(LUẬN văn THẠC sĩ) determinants of application software adoption, the case of SMEs in HCMC , luận văn thạc sĩ

OVERVIEW

INTRODUCTION

Information technology is vital for economic development, with the software industry experiencing rapid growth compared to other sectors The global software market expanded from approximately US$110 billion in 1988 to around US$600 billion by 2002 This industry presents a significant opportunity for developing countries to enhance their economies and boost national competitiveness For instance, India's software industry has maintained an annual growth rate exceeding 20% since 1996, generating revenues of US$8.7 billion in 2001 Similarly, Brazil's software industry has seen growth rates of 11%-12%.

Developing countries should prioritize their domestic software markets, as this focus can accelerate software exports by enhancing experience and fostering innovation in software production (Schware, 1992).

The Vietnamese government recognizes the vital role of the software industry in economic development and has implemented various supportive policies and significant investments to foster this sector With around 7,000 organizations, including 6,000 state firms and nearly 260,000 limited companies, Vietnam's domestic software market holds considerable potential However, the adoption of application software remains limited, evidenced by revenues of only 93 million USD in 2006 Despite numerous conferences aimed at boosting the demand for domestic application software, effective solutions have yet to be realized.

The adoption of application software among SMEs in Ho Chi Minh City is influenced by various determinants Despite a domestic market growth rate of approximately 25%, the overall size and growth remain below anticipated levels (Nguyen, 2004).

THE CONTEXT OF VIETNAMESE SOFTWARE INDUSTRY

The Vietnamese software industry has grown prosperously in recent years Before

From 2000 to 2005, the government's plan for the software industry aimed for a revenue target of 500 million US dollars, but it fell short However, in 2006, the industry experienced significant growth of approximately 25% per year, with revenues soaring to nearly 500 million US dollars (498 million) by 2007, reflecting an impressive growth rate of up to 40% The government projected that software industry revenues would reach 600 million US dollars in 2008.

US dollars, and for 2010 would be 800 million US dollars (Tram 2009) The target for the year 2008 was reached, however, the economic recession curtailed revenue goals

In late 2008, the financial crisis and economic recession significantly impacted the Vietnamese software industry, particularly outsourcing firms, which were a major source of revenue FPT Software, a leading company in Vietnam, experienced a revenue growth of just 40%, a stark 50% drop compared to 2007 A survey conducted by VINASA in mid-2009 revealed that 64% of Vietnamese software firms faced negative growth from 2008, with 12% encountering severe declines and financial difficulties Only 36% of firms managed to maintain stable growth at levels equal to or above those of 2008.

However, in late 2009, there were some positive signals Some software outsourcing firms got new projects It happened because Vietnam software outsourcing firms had

The adoption of application software among SMEs in Ho Chi Minh City is influenced by several key determinants, including Vietnam's competitive labor costs, which are over 30% lower than those in China and India According to the IT department of the Ministry of Post and Telematics, the Vietnamese software industry generated revenues of $880 million, demonstrating a remarkable growth rate of 35%, exceeding the government's targets for 2010 (Nguyen, 2010).

The Vietnamese software industry has experienced rapid growth, averaging 35-40% annually in recent years Notably, software outsourcing has become the primary revenue driver within this sector, with a survey by Vinasa revealing that 50% of software firms are engaged in outsourcing activities (Tram 2009).

Statistics reveal that while 2,000 firms are registered as software companies in Vietnam, only 800 are actively engaged in the software industry, employing approximately 45,000 individuals Most of these firms operate with fewer than 30 employees and have charter capital below 500 million Vietnam Dong According to Jefrey Haddee, Deputy Chairman of the Business Software Association, the skill level of Vietnamese IT and software workers is inadequate, with only 1 in 10 candidates being qualified He attributes this deficiency to outdated educational programs, ineffective teaching methods, a lack of practical soft skills training, and weaknesses in foreign language proficiency (Manh 2009).

Experts suggest that to enhance the Vietnamese software industry, the government should prioritize the development of IT services, which account for over 75% of global IT and telecom revenue (Hiep 2009) Deputy Minister of Post and Telematics Nguyen Minh Hong indicates that the domestic IT services sector has yet to reach its full potential, primarily due to unclear mechanisms and a lack of government policies favoring specialization within the services industry.

Determinants of Application Software Adoption: The Case of SMEs in HCMC

Experts highlight significant limitations in Vietnam's IT services sector, including insufficient quantity, investment capacity, professionalism, inadequate intellectual property protection, and a lack of legal frameworks To address these issues, the government should establish clear assessment standards for service quality However, some companies argue against government-mandated quality stipulations, suggesting that assessments should be based on agreements between service providers and clients instead (Ha 2009).

To enhance the IT sector, especially in software, the government has tasked the Minister of Post and Telematics with developing a strategic action plan Minister Le Doan Hop has submitted this proposal to the Prime Minister, expressing hope for its swift approval He emphasizes the importance of focusing on six key areas to effectively tackle the substantial workload ahead (Ha 2010).

To strengthen Vietnam's IT sector, it is essential to build a large-scale workforce while also nurturing key talent Additionally, the focus should be on developing the IT industry to ensure that Vietnam not only consumes but also produces its own IT products.

Third, establish a high bandwidth infrastructure Fourth, IT should reach everyone, such as communication and internet; tools that contributes to development in modem and civilized countries

To enhance state management and reduce costs, implementing information technology is essential Establishing e-government initiatives will promote transparency from central to local levels, streamline processes, eliminate backlogs, and reduce bureaucratic obstacles, ultimately accelerating paperwork efficiency.

Sixth, establish telecom incorporation with international stature

In April 2009, the Prime Minister announced an investment of 980 billion Vietnam dong to develop the software industry and electronic content from 2009 to 2012, as outlined in Decision 50/2009/QD-TTg By the end of 2009, an additional investment of 16.9 billion Vietnam dong was allocated to further support this initiative.

