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MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY - Phan Thi Bao Quyen A DEVELOPMENT OF ENTERPRISE RESOURCE PLANNING SUCCESS MODEL FOR ACCOUNTING PROFESSIONALS Major: Accounting Code: 9340301 A DOCTORAL THESIS SUMMARY Ho Chi Minh City, 2020 A doctoral dissertation is submitted for the Degree of Doctor of Philosophy in Accounting at the University of Economics Ho Chi Minh City Supervisors:  Associate Professor, Dr Vo, Van Nhi  Dr Nguyen, Thi Kim Cuc Reviewer 1: Reviewer 2: Reviewer 3: This thesis is accepted by the School of Accounting and School of UEH Graduate in partially fulfillment of the requirements for the degree of Doctor of Philosophy in Accounting: Date Dean of the School of Accounting Date Dean of the School of UEH Graduate ABSTRACT Enterprise Resource Planning (ERP) system is commercial software that automates and integrates many or most of a firm’s business processes It allows to access to integrated data cross the entire enterprise according to realtime (Davenport, 1998) Therefore, ERP system is expected to increase productivity via processes standardization, to improve decision-making ability via information integration throughout the whole enterprise, to enhance cooperation between organizational entities by connecting them smoothly, and the most important, to maintain competitive advantage once these benefits are satisfied (Davenport, 1998) These promises are possibly a close explanation of its increasing popularity Namely, Fortune 500 companies are trusting ERP system and it is also a solution that large-sized organizations in Vietnam select and adopt more growingly2 Nevertheless, instead of achieving impressive benefits from their ERP systems, some firms have faced difficulties in gaining the benefits they expected Therefore, as suggested by Markus and Tanis (2000), for both researcher and executives, one of the initial interested-questions is whether investments in ERP will pay off Several organizational-level econometric studies conducted (M C Anderson, Banker, & Ravindran, 2003; Hitt, Wu, & Zhou, 2002) give an answer that it is likely yes – on average However, the impacts vary from enterprise to enterprise, even from module to module (Nicolaou, 2004a) in which accounting-related modules are in charge of changed-focuses Kanellou and Spathis (2013) perform the relevant literature and conclude that ERP implementation has a considerable impact on accounting department of the business organizations Hence, the executives’ next questions are probably to be, how can I maximize the positive impacts on accounting department? Is there some way to predict what the ultimate impacts of ERP systems on accounting professionals will be in order to achieve a goal of enhancing organizational performance? This information is quoted from website http://fortune.com/2017/09/13/amazon-microsoftgoogle-sap-cloud/ This information is quoted from Vietnamese E-commerce Indicator Report in 2018 These questions are worth addressing In attempting to so, the author draws on D&M IS success model (DeLone & McLean, 1992), IS-continuance theory (Bhattacherjee, 2001) and the principle “fitness for use” (J M Juran, 1988) to develop the ERP success model for accounting professionals in order to make them more productive, which in turn improves performance of implemented organizations The theoretical and empirical results indicate that organizational performance is, indeed, influenced by the extent to which accounting experts effectively utilize ERP systems in the adoption and ongoing context This study makes an original contribution to both of theory and practice through forming and validating the ERP success model for accounting professionals only In a little more detail, it provides empirical evidence regarding Hunton’s accounting value chain (2002) In addition, it discovers and proves effective use as the most appropriate system-use concept so far Moreover, it makes an effort to investigate outcomes of accounting benefits perceived from ERP system, which related-studies are much further underresearched Last but not least, the research provides valuable implications for organization management on how they can successfully manage accounting department as well as accounting professionals in an attempt to maximize ERP’s impacts on organizational performance, which executives have paid much attention to for recent years but have not yet found out the answer so far Key words: ERP success model, accounting professionals, perceived accounting benefits, system use, the principle "fitness for use" CHAPTER INTRODUCTION 1.1 Chapter introduction The purposes of this chapter are to describe a broad overview of the research 1.2 Background of research This study is conducted in the context, which the ERP system has already been one of the most popular business-management-applications in organizations all over the world and begins to be increasingly adopted in Vietnam 1.3 Motivations for research 1.3.1 Motivation - ERP research Huang and Yasuda (2016) summarize that a field of critical success factors is one of the most mentioned ERP-related topics The CSF researches have typically addressed several different issues In most cases, typical CSF studies have consistently identified a set of core factors critical to the success of ERP implementations However, the few researchers are interested in building ERP success models as untypical CSF studies Finney and Corbett (2007) lament the fact that most of recent ERP CSF research (both typical and untypical CSF type) has generally taken from a macro perspective or a view of multiple top mangers, the perspectives of key or single stakeholders are often missing For these reasons, a call for developing a model measuring ERP success from stakeholders’ perspective has been established for recent years 1.3.2 Motivation – Behavioral Accounting Research (BAR) Behavioral accounting research (BAR) is defined as the study of accounting professionals’ behavior or non-accountants’ behavior influenced by accounting functions, and/or report system, and/or creating accounting information (Hofstedt & Kinard, 1970) This thesis focuses on “study of accountants” due to its increasing concern in BAR literature; the more growingly intertwined relationship between accountants and ERP system; and their valuable contributions in IS-adopting business organizations 1.3.3 Combination of ERP research and BAR Because of its accounting benefits, ERP requires accounting expertises to change their role in order to make broader contribution to the company, such as reporting on non-financial measures, auditing information systems, implementing management controls within information systems, and providing management consulting services (Grabski, Leech, & Schmidt, 2011) Therefore, the thesis will combine ERP CSFs research with the study of accountants to formulate a research topic That is to discover how to assess ERP success for accounting professionals from accounting professionals’ perspective themselves, or, developing an ERP success model for accounting professionals (ESMAP) 1.4 Research objective The primary objective of this research is to develop and test ERP success model for accounting professionals at organizational level 1.5 Research questions The managerial question of this thesis is that “How can the ESMAP be designed in an attempt to improve accountant performance, which in turn enhances organizational performance?” Two research questions extracted from the managerial question are sequent that: “How can the ESMAP be formed in an attempt to improve accountant performance, which in turn enhances organizational performance?” and “ How can the ESMAP be validated?” 1.6 Justification From a theoretical perspective, this study is significant and worth First, the ESMAP more provides empirical evidence on the accounting value chain of Hunton (2002) Second, it should be noted that almost previous studies pay attention on perspectives of multiple stakeholders on ERP success while this study focuses on perceptions of accounting professionals only Third, perceived accounting benefit concept is firstly validated in the complex model as the ESMAP Finally, the ESMAP focusing on the post-implementation stage adds more insights into the paucity of research on ERP system after implementation (Grabski et al., 2011) This study is also an essential from a practical standpoint The ESMAP is precious as it guides accounting professionals how to become productive under ERP settings Furthermore, the ESMAP guides organization management how to predict, access and improve organization’s accountant performance to achieve the advanced organizational performance for their organizations Finally, organization will obtain beneficial outcome when individual benefits are positive influenced 1.7 Methodology This study makes use of positivism paradigm and quantitative research method It is divided into two phases: forming the ESMAP, and validating the ESMAP To start with, it reviews related literature and finds suitable foundational theories to propose the ESMAP with its hypotheses and its constructsconceptualization