Purchasing, and Material Planning are operational and some are under development. 3.4 TeaCo TeaCo is one of the largest tea exporters in Sri Lanka. The company has been using a mid-range ERP product from a foreign supplier for last five years. Modules such as finance, order processing, inventory, purchasing and material management are operational. 3.5 AgriCo AgriCo is one of the largest agricultural-based manufacturing companies in Sri Lanka. In 1999, due to the Y2K problem and for planned functionality and technology upgrade reasons, it implemented a ERP product. Implementation could not be completed until the vendor abandoned its original ERP agency in 2002. Workarounds, data duplication, and Excel reports were the common practices. With a high volume of transactions and an incomplete ERP implementation project, the company faced many problems including some wrong transactions, which cost some money.
3.6 RubberCo
RubberCo is one of the largest rubber product manufactures in Sri Lanka. The
company implemented its first foreign accounting package in 1987. The system
was not implemented in integrated manner but as modules in isolation since the
working culture of the company favoured standalone user practices. RubberCo
decided to move to an ERP package in 1999 to overcome several problems
including Y2K, instability of the vendor of the existing package, and functional
problems.
4 RESULTS
This section presents evidence related to the company’s cultural practices in terms
of Hofstede’s two cultural dimensions, Power Distance and Individualism, based
on interviews, reports and questionnaires from the six case studies. A measure of
data triangulation was achieved by collecting data from mangers of the case
companies by means of both interviews and a questionnaire. This evidence is
summarised in Tables V and VI. Our interpretation of these findings is presented
in the next section, Section 5, Analysis and Discussion.
4.1 Power Distance
During the interviews decision making styles were mentioned frequently. Most of
the senior management felt that Sri Lanka is not yet ready for ERP because of
culture. “Culture wise we are not ready for even computerisation which is lower
than ERP. We are OK with standalone modules” reported the IT Manager of
TelCo. All six companies use a centralised decision making model irrespective of
ownership type (public vs private). Lack of decision making even at senior
mangers level leads to more concentration of authority at director’s levels. In fact
in the case of AgriCo, we observed that high level of concentration of authority as
one source of failure where one senior manger controls almost all the operational
departments. Most of the time management meetings are controlled by few senior
managers. Others are listeners or presenters of problems without suggested
answers. Thus, meetings are not open discussions as in the West. “Our
management systems are not geared for a proper ERP solution. First of all the
mind set of our people has to be changed, it is a cultural shock”, says the Vice
Chairman of ConfecCo.
“We find lot of human errors in our systems at operational levels. They are not
convinced about what they enter. They need guidance” reported a ConfecCo
interviewee. Sri Lanka has a teacher-centered education system up to the
university level (Navaratna 1995). Compared to activity-based learning in
Western schools, students expect total learning from the teacher (passiveparticipation). In Bloom’s (1956) taxonomy of educational objectives, thinking
proceeds from the lower levels (knowledge and comprehension) to the highest
levels (synthesis and evaluation). The passive form of participation by the student
does not require higher-order thinking skills and problem solving abilities; nor
does it motivate and challenge students to further inquiry as a means of obtaining
additional knowledge (McDermott 1993). This early life experience tends to carry
forward to the working life. “Operational Mangers use systems as IT tools but in
Europe it is a business driven need. Until our level of competency improves to
business need it may be foolish to implement an ERP and force them to use it”,
reported an interviewee. The same interviewee expressed a need for formal rules,
“For me without a proper logs and etc. etc. I would be worried about frauds and
malpractices”.
Subordinates, mainly operational staff with limited skills and professional
education, find it hard to absorb complex solutions like ERP systems. “If we are
to implement ERP we have to hire more people because our people are not
competent enough, and I am sure usage will be very limited at the end”
commented by an interviewee. “Standards of operational level people are
questionable. Therefore, quality of final outcomes from software degrades as
information goes up in the hierarchy”, says the IT Manager of TelCo.
The above paragraphs and additional comments and observations, which are
all concerned with the importance of various components of Hofstede’s (2001)
Power-Distance dimension, are summarized in Table V. The number of cases
where the component was present in the case is shown in brackets (maximum six).
The three rows in Table V correspond to the three rows highlighted in Table II. It
is clear from the table that the Power-Distance issues Hofstede identified are both
important and different in Sri Lanka compared to typical Western organizations.