OBJECTIVES OF THE RESEARCH

The Vietnamese domestic software market holds significant potential but has not yet reached the growth levels seen in other regions Understanding the reasons behind this stagnation is crucial, especially given the substantial government investment in the software industry Notably, there has been a lack of research examining the factors influencing application software adoption in Vietnam This study aims to address this gap by focusing specifically on the domestic application software market, which is vital for enhancing management efficiency Gaining insights into the determinants affecting this market will provide valuable guidance for policymakers seeking to boost the Vietnamese domestic application software sector.

RESEARCH QUESTIONS

This study tries to answer the following questions:

1 Do BOM Characteristics affect the software application adoption?

, Do Business Characteristics affect the software application adoption?

This article explores the reasons behind the slower-than-expected growth of Vietnam's domestic software market, providing insights that can guide government actions to shift SMEs' perceptions towards adopting application software Additionally, it offers software firms valuable direction on key areas to focus on for expanding the local software market.

RESEARCH METHODOLOGY AND SCOPE

This study only focuses on application software in Ho Chi Minh City's market

This study focuses on applications utilized for managing business activities, specifically targeting small and medium enterprises (SMEs) in Ho Chi Minh City Data was gathered through structured questionnaires, and subsequent analysis was performed using Cronbach's Alpha to ensure reliability.

In this study, EF A is utilized to validate the collected data, followed by regression analysis using the OLS model to identify the key determinants influencing the adoption of application software The analysis is conducted with the statistical software Eviews 4.1.

LITERATURE REVIEW

INTRODUCTION

Chapter 1 presented the overview of this study including the important role of the software industry in the economic development of developing countries and research objectives Chapter 2 is an introduction to the argument basis for this study based on the empirical studies This chapter is composed of two main sessions: (1) the definitions of terms that are used in this study, (2) the theories and empirical studies review.

DEFINITIONS

"Software engineering 1s the systematic approach to the specification, development, operation, maintenance, and retirement of software" (Schware 1989, p.l2)

System software is essential for managing hardware components, including peripheral devices like printers, keyboards, monitors, and storage systems, while also providing a platform for application software to run It serves as a crucial intermediary, connecting application software with the underlying hardware Key examples of system software include operating systems and device drivers.

Application software is specifically designed to leverage computer capabilities for managing tasks related to administration and management, such as payroll, human resources, and accounting (Schware, 1989) Unlike general software like Microsoft Excel and Microsoft Word, true application software focuses on these specialized functions Businesses can either develop this software in-house or purchase it from a software development firm to meet their operational needs.

THEORIES AND EMPIRICAL STUDIES

Application software encompasses various tools essential for managing business operations This study focuses specifically on the factors influencing the adoption of application software (ASADOPT) in small and medium enterprises (SMEs), as it is impractical to analyze all variables affecting software adoption across different business types According to Government Decree No 90/2001/ND-CP, an enterprise qualifies as an SME if its registered capital is capped at VND 10 billion or its workforce does not exceed 300 employees.

This study focuses on the following application softwares:

Purchasing Personnel and Payroll CRM

This study investigates key factors influencing technology adoption, drawing primarily from empirical research by Thong and Yap (1995), Nguyen and Barrett (2006), and Nguyen (2007) The critical factors identified include Innovativeness, Perceived Usefulness, Perceived Ease of Use, IT Knowledge, Size of Business, Competitive Intensity, and Types of Business, with additional empirical studies reviewed to further substantiate these findings.

Personal innovativeness significantly influences the adoption of innovation within organizations, as individuals with high innovativeness are more willing to take risks (Leonard-Barton and Deschamps, 1998) Innovative employees tend to be skilled and less swayed by managerial directives, enabling them to contribute effectively to the adoption process Moreover, a CEO's innovativeness plays a crucial role in small and medium-sized enterprises (SMEs), as they may favor untested, risky solutions that can lead to innovation adoption (Thong & Yap, 1995; Al-Qirim, 2007) Personal innovativeness also affects how perceptions shape adoption decisions (Ritu and Jayesh, 1998) In SMEs, the CEO typically collaborates with the Board of Managers (BOM) to reach final decisions, acknowledging that they may not possess expertise in all areas, such as Human Resource software Consequently, this study emphasizes the importance of the BOM's innovativeness (denoted as INNO) in determining whether an organization will implement new application software.

Hypothesis 1: Firms with BOM who are more innovative have positive effect on adopting application software

Research by Thong and Yap (1995) indicates that a CEO's positive attitude towards adopting information technology (IT) significantly increases the likelihood of successful IT implementation within a business This perception of IT is crucial, as it shapes attitudes towards its implementation Furthermore, studies by Nguyen and Barrett (2006) and Nguyen (2007) highlight the importance of technology in organizational success, reinforcing the need for leadership support in the adoption process.

The adoption of application software among SMEs in Ho Chi Minh City is significantly influenced by the Technology Acceptance Model (TAM), which is backed by extensive empirical research Central to this model are two key factors: perceived usefulness and perceived ease of use, both of which shape individuals' attitudes towards utilizing a system.

Nguyen and Barrett (2006) discovered that perceived usefulness and perceived ease of use are significant predictors of the intention to utilize IT applications Additionally, these factors can effectively forecast actual IT usage.

Research by Nguyen and Barrett (2006) and Nguyen (2007) demonstrates that the Technology Acceptance Model (TAM) effectively explains both individual and organizational intentions to use IT applications Attitudes toward IT adoption are influenced by perceived usefulness and perceived ease of use This study focuses on application software within the IT domain, utilizing the concepts of perceived usefulness and perceived ease of use in the context of Bill of Materials (BOM) as it pertains to a company's implementation of application software.

Perceived usefulness (denoted as OPU) of application software is a degree to which the SME believe that application software is useful (Nguyen & Barrett 2006; Nguyen

The effectiveness of application software in enhancing business performance is crucial, yet firms often struggle to verify its usefulness prior to implementation When business owners and managers (BOM) perceive an application as beneficial, they are more inclined to adopt it Positive experiences, either through personal use or through the success stories of others, can significantly enhance the perception of an application's usefulness.

