FACTORS AFFECTING THE ADOPTION OF ENTERPRISE RESOURCE PLANNING (ERP) ON CLOUD AMONG SMALL AND MEDIUM ENTERPRISES (SMES) IN PENANG, MALAYSIA

The purpose of this research is to investigate the effect of cloud security and data privacy, cost effectiveness, Internet reliability, top management support, and competitive pressure factors on the intention to adopt cloud-based ERP system by Small and Medium Enterprises (SMEs) in Penang, Malaysia. This study employs a survey method where 300 SMEs in both manufacturing and service sectors were selected from a list taken from the SME Corporation Malaysia (SME Corp) website. Statistical Package for Social Science (SPSS) version 20 was used to analyze the collected data. There were 51 valid data records from the manufacturing sector as well as 51 valid data responses from the service sector. This paper has developed a theoretical model using the Technological Organizational Environmental (TOE) framework and formulated several hypotheses. The results of this study have revealed that the top management support factor significantly and positively correlates with the intention to adopt cloud-based ERP system in manufacturing SMEs only. In addition, the analyses have found that all the factors have no significant impact on the intention to adopt cloud-based ERP system in both sectors. The practical contribution in this research will be the guidelines for cloud-based ERP providers, SMEs, as well as the Malaysian government in order to encourage the application of cloud-based ERP systems by SMEs.