Power Distance Supportive evidence
Questionnaire Facts from interviews
1. Centralized decision All 6 a) Centralised decision making (6)
structures; more Companies b) Junior and middle management
concentration of are reluctant to make decisions
authority. (5)
c) Less open in discussions (5)
2. Large proportion of All 6 a) Junior/operational staff needs
supervisory Companies high supervision (5)
personnel b) Expect others to do a better job
while your performance is poor
(6)
c) Lack of accountability (5)
d) Follow up is a must (6)
e) Staff is not disciplined (2)
3. Subordinates expect All 6 a) Subordinates are highlyto be told. Companies dependable on superiors (6)
b) Cannot absorb drastic changes
and such changes should be
incremental (6)
Table V. Summary of the findings in relation to Power Distance.
4.2 Individualism
ERP systems require individuals to learn, understand and master the system.
However, many employees do not make this effort. The Business Development
Manager of RetailCo commented “For example only one person knows A to Z of
how to run a data query with our ERP. They don’t understand the complicated
linkages”. He further commented that system is too complex in relation to the
existing competencies. “Our company is 42 years old and most of the people have
over 20 years of experience. It is a problem, they are very conventional in
thinking and used to manual systems. So we have a competency problem with our
ERP system” reported an interviewee manager from RubberCo.
In general, commitment is very low due to various factors such as low salaries
and other family and social responsibilities etc.. “We have a slow moving staff
because our culture is like that we are not getting snow tomorrow” a Director of
AgriCo. Making the situation worse, Sri Lanka probably has the highest number
of holidays in the world (around 25 days per year).
Most of the people like to continue with what they do and they have a fear that
changes may result in job loses. “Our systems had to be changed but people resist
to change” says the Vice Chairman of ConfecCo. The Accountant of RubberCo
said that they have faced with lot of resistance during their ERP adoption because
people didn’t want to accept changes for their current jobs. Having implemented
ERP five years back, RubberCo has not achieved any major business benefit yet.
The Managing Director of RubberCo also said that resistance to change is one of
the major factors for such delays.
The above paragraphs and additional comments and observations , which all
relate to the importance of various components of Hofstede’s (2001)
Individualism/Collectivism dimension, are summarized in Table VI. The number
of cases where the component was present in the case is shown in brackets
(maximum six). The three rows in Table VI correspond to the three rows
highlighted in Table III. It is clear from the table that the Individualism issues
Hofstede identified are both important and different in Sri Lanka compared to
typical Western organizations.
Individualism Supportive evidence
Questionnaire Facts from interviews1. Poor performance All 6 Companies a) High numbers of staff (6)
reason for other task b) Long service histories (5)
2. Employee 4 Companies a) Staff is reluctant to take
commitment to additional responsibilities
organisation low (6)
b) Staff is traditionally slow
moving (4)
c) Staff is not keen to complete a
Task (5)
3. Fewer invention All 6 Companies a) Lack of self
patents granted learning/innovation (6)
b) Not willing to accept new
technologies (6)
c) In general changes are not
welcomed (6)
Table VI. Summary of the total findings in relation to Individualism.
5 ANALYSIS AND DISCUSSION
As partly presented in Tables V and VI, the evidence collected through
interviews, questionnaires, and other sources reveals that Hofstede’s cultural
dimensions, namely, Power Distance and Individualism, summarize important
cultural differences between Sri Lanka and, say, the United States or Germany.
This section explores the extent to which these cultural differences explain
problems experienced by the case study firms that have adopted western ERP
systems, and hence, why such ERP systems have not been used often in
developing countries in Asia.
5.1 Power Distance
The analysis that follows is organized around the three components of Power
Distance shown in Table V (and in bold in Table II).