Hypothesis 2: Firms with the BOM who perceive the usefulness of application software have positive effect on adopting application software

Perceived ease of use (OPEU) significantly influences the intention to utilize information technology (Davis et al., 1989) In an organizational context, particularly for small and medium enterprises (SMEs), perceived ease of use refers to the belief that employing application software will simplify the management and administration of tasks (Nguyen & Barrett, 2006; Nguyen, 2007) Essentially, the less effort required to manage tasks with application software, the higher the perceived ease of use Consequently, when the Board of Management (BOM) of a firm recognizes an application as user-friendly, they are more likely to adopt it for their business operations.

Hypothesis 3: Firms with the BOM who perceive the ease of use of application software have positive effect on adopting application software

Research indicates that system usability is a key factor in assessing its functionality, with the perceived ease of use significantly impacting the perceived usefulness of application software (Nguyen & Barrett, 2006) Additionally, innovativeness has been shown to positively influence the connection between perceived usefulness and the adoption of application software, as well as the link between perceived ease of use and its adoption (Ritu & Jayesh, 1998) However, this study will not explore the interactions among innovativeness, perceived usefulness, and perceived ease of use.

Thong and Yap (1995) find that lack of IT knowledge (denoted as ITKNOW) contributes to the failure of small firms to adopt IT, howe~er, CEOs understanding the

The adoption of application software among SMEs in Ho Chi Minh City is significantly influenced by the perceived ease of use and usefulness of IT Organizations may hesitate to adopt IT applications due to concerns about their complexity, despite recognizing their potential benefits (Nguyen & Barrett 2006; Nguyen 2007) A strong IT awareness among the Board of Management (BOM) can foster a belief in the user-friendliness of these applications (Ritu & Jayesh 1998) While IT knowledge is synonymous with IT awareness (Thong & Yap 1995), this study does not explore its direct impact on perceived usefulness and ease of use Additionally, many CEOs remain reluctant to adopt new IT solutions, highlighting the need for improved understanding and confidence in technology.

Many individuals remain unaware of the numerous benefits that information technology (IT) offers By educating them on these advantages, we can facilitate a smoother transition towards adopting IT solutions.

Hypothesis 4: Firms with BOM who have IT knowledge have positive effect on adopting application software

Organizational size significantly influences the adoption of information technology (IT) and e-commerce, as highlighted by Hashim (2007) Al-Qirim (2007) also emphasizes the positive relationship between firm size and the adoption of Intranet and Electronic Data Interchange (EDI) Furthermore, Thong and Yap (1995) reveal that larger firms are more inclined to adopt application software due to their greater resources and operational scale In contrast, small firms often face more resource constraints, making them less likely to utilize IT compared to their larger counterparts.

Hypothesis 5: Firms with larger in size have positive effect on adopting application software

Competitive intensity (CINT) significantly affects the adoption of application software within organizations Research indicates that higher levels of competitive intensity can influence the acceptance of innovative technologies (Robertson & Gatignon, 1986; Al-Qirim) This relationship highlights the importance of understanding market dynamics in the successful implementation of software solutions.

In New Zealand, SMEs are increasingly adopting eCommerce communication and application technologies to enhance their competitiveness (2007) According to Thong and Yap (1995), firms can transform their competitive landscape by leveraging IT in three significant ways: altering industry structure and competition rules, gaining competitive advantages through improved performance, and creating new business opportunities from existing operations Consequently, firms in highly competitive environments are more inclined to adopt IT to secure an edge over rivals, whereas those in less competitive settings may not feel the same urgency to innovate.

Hypothesis 6: Firms who perceive high competitive intensity of the industry have positive effect on adopting application software

METHODOLOGY

INTRODUCTION

This chapter is to discuss the methodology that is employed to test the conceptual framework developed in Chapter 2 This chapter introduces (1) the research process,

(2) the operationalization of measurement, and (3) the design of the survey questionnaire.

RESEARCH PROCESS ããããããããã

The research process of this study was composed of two main steps illustrated in Figure 3 1

The first step was to design questionnaires for the survey This was undertaken from the literature review From the literature review, all items from the questionnaire were

This study examines the factors influencing the adoption of application software among small and medium-sized enterprises (SMEs) in Ho Chi Minh City (HCMC) A tailored questionnaire was developed to align with the specific context of application software, and the refined items are detailed in Appendix 1.

This study conducted a primary survey without a pilot phase, as it utilized established items from previous empirical research that required no modifications The main survey aimed to evaluate both the measurement and structural models effectively.

This study employed face-to-face interviews and a mail survey targeting BOM members from firms in Ho Chi Minh City The survey measures were refined using Cronbach's alpha and Exploratory Factor Analysis (EFA) based on the collected data Subsequently, the refined measures were analyzed through least squares regression to estimate the results.

This study estimates an Ordinary Least Squares (OLS) model for application software adoption among SMEs, utilizing a dependent variable derived from factor analysis based on a Likert scale measured through five items The reliability of this measurement was confirmed using Cronbach's alpha and Exploratory Factor Analysis (EFA) The resulting model quantifies application software adoption levels on a scale from 1 to 5, where a score of 5 indicates a high level of adoption.

1 means highly not adopt application software

The assessment of application software adoption focused on various management areas where software could enhance firm activities This variable encompassed multiple applications, as each firm may utilize one or several software solutions to improve their operations.

Determinants of Application Software Adoption: The Case of SMEs in HCMC applications at the same time (MRP, SCM, CRM, Personnel and Payroll, etc.)

The application known as ERP encompasses various essential functions, including MRP, SCM, CRM, Personnel and Payroll, Inventory, and Finance Management For the purpose of this discussion, we assume that the firm utilizes all the applications integrated within the ERP system rather than focusing solely on ERP itself.

Some companies have adopted the application for their internal use, which may encompass one or multiple applications mentioned earlier, such as MRP and Personnel & Payroll Consequently, we recognize that these firms utilize both MRP and Personnel & Payroll applications.

