CHAPTER
TWO: LITERATURE REVIEW

 

2.1 Introduction

 

This chapter reviews selected literature and
examines both theoretical and empirical literature. The literature reviewed
examines how various studies have analyzed the concept of E-procurement
adoption. In this context the researchers will be in a position to give their
opinion and a critical analysis of the theories presented in the past studies.
This chapter covers the theories governing E-procurement implementation, past
empirical studies and factors impacting E-procurement implementation in
supermarkets in Kenya and conceptual framework.

 

2.2 Theorical Foundation of E-procurement Adoption and Implementation

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This section will review theories that have been found relevant in
E-procurement adoption; these theories are; Technology Acceptance Model (TAM),
Theory of Reasoned Action, Theory of Planned Behaviour.

 

2.2.1 Technology Acceptance Model (TAM)

 

The TAM, firstly proposed by (Davies, 1986), was
conceived to predict (Fishbein&Ajzen, 1975), and explain an individuals
IT/IS acceptance (Hu, et al., 2008). The Technology Acceptance Model (TAM) is
an extension of the Theory of Reasoned Action (TRA). TRA was originally
proposed by Fishbein and Ajzen in 1975 in an attempt to understand behaviour
and predict outcomes. TRA assumes that a person takes into account the
implications of his/ her action before deciding whether or not to engage in
certain behaviour. It also sets that the main determinant of person?s behaviour
is behaviour intention.

 

 

The premise of TAM is that people behavioural
intention to accept and actually use a certain technology is determined by two
constructs namely; perceived usefulness and perceived ease of use (Davis,
1989). User?s attitude and belief as proposed by TAM is perceived to be an

 

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important factor which influences the use of new
technology. A person whose attitudes toward information technology are positive
will have higher acceptance of the use of technology in question, compared to
another person whose attitudes toward that technology are negative. Many
empirical researches (e.g. Davis, et al., 1989; Agarwal &Karahanna, 2000;
Venkatesh, et al., 2003, 2007; Adams, et al., 1992; Segars& Grover, 1993)
have shown support for TAM. Thus, the technology acceptance model is generally
referred to as the most influential theory in IT and Information Systems
(Benbasat& Bark, 2007).

 

 

The Unified theory of acceptance and use of
technology (UTAUT) represents a shift from fragmented view of IT adoption or
acceptance to a unified integrated single theory (Abu Shanab, et al., 2010).
Kaasinen, et al., (2002) and Keat and Mohan (2004) modified the value component
(from perceived usefulness) and added two components: trust and perceived ease
of adoption. In a study by Quan, et al., (2010) the “attitudes” construct was
removed for simplification. O?cass& French (2003) are of the opinion that
TAM should not be confined solely to the adoption of technological perspective,
and that other non-computer based technological adoption should be encouraged
to add a marketing flavour to the findings, and to be more specific. The
researcher concluded that most of the technology acceptance models have been
extensively tested in the developed countries.

 

2.2.2 Theory of Reasoned Action

 

Fishbein and Ajzen,(1975) is well established
social psycho-logical model that is concerned with the determinants of
consciously intended behaviours. From a theoretical point of view, the TRA is
intuitive, parsimonious and insightful in its ability to explain behaviour
(Bagozzi, 1982). The TRA assumes that individuals are usually rational and will
consider the implications of their actions prior to deciding whether to perform
given behaviour (Ajzen and Fishbein, 1980).

 

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Fishbein (1980), the TRA assumes that most
behaviours of social relevance are under volitional control and are thus
predictable from intention. The theory also suggests that because many
extraneous factors influence stability of intention, the relationship between
intention and behaviour depends on factors:a) the measure of intention must
correspond to the behavioural criterion in action, target, context and time;
and b) intention does not change before the behaviour is observed (Ajzen and
Fishbein, 1980). The TRA specifies that behavioural intention is a function of
two determinants: a personal factor termed attitude toward behaviour and a
person?s perception of social pressures termed subjective norm (Fishbein and
Ajzen, 1975).

 

 

In the TRA, behaviour is determined by behavioural
intentions, thus limiting the predictability of the model to situations in
which intentions and behaviour are found when the temporal gap between their
expressions is minimal. To take the extreme case of overcoming this, however,
measuring intention and behaviour simultaneously fails to ensure a true test of
the model?s power to predict the future. At best, it corroborates the
attitudinal basis of current behaviour. Davies, Foxall and Pallister (2002)
suggested that in order to test TRA behaviour should be measured objectively
and unobtrusively, without signal in any way its connection to the prior
intention measurement phase. A further requirement of the TRA is the behaviour
must be under volitional control. Hence, the TRA is ill equipped to predict
situations in which individuals have low levels of volitional control (Ajzen,
1991).