Centralised decision making – Decentralised decision making
While every company in the study favours centralised decision making, ERP
software promotes decentralisation according to the Western culture embedded in
it. Thus, delays in data entry due to not making the decision at the expected level
can create missing data or/and data in wrong context, which could lead to
incomplete reporting. Lack of information available for the key decision makers
from the operational level staff could lead to inferior decisions being made by key
decision makers.Large proportion of supervisory personnel –Small proportion of supervisory personnel In Sri Lanka, a supervisor’s job involves checking other people’s work. Such supervisory roles are prominent in most of the Sri Lankan companies due to lack of accountability and discipline at junior levels (mostly operational). Furthermore, junior staff are highly dependent on instructions from above; their work has to be followed up very closely. Therefore, activities of operational staff have to be staggered and verified before it is accepted. Subordinates expect to be told - Subordinates expect to be consulted All the cases reveal that subordinates rely heavily on instructions from the superiors. ERP software requires data capture at source by operational-level staff. In order to complete a transaction, one has to go through several screens through different navigational paths. Thus, as they operate a complex solution like ERP they need more and more instructions. This could result in having more supervisory staff. Summarizing, all three components of Power Distance from Table V lead to conflict between IT support required to match cultural norms in Sri Lanka and those assumed by western-based ERP systems. We argue that this cultural misfit is an important reason for the non-adoption by some firms of ERP systems in Sri Lanka and troubled experiences of others. 5.2 Individualism The analysis that follows is organized around the three components of Individualism/Collectivism shown in Table VI (and in bold in Table III). Poor performance reason for other task - Poor performance reason for dismissal Because of irregularities in recruitment processes, stringent labour laws and management’s sense of obligation to its workers, retrenchment of staff is not very frequent in Sri Lanka. This leads to high number of staff even though new technologies are introduced. This in turn, tends to result in some incompetent and inflexible staff. In Western societies poor calibre of staff will not survive. Thus, while ERP solutions expect a level of competence that the case companies some times find difficult to achieve. Finally, the most important part of the change management process, training, will be difficult because of high number of staff and some of them are less competent. Employee commitment to organisation low - Employee commitment to organisation high
ERP adoptions expect high level of commitment from all staff as expected by the Western culture. In contrast, the case companies do not show such commitments. In general, staff are slow moving and reluctant to take on additional responsibilities. However, additional responsibilities are a must in ERP adoptions. In order to support the cross-functional nature of ERP software, staff need to understand other department’s work which increases job scope. Some reasons for low commitment could be low salaries and other family and social responsibilities. Fewer invention patents granted – More invention patents granted Passion to change is the key for innovation. However, the case companies do not illustrate such a passion. In general, changes are not welcomed. Thus, while ERP solutions promote an exceptional level of change, the case companies oppose such change. Summarizing, as with the Power-Distance dimension, all three components of Individualism/Collectivism from Table VI lead to conflict between IT support required to match cultural norms in Sri Lanka and those assumed by western-style ERP systems. We argue that this form of cultural misfit is a second important reason for the non-adoption by some firms of ERP systems in Sri Lanka and troubled experiences of others. 5.3 Synthesis The above analysis of three Power Distance and three Individualism factors can be reduced to four opposing forces by combining the 2nd and 3rd Power-Distance factors from Table V into a single opposing force (low level of accountability vs high level of accountability) and the 1st and 3rd Individualism factors from Table VI into another single opposing force (Low level of change- High level of change). The resulting four opposing cultural forces are shown in Table VII. We do not claim that this set of four opposing cultural forces is exhaustive, but it is a useful start for understanding why ERP systems may be adopted less, and be less effective, in developing countries in Asia. Since all the Asian countries in Table I differ markedly from the West (represented by the US and Germany) in the two dimensions analysed in this paper, it seems likely that these four cultural clashes also apply to other developing countries in Asia. National culture (Asia) ERP culture = West Centralised Decentralised Low level of accountability and High level of accountability and discipline discipline Low level of commitment High level of commitment Low level of change High level of change
Table VII. Four cultural clashes for ERP systems in developing countries in
Asia.
6 CONCLUSION
Although factors such as the high relative cost of hardware and software
compared to costs in the West, limited national infrastructure (including country-
wide knowledge of ERP systems), and well-documented difficulties with IT
implementation projects are clearly important in explaining the relatively low
adoption of western-based ERP systems in developing countries in Asia, we have
chosen to focus on the possible impact of cultural factors, to explain the relatively
low adoption of ERP systems in developing countries in Asia. Our basic argument
is that the business practices embedded in western-based ERP software are likely
to reflect US and European business and national cultures, and that when such
systems are implemented in developing countries in Asia, problems may be
experienced due to mismatch between cultural assumptions and practices
embedded in the software and those in the client organizations.
Our conclusion is that cultural factors do matter. In this study, we used two
cultural dimensions from Hofstede (2001), namely Power Distance and
Individualism/Collectivism, to explore potential cultural misfit between western-
style ERP systems and Sri Lankan organizations. By identifying culture clashes
through these dimensions we managed to explain some reason for problems in
ERP adoptions in developing countries in Asia. Our analysis reveals that four
pairs of opposing cultural forces (see Table VII) work against the ERP adoptions
in developing countries in Asia.
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