The questions listed in the following table are for different applications that the firms use Each question is for a type of application

Our firm has applied application software AAS1 efficiently and effectively in tinancial management D D D D D

Our firm has applied application software AAS2 efficiently and effectively in the improvement of our inventory control activities and purchasing activities D D D D D

Our firm has applied application software AAS3 efficiently and effectively to improve our sales activities and customer services D D D D D

Our firm has applied application software AAS4 efficiently and effectively in the D D D D D

Determinants of Application Software Adoption: The Case of SMEs in HCMC utilization and simplification ofhuman resource management

Our firm has applied application software AASS efficiently and effectively in the simplification of manufacturing resources planning D D D D D

The measurement of BOM innovativeness utilized a modified version of the Thong and Yap (1995) scale, based on Kirton's Adaption-Innovation Inventory (KAI) This assessment comprised three key items: BOM typically generates original ideas, prefers to create new concepts rather than enhance existing ones, and frequently embraces the risk of doing things differently.

1 BOM usualiy has original ideas INN01 D D D D D

2 BOM would sooner create something INN02 new than improve something existing oã D D D D

3 BOM often risks doing things differently INN03 0 D D 0 D

BOM IT knowledge was measured based on the scale developed by the Thong and Yap

(1995) Their scale was measured by two items: (1) the computer experience, (2) the

This study examines the factors influencing the adoption of application software among small and medium-sized enterprises (SMEs) in Ho Chi Minh City (HCMC), focusing specifically on the self-assessment of computer knowledge relative to peers in similar roles Notably, only the second item of the survey was utilized for analysis, as it adhered to the Likert scale format.

I would rate my own understanding of ITKNOW computers (before my company computerized) as very good compared to oj other people in similar positions D D D D

The perceived usefulness of the application software was evaluated using a modified version of the Davis scales, as outlined by Nguyen and Barrett (2006) This assessment included five key statements: the software facilitates easier management of business information, accelerates the processing and retrieval of relevant data, reduces costs associated with obtaining statistical information, enhances the effectiveness of business decision-making, and overall, is deemed beneficial for managing business activities.

1 By using the application software, our OPU1 firm would manage information related to our business more easily D D D D D

2 By using the application software, our OPU2 firm would process and obtain information related to our business more quickly D D D D D

3 By using the application software, our OPU3 firm would obtain the statistic data related to our business more cheaply D D D D D

4 By using the application software, our OPU4 firm would find it more effective in making business decisions D D D D D

5 Overall, our firm would consider that the OPUS application software is useful for managing business activities D D D D D

3.3.2.4 BOM Perceived Ease of Use

The perceived ease of use of the application software was assessed using a modified version of the Davis scales, based on the Nguyen and Barrett (2006) framework This evaluation included four key items: (1) The application software is easy to learn, which would benefit our firm, (2) It allows for easy access to business-related information, and (3) It facilitates improved communication through its user-friendly interface.

Determinants of Application Software Adoption: The Case of SMEs in HCMC departments in our firm, and (4) Overall, our firm prefer the application software which is easy to use

Exhibit 3.5 - Perceived ease of use

I The application software which is easy to OPEU1 learn would be good for our firm D D D D D

2 It is easy to !c.Jk up the information related OPEU2 to our business by using the a!Jplication software D D D D D

3 It is easy to use the application software to OPEU3 improve the communication between the departments in our firm D D D D D

4 Overall, our firm prefer the application OPEU4 software which is easy to use D D D D D

The competitive intensity within our industry is assessed using the Thong and Yap (1995) scale, which evaluates two key aspects: the high level of rivalry among firms and the presence of numerous alternative products or services that, while distinct, fulfill similar functions.

1 The rivalry among firms in the industry in CINT1 which my company is operating is very intense D D D D D

2 There are many products/services in the CINT2 market which are different from ours but perform the same functions D D D D D

Business size was measured by number of employees, a measure used by Thong and Yap (1995)

Type of business was measured based on the types of business, included: (1) manufacturing, (2) trading, and (3) services

3.3.4 Measurement Scale and Notation of Variables

All items, except one measuring business size and three assessing the type of business, were evaluated using a five-point Likert scale, where 1 indicates the lowest level and 5 signifies the highest level.

Strongly Disagree Disagree Neutral Agree Strongly Agree

The notation of variables was presented in the exhibit 3.1 to 3.5 above and summarized in the Appendix 2.

SURVEY DESIGN

A survey was conducted involving 200 businesses and organizations in Ho Chi Minh City, focusing on three sectors: manufacturing, trading, and services These firms, which were not software companies but utilized application software for their operations, included state-owned, joint stock, and private-owned entities that had been in the market for at least two years to ensure their stability Questionnaires were distributed either via email to the CEOs or board members or collected directly during meetings.

We sent out 200 questionnaires, however, we got 140 questionnaires answered finally The data analysis of the survey is presented in the next chapter

FINDINGS AND DISCUSSION

INTRODUCTION

This chapter begins with a descriptive analysis of survey data, followed by a reliability analysis to evaluate the scales' consistency An explanatory factor analysis (EFA) is then conducted to validate the predefined factors and prepare the data for ordinary least squares (OLS) regression Finally, with all necessary data in place, OLS regression analysis is performed to test the hypotheses outlined in Chapter 2.

THE SAMPLE ~ã

Hair et al (1995) suggest that a minimum sample size of 100 is necessary for effective maximum likelihood estimation, with a maximum of 20 free parameters to estimate Consequently, a sample size exceeding 100 is recommended for this research to ensure robust results.

The research focused on firms located in Ho Chi Minh City, as outlined in the survey design section of the previous chapter Data was collected from a selected sample of these firms.

140 people who were BOM members from the firms located in Ho Chi Minh City by filling out structured questionnaires The sample size of 140 was relevant.

DESCRIPTIVE ANALYSIS

A frequency analysis was performed to examine the characteristics of businesses, including their type and size, as detailed in Tables 4.1 and 4.2 Additionally, an analysis of the application software utilized by these firms was conducted, with findings presented in Table 4.3.

Determinants of App lication Software Adoption: The Case of SMEs in HCMC

In this study, the majority of firms analyzed were service-oriented, comprising 61 companies, which accounts for 44% of the total Manufacturing firms represented 30%, while trading firms made up 26% It is important to note that some firms may engage in a combination of manufacturing, trading, and services; however, this research specifically concentrated on the primary business type that generated the most revenue for each firm.