 

2.2.3 Theory of Planned Behaviour

 

The theory of planned behaviour (Ajzen, 1991), an
extension of the TRA, tackles the original model?s limitations in dealing with
behaviours over which people have incomplete volitional control. The TPB
suggests that in addition to attitudinal and normative influence, a third
element, perceived behavioural control (PBC), also influences behavioural
intentions and

 

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actual behaviour. The TPB extends the TRA to
account for conditions in which individuals do not have full control the
situation. According to the TPB, human action is guided by three kinds of
considerations: a) behavioural beliefs about the likely outcomes of the
behaviour and the evaluations of these outcomes; b) normative beliefs about the
normative expectations of others and motivation to comply with these
expectations; and c) control beliefs about the resources and opportunities
possessed (or not possessed) by the individual and also the anticipated
obstacles or impediments toward performing the target behaviour (Ajzen, 1991).

 

 

Eagly and Chaiken (1993) pointed out, the
assumption of a causal link between PBC and intention presumes that people
decide to engage in behaviour because they feel they can achieve it. Second,
the operation of the theory is troubled by the problem of measuring PBC
directly, as opposed to to recording control beliefs (Davies et al., 2002; Manstead
and Parker, 1995). Third, the theory introduces only one new variable when
there is evidence that other factors add predictive power over and above the
measures formally incorporated in the TPB (Davies et al., 2002). For example,
Manstead and Parker argued that personal norms and effective evaluation of
behaviour may account for variance in behavioural intentions beyond that
accounted for by the TPB (CF. Davies et al., 2002). Ajzen (1991) himself
described the model as open to further expansion.

 

 

2.3 Factors that Influence the Implementation of E-procurement

 

2.3.1 Organizational Factors

 

E-procurementis more evident in bigger
organizations than smaller. Small to medium enterprises (SMEs) often lag behind
larger organizations in e-procurement adoption (ISM/Forrester Research, 2003).
Reasons for this include owners? attitude, resource poverty,

 

 

 

 

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limited IT infrastructure, limited knowledge and
expertise with information systems (Harland et al., 2007).

 

 

However, E-procurement can be viable for SMEs
through web-based enterprise cooperation?s (Berlak and Weber, 2004) or if the
SMEs can see the business case for e-adoption (Harland et al., 2007). Some
types of organizational operations seem to lend themselves to e-procurement.
The use of E-procurementapplications often goes hand-in-hand with repetitive
purchases from suppliers, reducing human intervention and paperwork and often
resulting in improved performance for buyers and suppliers (Melville et al.,
2004; Sanders, 2005; Subramani, 2004). Reutilization and repetition in the
procurement system will increase the efficiency in this process and result in a
higher level of electronic integration between buyers and suppliers (Choudhury
et al., 1998). Make-to-order supply chains differ from make-for-stock supply
chains, impacting on implementation of e-business (Gosain et al., 2005).

 

2.3.2 Readiness Factors

 

Organizational readiness and external pressure
impact on e-business strategy (Mehrtens et al., 2001b). Many firms are
experiencing a number of major problems in implementing e-business projects,
due to hasty decisions in the presence of considerable media and software
vendor hype, and often no theoretical basis behind the determination of which
applications are most appropriate (Cox et al., 2001). To attain the greatest
benefits, purchasing processes should be evaluated and improved before adopting
e-procurement tools (Presutti, 2003). Internet technologies enable integration
with trading partners, yet amplify the need for fundamental organizational change
(Power and Singh, 2007).

 

 

B2B seller competence depends on change disposition
(Rosenzweig and Roth, 2007). Lack of readiness has been attributed mainly to
human readiness (Osmonbekov et al., 2002). Internal

 

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barriers to e-adoption are more significant than
customer or supplier barriers (Frohlich, 2002), suggesting supply management
professionals need to ensure their own organizations are ready for e-adoption
(Hartley et al., 2006).

 

2.3.3 Environmental Context

 

Environmental context play a crucial role in
technology adoption and some factors in this category are arguably more
influential than others, especially when countries under study have an
authoritative government leadership. Five factors relevant for
E-procurementadoption are included in our framework as briefly outlined (Duncan
1973). Competitive pressure can strongly influence any bank to develop and
adopt E-procurement initiatives and it may affect the bank?s perception towards
E-procurementservices as implied in previous studies. Government policies and
regulations can either directly or indirectly affect the adoption of e-banking
in terms of creating a favourable environment and impetus for institutions and
their customers so that the services can be diffused with the community (Davis 1989).