Then, the empirical survey data is obtained from an expected sample of 300 organizations in Vietnam adopting the ERP system for at least one year The ESMAP’s constructs operationalization and their validation are subsequently conducted via SPSS 24.0 and AMOS 20.0 Finally, the theoretical model and hypotheses of the ESMAP are tested using PLS-SEM analysis technique with the support of Smart PLS 3.2.7 1.8 Research scope This study is conducted in Vietnam The ‘ERP success’ term in the current study is referred to how to adopt ERP system to improve effectiveness in implemented enterprises The study unlimited considers various ERP packages including foreign and local brands because varying in system’s types, to some extent, may increase software-related generalizability of this study The thesis’s unit of analysis is at organizational level 1.9 Thesis structure Figure 1.1: A systematic procedure for designing the ESMAP 1.10 Chapter summary CHAPTER LITERATURE REVIEW 2.1 Chapter introduction Chapter introduces the basic literature of Enterprise Resource Planning, a review of the existing ERP Success Models, and a review of ‘rich construct(s)’ 2.2.1 Defining ERP Based on different ERP-related definitions of Davenport (2000), Soh, Kien, and Tay-Yap (2000), Nah, Lau, & Kuang (2001), and Loh & Koh (2004), it could be conducted that an ERP is a packaged complex business software designed to integrate business processes and functions through using single database in order to be able to permit the sharing of common data and information in real time 2.2.2 Evolution of ERP 2.2.3 Advantages and disadvantages of ERP ERP system's advantages include reliable accessibility, avoiding duplication of data, transportation and reduction of turnaround time, minimizing cost, flexibility, more capability of expansion, enhanced and active long-term maintenance, association with parties on a global scale, and increasing ecommerce, e-business (Mohammad A Rashid et al., 2002) ERP system's disadvantages consist of spending a lot of time to implement a system, costly price, matching between ERP and organization’ business processes, dependence on ERP vendor, multi-features system and its complexity nature, global scalability, and capability of ERP extension (Mohammad A Rashid et al., 2002) 2.2.4 The ERP lifecycle This research chooses Change et al.’s (2000) approach to divide the ERP lifecycle into three principal phases: pre-implementation, implementation and post-implementation 2.3 ERP Success Models 2.3.1 Challenges of measuring ERP success In the context of this thesis, except for efforts to reflect complex nature of the ERP system, evaluating intangible success of ERP system is focused rather than its tangible benefits 2.3.2 A summary of ERP Success Models from 1990 up to present Although a history of ERP evolution has lasted almost three decades, the quantity of these ERP success studies up to present is eleven, actually not much The common points of most of such models are to utilize system quality, information quality, and user satisfaction as measure of ERP success Based on this analysis, it could be said that the D&M IS Success model (1992) is considered as underlying theory of most of existing ERP success models The study are also going to adopt it as our underlying theoretical framework when developing the ESMAP 2.3.3 Issues with the existing ERP success studies Issues with the existing ERP success studies are a lack of research in ERP ongoing system success evaluation, considering appropriateness of additional construct(s) which is embedded into the chosen ESM, essentialness of system use construct in the ESM, the completeness of D&M IS success model’s success dimensions, the match between construct measurements and characteristics of contemporary ERP system, the call for understanding perspective of a particular stakeholder (i.e., accounting professionals), the call for combining the D&M IS success model with appropriate underlying theories, and recommendations of empirical testing the ERP success model 2.3.4 Differences between the current study and the previous ESMs This research is valuable and worth as it covers all the existing issues in the previous ESMs 2.3.5 Review of ERP success studies in Vietnam The current study is to develop an ERP success model for accounting professionals in order to guide them how to become increasingly productive enabling enhanced organizational performance when adopting ERP For this, it is obvious that the research idea is entirely different from all four previous ERP-related studies in Vietnam (Hiền & Trung, 2014; Thanh, 2015; Thọ, 2013; Thông, 2017) It can be stated that the current research topic is not a duplicate of any ERP-related studies in Vietnam, and thus, it is unique in Vietnam 2.4 Review of ‘rich construct(s)’ enabling to overcome unanswered validity-setting-related issues Through an extensive review, a construct of accounting benefits perceived from ERP system is under discussion The author selects conceptualization and operationalization of Kanellou and Spathis (2013)’s scale as it is validated by testing the relationship between it and user satisfaction 2.5 Chapter summary -CHAPTER CONCEPTUAL FRAMEWORK, CONSTRUCT CONCEPTUALIZATION AND HYPOTHESES 3.1 Chapter introduction This chapter covers two last steps of phase one of the process on how to design the ESMAP, which is presented in Chapter 3.2 Theories used in the ESMAP 3.2.1 D&M IS success model (DeLone & McLean, 1992) This study chooses the D&M IS success model (1992) as an underlying model of the ESMAP 3.2.2 IS-continuance theory (Bhattacherjee, 2001) The IS-continuance theory is chosen to clarify the links between system quality, information quality, perceived accounting benefit and satisfaction 3.2.3 Principle “fitness for use” (Juran, 1988) According to the principle “fitness for use”, the author assumes that the ESMAP aims to guarantee ERP system quality in order to enable to maximize ERP’s “economic benefits” For this assumption, accounting professionals (“who”), based on system quality, information quality, perceived accounting benefit (“what” available), exploit effectively ERP system (“how” element, which refers to its use and satisfaction – users’ feeling when using ERP system) to achieve “economic benefits”, including improved accountant performance (ERP’s 11 conceptualized as a reflective-reflective construct Satisfaction, Accountant performance and Organizational Performance are modeled as reflective constructs in this study 4.5.1.3 Ensuring content validity for constructs Based on these measurement scales, the items of the questionnaire are proposed This study will apply expert panel to improve the reliability of the instrument Based on their feedbacks, two adjustments are done The translation of the questionnaire into Vietnamese is conducted through Brislin’s translation process to assure consistency in meaning The pilot testing can be conducted to revise the questionnaire at the last time Before collecting data, this study considers several bias issues such as response and non-response bias and common method bias and mentions some solutions controlled and carried out in relation to designing questions and how to collect data in order to minimize these bias issues 4.5.2 Sample design This research is conducted in Vietnam The sample organizations are firms adopting ERP system in Vietnam for at least one year The respondents in this study are defined as CFOs, chief accountants, internal controller, internal auditors, and management accountants who take part in organizations implemented ERP system for at least one year and have at least two-year working experience at the current position Based on minimize sample size of each statistical method, the minimize sample size of the current study decided is 90 Sample is collected by snowball sampling technique 4.5.3 Data collection Email with the survey link is sent to all potential informants’ 5110 email addresses After six rounds of data collection, just 136/549 responses are valid 4.6 Ethical considerations Nowadays, research ethics are an issue that needs to be paid more attention to, especially when researchers conduct any studies on organization 4.7 Chapter summary 12 CHAPTER DATA ANALYSIS 5.1 Chapter introduction This chapter is systematically divided into three steps including data preparation, instrument preparation, and testing the ESMAP 5.2 Step 1: Data preparation 5.2.1 Data screening and cleaning After screening and cleaning, 433 cases of 569 responses received not matching identified criteria are deleted The left 136 responses are usable for further analysis 5.2.2 Straight lining check Straight lining happens when the respondent selects the same response for the entire set of items on a screen Accordingly, the author discovers that there are no cases with straight lining 5.2.3 Testing for outliers This study utilizes Stem and Leaf analysis on SPSS with multivariate method to identify outliers Accordingly, this study needs to delete 16 outliers 5.2.4 Bias Tests In order to be likely possible to generalize the research findings from the sample to the population; non-response