Type of Business Frequency Percentage (%)

As shown in Tabl equal or less than e 4.2, there were forty-eight firms with the number of employees

30 (34%) Forty-three firms had more than 30 employees but less

In the analyzed data, 31% of the firms reported having zero employees, while 16% employed over 100 individuals, including 23 firms with more than 300 employees Additionally, 19% of the firms had between 1 and 10 employees The software applications utilized by these firms are detailed in Table 4.3.

In a study on the determinants of application software adoption among SMEs in Ho Chi Minh City, it was found that 76% of the 140 firms surveyed utilized accounting software, while 58% employed personnel applications and 46% used sales applications Additional applications and their usage rates are detailed in Table 4.3.

RELIABILITY ANALYSIS

The scales were assessed by Cronbach's alpha In other words, Cronbach's alpha was used to assess the reliability of the scales

The analysis revealed that Cronbach's alpha values for OPU, OPEU, and CINT were 0.858, 0.808, and 0.809, indicating good reliability In contrast, the INNO variable exhibited a Cronbach's alpha of 0.453, which is below the acceptable threshold of 0.70 The Application Software Adoption (ASADOPT) showed a strong reliability with a Cronbach's alpha of 0.873 According to established research, a scale is considered good when its Cronbach's alpha ranges from 0.8 to 1, and acceptable between 0.7 and 0.8 (Peterson 1994; Slater 1995) Due to its insignificance, the INNO variable was excluded from the model, while IT knowledge (ITKNOW), having only one item, could not be evaluated for reliability.

Determinants of Application Software Adoption: The Case of SMEs in HCMC be assessed by Cronbach's alpha The results of reliability analysis are shown in Table 4.4

BOM Perceived Ease of Use [OPEU] 0.808

REVISE MODEL

Because BOM Innovativeness (INNO) was removed from the model, the model was revised as the following:

Perceived usefulness Adoption of application software

Business size, Type of business

The function was also revised as the following:

ASADOPT = f(OPU, OPEU, ITKNOW, SIZE, CINT, BTYPE)

In this research, factor analysis was used to assess the factors The method of factor analysis used in this research was Explanatory Factor Analysis (EF A)

Firm would process I information more quickly 299 164 -.018

Firm would obtain statistic data more 243 309 -.420 cheaply [OPU3]

Firm would make business decisions more 247 287 -.228 effectively [OPU4]

AS (application software) I is seemed to be useful I

360 i 407 -.014 for managing biz activities [OPUS] I

AS being easy to learn :;;ãfg~l 030 241 would be good [OPEU1]

Easy to look up information by using AS 257 -.157

Easy to use AS to improve communication 397 -.220

Firm prefers AS which is 096 176 easy to use [OPEU4]

A member of BOM is very good at computer 057 [ITKNOW]

Competition is very high 252 [CINT1]

Many products/services 215 1 I 129 in the market [CINT2] I

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 6 iterations

The factor analysis results indicate that four out of five items of OPU demonstrated factor loadings greater than 0.6, while one item (OPU3) had a loading of 0.419, which was deemed acceptable to retain Similarly, four items of OPEU showed loadings above 0.5, with one item from ITKNOW and two items from CINT exceeding 0.6 Despite some items having loadings below 0.5, they were retained due to the confirmatory nature of this research, rather than exploratory testing The majority of items with loadings over 0.6 confirmed the significance of the factors, as factor loading represents the correlation coefficient between variances and factors Items with loadings below 0.5 indicate a lack of correlation, suggesting they do not belong to the same factor (Hair et al 1998).

Another method of evaluating the suitability for factor analysis is the Kaiser-Meyer- Oklkin (KMO) and Ba11lett's test (Kaiser, 1958) The large value ofKMO (from 0.5 to

1) was the sufficient condition for factor analysis The value below 0.5 indicated that factor analysis might not be appropriate for the data In the factor analysis results, KMO of the factor OPU, OPEU, ITKNOW, CINT was 0.818 The results are shown in Table 4.6

Table 4.6 - KMO and Bartlett's Test

Kaiser-Meyer-Oikin Measure of Sampling Adequacy .818

Approx Chi-Square df Sig

To sum up, after using EF A, the following factors OPU, OPEU, ITKNOW, and CINT were confirmed to be valid

Similarly, the dependent variable (ASADOPT) was assessed by EFA Its KMO was 801 and the factor loading of its items was larger than 0.7 The results are presented in Table 4 7 and 4.8

Table 4.7- KMO and Bartlett's Test (ASADOPT)

Kaiser-Meyer-Oikin Measure of Sampling

1 Apply AS in financial management 814

Apply AS in sales and customer services 835

App,y AS in human resource management 853

Apply AS in manufacturing resource 784 planing [ASADOPT5]

Extract1on Method: Pnnc1pal Component Analysis a 1 components extracted

The empirical model is written as follows:

ASADOPT = f(OPD, OPED, ITKNOW, SIZE, CINT, BTYPE)

OPD, OPED and ITKNOW were assessed by EFA and they could be placed directly into the model

CINT was evaluated using EF A and recoded as a dummy variable, serving as a moderating variable rather than an independent variable We calculated the sum of the values from two items and determined the median, which was found to be 7.5 Consequently, values from 0 to 7 were recoded as 0, while values above 7.5 were recoded as 1.

Table 4.9- Frequency Analysis of sum values of two items of CINT

Frequency : Percent ! Valid Percent I Percent

BTYPE was also established as the following Dummy variables:

DBTYPE 1 i = 1: the firm is Manufacturing DBTYPE 1 i = 0: the firm is not Manufacturing DBTYPE 2 i = 1: the firm is Trading

DBTYPE 2 i = 0: the firm is not Trading

The business types with dummy variable are represented in Table 4.10

Table 4.10-Business Type with dummy variables

Type of Business DBTYPEt DBTYPE2

Business size (SIZE) was separate into the following dummy variables:

SIZE 1 = The number of employees of firm is equal or less than 30

The number of employees of firm is more than 30

The number of employees of firm is more than 30 but less than or equal to 100

The number of employees of firm is equal or less than 30, or more than 100

The number of employees of firm is more than 1 00 but less than or equal to 300

The number of employees of firm is equal or less than 100 or more than 300

The dummy variables of the business size are represented in Table 4.11 below

Table 4.11- The dummy variables of the business size

The model can be written as following:

ASADOPT = ~~ + ~20PU + ~30PEU + ~4ITKNOW + ~ 5 CINT + ~ 6 DBTYPE 1 +

The analysis revealed that Competitive Intensity (CINT) did not significantly influence the adoption of application software, with a p-value greater than 0.05 Additionally, the business size dummy variables (SIZE1, SIZE2, and SIZE3) also showed no significant differences between adopters and non-adopters of application software, as indicated by their p-values exceeding 0.05.

