EXTERNAL FACTORS AND EXTENDED ENTERPRISE RESOURCE PLANNING SYSTEM USAGE OF FIRMS IN KENYA’S MANUFACTURING INDUSTRY

Abstract

This research was carried out with the aim of establishing effect of the external factors on eERP system
usage among manufacturing firms in Kenya. It is a global trend that Extended Enterprise Resource
Planning (eERP) system integrates a business firm with its supply chain partners for better organizational
firm performance. However, it is a concern that past studies have given contradicting results on what
factors lead to or what determines the usage of eERP in firms. The aim of this study was to discover the
external factors that contribute towards the usage of eERP system usage in the manufacturing industry in
Kenya. The external factors that were investigated are infrastructure like stable electricity power, stable
network and reliable internet, others include vendor support, competition, and government support and
their effect on eERP system usage. The research design adopted was the descriptive cross sectional
research design. The population was made up of the manufacturing firms from the various 13
manufacturing sectors in Kenya. The sampling technique used was stratified proportionate sampling
whereby a sample was obtained from each of the strata of the manufacturing sector. Consequently, data
was collected in 269 out of 903 manufacturing firms. The descriptive data analysis was done and inferential
data analysis techniques was carried out too using logit model, probit model and linear regression model
concurrently so as to test the study hypothesis. The findings indicated that, electric power, reliable network
and reliable internet influence eERP system usage, whereas linear regression analysis indicated that only
reliable network, and reliable internet had an influence on eERP system usage. These findings are expected
to inform the government in enacting policy that ensures all firms in the manufacturing industry use eERP
systems and have electricity, reliable networks and internet as they seek to drive Kenya’s development and
economic growth to a Growth Domestic Product (GDP) of 15 percent by 2022 in support of Kenya’s big 4
agenda. The main limitation of the study was that it was a cross sectional study which was done at one
specific point in time. In future, a longitudinal study could be carried out to study and document
improvements in the external factors for eERP system integration in a firm’s supply chain.
Keywords: eERP system, electricity, reliable network, internet, manufacturing firm, Kenya.