 

2.3.4 Information and Communications Technology

 

Both the local and foreign owned banks felt that
this was a challenge and barrier to E-procurement adoption and implementation
but the impact was felt more in the local supermarkets. Foreign owned banks
have well established LAN?s and WAN?s and enterprise-wide ICT whereas local
banks do not have well-established ICT capabilities. In some cases local banks
are not even convinced that it is necessary to invest in advanced ICT
infrastructure. Since E-procurementadoption involves the use of a set of ICT
related skills and knowledge, we observe that a high level of ICT resources
will positively impact the adoption and implementation of E-procurement(duncan
1973).

 

 

 

 

 

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Both local and foreign suermarkets believe that
there are many benefits of adopting and implementing E-procurement Duncan
(1989). In fact, all the benefits in the questionnaire were applicable to both
types of supermarkets. This is partly the reason why foreign supermarkets are
using many of the E-procurementapplications that are available and supported by
the current infrastructure of their respective banks. From the local
supermarkets? standpoint, it seems the perceived benefits do not outweigh the
other factors that have to be taken into consideration before adopting and
implementing E-procurement. He also argued that both local and foreign
supermarkets reported that compatibility is a barrier and challenge to
E-procurement adoption and implementation. Foreign supermarkets overcome this by
the influence they have from their other branches abroad whose beliefs and
practices are different from the local people. The need for change to adapt to
a dynamic environment can explain the impact of perceived compatibility on the
adoption and implementation (Hastings, 2012).

 

2.4 Benefits of E-procurement Implementation

 

E-procurement has become one of the most successful
applications of electronic commerce (ecommerce), having been implemented by
many companies seeking better business processes (Aberdeen Group, 2001).
Kalakota and Robinson (2000) have identified benefits in cost saving, improved
efficiency, measurement and single data entry;however, these are the three
catalysts driving growth in the e-procurement area. E-Procurement is the
procedure that involves goods procurement automation by use of internet.This
process leads to significant reduction in both cost and time. Quinnox (2012),
noted that e-procurement is a very comprehensive phenomenon which includes
making strategic initiatives and it can be used in reorganizing the entire
purchasing process. A properly implemented e-Procurement system can connect
companies and their business processes directly with suppliers while managing
all interactions.

 

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According to Morgan (2016), traditionally the role
of the purchasing manager has focused on cost containment, which makes sense
since spending on purchased goods and services can represent up to 70% of a
company?s cost of doing business. However, the opportunities for the role of
the procurement manager are much greater than simply saving money having a
broader view of procurement can contribute much more to the overall health and
growth of an organization.

 

 

He further argued that, manual systems have
operated on manual data entry from hardcopy documents. This method is
tremendously time-consuming and redundant for employees across all departments
within the procurement process. With an easy-to-use automated purchasing
software program, a company can keep all current and historical records up-to-date
at all times. This allows managers to assess company performance instantly and
make faster decisions that subsequently provide more accuracy throughout the
sourcing and invoicing process.

 

2.5 Challenges of E-procurement Implementation

 

 

Mbarika, Okoli, Byrd and Datta (2005) studied the
impact of digital divide on social groups; they found that the existence of
international digital divide between countries evident in electronic commerce,
one only needs to examine the major ecommerce sites to detect the inequality.
The main obstacles that prevent developing countries from leveraging the
internet are lack of adequate communication infrastructure, technical know-how,
and information processing about the economy and environment. The lack of
adequate banking infrastructure is also considered as one of the problems faced
by developing countries in building E-procurementsolutions (Khalfan &
Akbar, 2006).

 

 

 

 

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A number of general inhibitors (e.g. sector
independent) have been identified by a range of authors (e.g. Deise, 2000;
Srivivasan 2004; and Issa et al 2008) these inhibitors include the security
implications for an organization transacting over the internet, the lack of
interoperability with existing solutions (e.g. Enterprise Resource Planning)
and the unwillingness of suppliers to embrace this aspect of e-commerce.

 

 

Alongside these general inhibitors a number of
specific inhibitors have been identified which relate to a specific sector. For
example Panayiotou et al; (2004) has noted that the inhibiting factors
affecting the adoption of e-procurement in the Greek public sector includes the
complexity of goods/services procured, the need for transparency in
procurement, the challenges posed by public policy and the regulatory and legal
constraints faced by supermarket organizations.

 

2.6 Summary of the Literature Review

 

The emergence of e-procurement also significantly
lowered barriers to entry in the selling of many types of goods; accordingly
many home based proprietors are able to use the internet to sell goods. Often
small sellers use online auction sites such as e-bay or sell via large
corporate websites such as amazon.com, in order to take advantage of the
exposure and set up convenience of such sites.

 

 

Previous studies carried in various areas have revealed a number of
factors that influence the implementation of e-procurement. Some of these
factors are classified under organizational factors, readiness factors,
environmental factors and information communication technology factors. This
study is based on a number of theories including Theory of Reasoned Action
(TRA), Theory of Planned Behavior (TPB), and Technology and technology
acceptance model.

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