The study found that BOM IT Knowledge (ITKNOW) significantly influences the adoption of application software, with a positive impact at 0.1% (p-value < 0.001), aligning with Thong and Yap's (1995) findings Additionally, both DBTYPE1 (p-value = 0.0083) and DBTYPE2 (p-value < 0.05) were significant, indicating that different types of businesses positively affect software adoption Furthermore, BOM perceived ease of use (OPEU, p-value = 0.0009) and BOM perceived usefulness (OPU, p-value = 0.0000) were also highly significant, demonstrating their positive contributions to the adoption of application software.

Dependent Variable: ASADOPT Method: Least Squares

Date: 03/11/10 Time: 07:08 Sample(adjusted): 2 140 Included observations: 103 Excluded observations: 36 after adjustin~_dpoints

Variable Coefficien Std Error t-Statistic Pro b t CINT 0.096869 0.247899 0.390759 0.6969 DBTYPE1 0.375468 0.166864 2.250138 0.0268 DBTYPE2 0.373778 0.180340 2.072632 0.0410 ITKNOW 0.414353 0.114932 3.605206 0.0005 OPEU 0.274973 0.079914 3.440850 0.0009 OPU 0.424944 0.077116 5.510423 0.0000 SIZE1 -0.067986 0.227356 -0.299030 0.7656 SIZE2 -0.160708 0.219669 -0.731593 0.4663 SIZE3 0.186812 0.256850 0.727321 0.4689 c -0.233200 0.243307 -0.958460 0.3403 R-squared 0.519888 Mean dependent 0.03285 var 1

S.E of regression 0.736525 Akaike info criterion 2.31829

8 Sum squared resid 50.44964 Schwarz criterion 2.57409

3 Durbin-Watson stat 2.107262 Prob(F-statistic) 0.00000

Table 4.12- Regression with data survey (Source: Regression results by using data survey)

The estimated results above provide the evidence that does not support for H5 (Firms with larger in size have positive effect on adopting application software) and H6

Firms with high competitive intensity positively influence the adoption of application software, indicating that the decision to implement such technology is not solely determined by a company's size or competitive landscape Contrary to the common belief that larger firms are more likely to utilize application software, there are instances where a large company relying on manual labor may not require it at all Conversely, a small firm with complex operations may find application software essential for managing its intricate tasks efficiently Additionally, in a competitive market, both large and small firms may forgo application software if their operations are straightforward and manageable with basic tools like spreadsheets However, a small firm in a less competitive environment may adopt application software to enhance its competitive edge, particularly if its rivals are already leveraging such technology.

The findings support hypotheses H2, H3, and H4, indicating that firms with Board of Management (BOM) members who perceive application software as useful, easy to use, and possess strong IT knowledge are more inclined to adopt such software For instance, a Human Resources Manager with a solid understanding of IT recognizes that software applications can enhance job management efficiency.

In the context of SMEs in Ho Chi Minh City, the adoption of application software is significantly influenced by the experiences of Human Resources Managers who utilize these tools By implementing such software, HR Managers can streamline their processes, allowing them to allocate more time towards strategic planning and staff development.

The findings support the hypothesis that manufacturing and trading firms are more likely to adopt application software compared to service-oriented businesses This trend is attributed to the specific needs of manufacturing and trading companies, which require efficient management of commodity purchasing and sales processes.

The results of hypothesis testing are summarized in Table 4.13

Table 4.13-Summary of Hypothesis Testing

Firms utilizing Bill of Materials (BOM) that exhibit higher levels of innovation positively influence the adoption of application software Additionally, companies that recognize the usefulness of support application software are more likely to embrace its adoption.

H3 Firms with BOM who have perceived ease of use of Support application software have positive effect on adopting application software

H4 Firms with BOM who have IT knowledge have Support po~itive effect on adopting application software H5 Firms with larger in size have positive effect on Not Support

In the context of SMEs in Ho Chi Minh City, the adoption of application software is influenced by various factors Notably, firms operating in highly competitive environments do not show a significant positive effect on software adoption Conversely, companies engaged in manufacturing or trading activities demonstrate a strong positive relationship with the adoption of application software.

The estimated results indicate that the adoption of application software is significantly influenced by factors such as IT knowledge, perceived usefulness, perceived ease of use, and the type of business.

The perceived usefulness of application software significantly influences its adoption; specifically, a one-unit increase in perceived usefulness leads to a 0.425-unit increase in adoption, assuming other factors remain constant When application software effectively addresses business challenges and enhances management efficiency, its perceived usefulness is strengthened, encouraging greater adoption Conversely, if the software fails to resolve issues or improve efficiency, its perceived usefulness diminishes, resulting in decreased adoption rates.

The perceived ease of use of application software significantly influences its adoption among BOM members, with a 1-unit increase leading to a 0.275-unit rise in adoption, capped at a maximum change of 5 units If BOM members find the software easy to use, their likelihood of adopting it increases A user-friendly interface reinforces this perception, enhancing overall adoption rates Conversely, if the software is not user-friendly, it may hinder the perceived ease of use and subsequent adoption.

The adoption of application software among SMEs in Ho Chi Minh City is significantly influenced by various determinants that negatively affect their perceived ease of use As a result, these businesses tend to be more hesitant and cautious in embracing new software solutions.