bias and common method bias test are conducted 5.2.5 Section summary 5.3 Step 2: Instrument preparation 5.3.1 Instrument reliability assessment Internal consistency is adopted to assess reliability through two statistical indicators: item-total correlation and Cronbach’s alpha All the item-total correlation value of each item to its designated instrument is greater than the cut-off value of 0.3 In meantime, the Cronbach’s alpha values of the instruments are almost greater 0.9 Therefore, reliability of each instrument is extremely excellent 5.3.2 Instrument validity assessment To consider instrument structure, and to define a small number of factors that adequately represent the original set of variables, this study utilizes data- 13 summarization-related exploratory factor analysis 5.3.2.1 Assumption consideration The current study considers sample characteristics and concludes that the data set has normal distribution, its homoscedasticity is certain, and its linearity is valid 5.3.2.2 Sample size consideration The minimize simple size in this study as discussed in Section 4.5.2.3 is 90 The existing sample size in this study is 120, then, satisfied 5.3.2.3 Appropriateness assessment The results of Bartlett’s test and the Kaiser-Meyer-Olkin test show that a factor analysis may be useful with the data 5.3.2.4 Interpreting the factors The EFA results show that, of the scales, information quality, satisfaction, accountant performance, organizational performance, extent of use and intend to use are immediately acceptable and three need to refine 5.3.2.5 Factor explanation Table 5.1: New conceptualization and operationalization of new factors extracted from EFA Instrument Factor Item Definition System System-related SQ1, SQ2, SQ7 Performance characteristics of the ERP system with quality quality regard to using system Task-related SQ5, SQ6, SQ8 Performance characteristics of the ERP system with quality regard to specific tasks and settings Information Information IQ1, IQ2, IQ3, IQ4, IQ5, Characteristics of the output provided by the ERP quality quality IQ6 system with respect to timeliness, relevance, availability, and understandability, and so forth Perceived Operational PAB6, PAB7, PAB8, The benefits that the users get from ERP system accounting accounting PAB9, PAB10 with respect to reduction of time for closure, and benefit benefit issuing financial statements Organizational PAB11, PAB12, PAB13, The benefits that the users get from ERP system accounting PAB14, PAB15, PAB16, with respect to organizational flexibility and benefit PAB17, PAB18 effectiveness Use Decision USE1, USE3, USE4, The extent that ERP system is used to improve the support USE7 decision making processes Work USE5, USE6, USE8, The extent that ERP system is used to coordinate integration USE11 work activities with others in one’s work group and manage one’s own work 5.3.2.6 Fit consideration of higher-order factor instrument model The author subsequently conduct confirmation analysis through AMOS-SEM with the target of re-confirming whether the second-order construct is the most 14 appropriate model measuring concepts that they capture The results of confirmation analysis indicate that perceived accounting benefit and use concepts fit best with second-order constructs 5.3.2.7 Section summary 5.4 Step 3: Testing the ESMAP 5.4.1 Analysis technique selection PLS-SEM multivariate analysis technique is chosen to test the EMSAP 5.4.2 Measurement model assessment The results indicate that all reflective first-order constructs achieve the reliability, convergent validity and discriminant validity and all reflective second-order constructs satisfy the reliability and convergent validity Besides, the result shows that system quality is suitable to formative second-factor measurement model 5.4.3 Structural model assessment 5.4.3.1 Structural model assessment H: H1: Relationship AP -> OP Table 5.2: Direct relationships for hypothesis testing Std Std [t Decision Beta Error value]^ f2 0.638 0.065 9.658*** Supported H2: USE -> AP 0.253 0.073 3.453*** Supported H3: SAT -> AP 0.535 0.071 7.598*** H4a: SQ -> USE 0.01 0.12 0.107 H4b: SQ -> SAT 0.28 0.085 H5a: IQ -> USE 0.054 0.115 H5b: IQ -> SAT 0.128 H6a: PAB -> USE H6b: PAB -> SAT q2 95% CI LL 0.523 95% CI UL 0.735 0.084 0.049 0.133 0.373 Supported 0.385 0.221 0.415 0.647 No 0 -0.191 0.206 3.322*** Supported 0.083 0.053 0.142 0.418 0.425 No 0.002 -0.131 0.242 0.104 1.218 No 0.014 0.006 -0.05 0.295 0.622 0.11 5.695*** Supported 0.313 0.124 0.436 0.794 0.473 0.102 4.624*** Supported 0.271 0.171 0.309 0.646 *** p