DISCUSSIONS

IMPLICATIONS AND CONCLUSIONS

INTRODUCTION

This chapter discusses the mam findings of the study and suggests some policy implications and also raises some limitations of this study

5.2 Main results contribution and implications

Vietnam's economy is experiencing rapid growth, with an annual rate exceeding 8% The government recognizes the software industry as a crucial sector within its economic development strategies, offering various incentives, including preferential duties for software development firms and significant budget investments, such as in project 112 Despite these efforts, the industry's effectiveness remains limited, with revenue primarily driven by outsourcing rather than domestic growth While the domestic market has a growth rate of approximately 25%, it remains small and below expectations, as the number of firms utilizing application software is still low This study aims to illuminate the reasons behind the underperformance of Vietnam's domestic application software market.

The overall IT knowledge among our population remains inadequate, with many individuals lacking basic computer skills A significant number can only perform simple tasks such as gaming, chatting, checking web mail, or editing basic documents Without proper guidance, they struggle to use even simple application software, highlighting a widespread deficiency in computer literacy.

The adoption of application software among SMEs in Ho Chi Minh City is often slow, as these businesses tend to favor simpler applications with limited functionalities However, as their IT knowledge improves, they become more inclined to explore tools and applications that enhance their work efficiency and simplify their processes.

- When people are lacking in IT knowledge, they does not know the utilities (Ritu

Many individuals have yet to fully grasp the significance of application software, as highlighted by Jayesh (1998) and Nguyen & Barrett (2006) The perceived usefulness of such software is often influenced by personal experience or observations In Ho Chi Minh City, numerous software development companies and groups exist, yet many lack a comprehensive understanding of business processes and necessary skills, resulting in software that fails to meet the specific needs of businesses Consequently, firms that have encountered challenges with application software tend to develop a negative perception of its usefulness, a sentiment that is also echoed by those aware of other companies' unsuccessful implementations.

Many individuals with limited IT knowledge tend to favor applications that are simple and have fewer functions, as they often perceive complex software as difficult to use (Ritu & Jayesh, 1998; Nguyen & BatTett, 2006) Furthermore, personal experiences and observations significantly influence their perception of ease of use; if users have encountered complicated and non-user-friendly software in the past, their overall attitude towards the usability of similar applications can become negatively impacted.

From the findings above, several implications are recommended:

Software development companies aiming to create and deploy application software should conduct surveys to assess the IT knowledge of their employees, particularly the BOM members If the results indicate a lack of proficiency, these firms should implement a gradual training program, starting with foundational concepts.

The adoption of application software among SMEs in Ho Chi Minh City (HCMC) hinges on several key factors To facilitate this process, software development firms must simplify their solutions, enabling clients to acclimate to the software effectively while enhancing their IT skills Additionally, providing comprehensive training for the employees of client companies is essential to boost their IT knowledge and ensure successful software implementation.

IT knowledge is enhanced, the software development firms should upgrade the application software to a higher level one

Software development firms should prioritize demonstrating the usefulness and user-friendliness of their application software to potential clients by focusing on client needs rather than their existing products Understanding clients' business processes is crucial for effectively implementing application software that standardizes these processes Additionally, firms should customize their existing application software to align with the standardized business practices of their clients, ensuring a tailored solution that meets specific operational requirements.

To successfully implement e-government, it is essential for the government to first enhance administrative processes and utilize simplified application software Concurrently, training should be provided to users, focusing not only on basic software manipulation but also on its application as a management tool As the IT knowledge of management improves, the government can progressively upgrade the software to align with the users' evolving IT skills.

Government policies are essential to ensure that software development firms prioritize high-quality application software, focusing on both usefulness and ease of use Many companies currently compete primarily on price, neglecting the quality of their products, which leads to a high turnover of applications that are quickly abandoned by users For instance, some businesses that implement accounting software find themselves needing to hire additional accountants, as the software fails to streamline their processes effectively.

Determinants of Application Software Adoption: The Case of SMEs in HCMC do input data into the software and two do the things that the software cannot solve.

LIMITATIONS AND DIRECTIONS FOR FUTURE RESEARCHES

Due to time constraints, the survey included only 140 firms, many of which provided insufficient information or were answered by individuals not from the Board of Management (BOM) As a result, the data collected was not comprehensive enough to fully understand the impacts of IT knowledge, perceived usefulness, and perceived ease of use on the adoption of application software in Ho Chi Minh City Furthermore, this study does not explore the relationships between IT knowledge and perceived usefulness or perceived ease of use, nor does it analyze the connection between perceived usefulness and perceived ease of use Additionally, the study overlooks the potential effects of asymmetric information on perceived usefulness and perceived ease of use.

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THE QUESTIONNAIRE

Date/Ngay month/thang year/nam 2009

I am Le Thanh Binh, a student in the Vietnam - Netherlands Master of Art Programme, conducting research on the adoption of application software by businesses in Ho Chi Minh City I kindly ask for a moment of your time to answer the following questions Please remember that there are no right or wrong answers; all responses are valuable for my research Thank you for your participation!

Tôi tên là Lê Thanh Bình, học viên cao học tại Hà Lan Hiện tại, tôi đang tiến hành nghiên cứu về sự lựa chọn phần mềm trong các công ty/doanh nghiệp tại TP HCM Mong Anh/Chị dành chút thời gian trả lời cho tôi một số câu hỏi sau đây Xin lưu ý rằng ý kiến của Anh/Chị sẽ không có quan điểm đúng hay sai Tất cả ý kiến của Anh/Chị đều có giá trị cho nghiên cứu của tôi Tôi rất mong nhận được sự hợp tác chân thành từ Anh/Chị.

Company Name/ Ten cong ty: Address I Dia chi:

Telephone I S6 di~n tho~i: lnnovativeness I Slf sang t(IO

1 BOM usually has original ideas

BGD thuimg c6 y tuang khai xuang

2 BOM would sooner create something new than improve something existing

BGD thich tf;w nhfing cai mai h011 cai tiin nhfing gi dang ton tgi

3 BOM often risks doing things differently

BGD thuimg idy rid ro ai lam vi?c theo mr)t each khac

Perceived usefulness I I>U'Q'C nh~n thrrc Ia hii'u dl].ng

1 By using application software, our firm would manage information related to our business more easily

Vai phdn mim t'mg d~:mg, cong ty chung toi quem ly thong tin doanh nghi?p dl dang hem

2 By using application software, our firm would process and obtain information related to our business more quickly

V&i phdn mim t'mg d~mg, cong ty chung toi xu ly va agt aU(IC thong tin doanh nghi?p nhanh han

3 By using application software, our firm would obtain the statistic data related to our business more cheaply

V ai phdn mJm tmg d1,mg, cong ty chung toi CO dU(J'C thong tin th6ng ke lien quan din doanh nghi?p re h071 I

4 By using application software, our firm would find it more effective in making business decisions

V&i phdn mJm U11g d1;1ng, cong ty chung toi c6 thi dua ra quyit djnh hi¢u qua han D D D D D

5 Overall, our firm would consider that application software is useful for managing business activities

N6i chung, cong ty chung toi xem phdn mJm U11g d?tng Ia hiru dl;lng cho vi¢c quan ly cac hor;~t dong doanh nghi¢p D D D D D

Perceived ease of use I DD'Q'C nh~n thrrc Ia d~ sfr dl}.ng

1 Application software which is easy to learn would be good for our firm

Phdn mJm tmg d1;1ng di h9c se t6t cho doanh nghi¢p chung toi D D D D D

2 It is easy to look up the information related to our business by using application software

Thcjt di dang tim kiim thong tin lien quan din doanh nghi¢p bi:mg phdn mim tmg d1,mg D D D D D

• 3 It is easy to use application software to improve the communication between the departments in our firm

Thcjt di dang sit d1;1ng phdn mJm img d1;1ng di cai tiin vi¢c trao dJi thong tin giu cac b{J phcjn trong doanh nghi¢p D D D D D

4 Overall, our firm prefer application software which is easy to use

N6i chung, cong ty chung t6i thich phdn mJm tmg d1;1ng D D D D D

Determinants of Application Software Adoption: The Case of SMEs in HCMC di sir dl:fng h(Jn

IT Knowledge I Ki~n thrrc cong ugh~ thong tin

I would rate my own understanding of computers (before my company computerized) as very good compared to other people in similar positions

T6i tv acmh gia muc a(J hidu biit vJ may tinh cua t6i (tru&c khi c6ng ty t6i tin h9c h6a) Ia rdt t6t so v&i nhfmg nguai khac trong vf tri tu(Jng au(Jng

Competitive Intensity I CU'img dq c~nh tranh

1 The rivalry among firms in the industry in which my company is operating is very intense

Sv C(lnh tranh trong cac doanh nghi¢p cimg nganh cua c6ng ty chung t6i rdt miinh li?t

2 There are many products/services in the market which are different from ours but perform the same functions

C6 nhiJu san phdm va djch Vl:f trong cimg thi truirng khac vfrf SCtn phdm VG djch Vl:f CUQ chung toi nhung thl!C hi¢n cimg chuc nang

Number of employees: s6 lu(111g nhan vien

Type of Business I Lo~i doanh nghi~p

You can circle more than one

Bc;m co thi ch(Jn nhidu han mr}t

Sa hi'ru nha nubc

Adoption of application software I Sv Iva chQn phAn m~m rrng dt,mg

Does your firm use application software? YES/NO D

Cong ty br;m co su dl;lng phbn mJm ung dl;lng khong? COIKHONG

Our firm has applied application software efficiently and effectively in financial management D D D D D

C6ng ty chung t6i dii cip dt,mg phan mem tmg d1,mg hi¢u qua va co kit qua trong vi¢c quan l;! tai chinh

Our firm has applied application software efficiently and effectively in the improvement of our inventory control activities and purchasing activities

C6ng ty chung t6i dii cip d11ng phdn mJm ung d11ng hi¢u qua va co kit qua vao vi¢c cai tiin ccic ho(}t d(Jng mua hang va quan l;! kho D D D D D

Our firm has applied application software efficiently and effectively to improve our sales activities and customer services

C6ng ty chung t6i dii cip d11ng phdn mJm tmg d11ng hi¢u qua va co kit qua di cai tiin ccic ho(}t d(jng kinh doanh va dfch

Our firm has applied application software efficiently and effectively in the utilization a11d simplification of human resource management

Công ty chúng tôi cung cấp dịch vụ phát triển phần mềm nhằm nâng cao hiệu quả và cải thiện kết quả trong việc tối ưu hóa và đơn giản hóa quy trình quản lý nguồn nhân lực.

Our firm has applied application software efficiently and effectively in the simplification of manufacturing resources planning

Công ty chúng tôi chuyên cung cấp giải pháp ứng dụng hiệu quả và có kết quả trong việc dân gian hóa các hoạt động định hướng nguồn nhân lực sản xuất.

Software Applications I Cac phin m~m lfng dt,mg

For each computer applications in use in your company, please put a tick against the application (This is a survey to know how many firms use each software application)

D6i vbi mJi ung d!,tng may tinh dang Slf dz;ng trong cong ty, vui long aanh ddu vao 1Ing dz;ng a6 Đây là khảo sát nhằm tìm hiểu về số lượng công ty Slf đang triển khai ứng dụng này.

Application I U ng d1}ng In-use I Dang sir d1}ng

Inventory control I Quim ly kho D

- - Sales I Quim ly kinh doanh D

Personnel and Payroll I Nhan SlJ va tien Iuong D

CRM I Quim ly quan h~ khach hang D

SCM I Quc'm ly chu6i cung cap D

MRP I Ho~ch djnh ngu6n )lJc san xuat D

Others (please specify) I Khac (vui long ghi ro)

' Determinants of Application Software Adoption: The Case of SMEs in HCMC

Tiêu đề	Determinants Of Application Software Adoption: The Case Of SMEs In HCMC
Tác giả	Le Thanh Binh
Người hướng dẫn	Associate. Dr. Nguyen Dinh Tho
Trường học	University of Economics
Chuyên ngành	Development Economics
Thể loại	thesis
Năm xuất bản	2011
Thành phố	Ho Chi Minh City

Định dạng
Số trang	73
Dung lượng	2,14 MB