4.2. PLS-SEM (Partial Least Square-Structural Equation Modeling) Analysis
This research study uses the PLS-SEM (Partial Least Square-Structural Equation Modeling) analysis tool. This study will explain the implementation of e-procurement effect on company performance, which will later be illustrated with a path diagram. In the path diagram, all to-be-studied variables and indicators will be linked.
An evaluation will be carried out for the measurement model (outer model) after depicting the path diagram. This includes the convergent validity test, discriminant validity test (cross-loading), validity test for AVE (Average Variance Extracted) value, composite reliability test, and evaluation of the structural model (inner model), including the R-square test, path coefficient test, and hypothesis testing.
4.11. Hypothesis Testing
Based on the data processing, the results can be used to answer the hypotheses in this study. The function of the t
-test is to test how influential the independent variable (exogenous variable) is on the dependent variable (endogenous variable). The test criteria state that the t
-Statistic value is ≥ t
-Table. This study used a confidence level of 95% (α of 5%) so that t
-Table = 1.96. The results of hypothesis testing can be seen in Table 10
Senior management support has a significant effect on the implementation of e-procurement.
In this study, senior management support has a significant effect on the implementation of e-procurement. This effect was previously tested in data processing, while the t-statistical value for H1 values reached a significant level. It is also supported by Vaidya et al. [28
], who explain that the importance of senior management support comes from its ability to influence other human-resource-related factors thoroughly. Senior management is the main allocator of resources and can ensure the successful implementation of e-procurement with a diverse allocation of resources, including human resources.
Senior management support within the company must be aware that the primary function of e-procurement is to facilitate a more effective and efficient procurement process [2
]. Ibem at al. [55
] explain the three most important factors affecting an organization’s decision to use e-procurement. They are the type of organization, senior management support, and the organization’s attitude towards global trends in e-procurement.
From the results obtained from the path coefficient test in the inner model evaluation, it can be explained that the influence of senior management support on the implementation of e-procurement has the second most significant level among the other three variables. These results support research conducted by Fu et al. [56
] that senior management support led to the mapping of the implementation plan and a complete series of actions. The company also makes good use of external resources to promote the project.
Information quality has a significant effect on the implementation of e-procurement.
In this study, Information Quality has a significant effect on the implementation of e-procurement. This effect was previously tested in data processing, while the t-statistical value for H2 values reached a significant level. It is also supported by Mose et al. [57
], who state that information quality is used to describe e-commerce (web) problems. In the context of successful electronic procurement, web-based applications must be personalized, complete, relevant, and easy to understand, and ensure the expected buyers or suppliers make transactions via the internet. According to Davis et al. [58
], there are three constructs in the service quality dimension: trust, perceived risk, and ease of use. Trust in e-commerce is considered necessary because of the high degree of uncertainty and risk in most online transactions. It is also necessary for companies to ensure that all perceived risks are properly-handled. The implementation of e-procurement is closely related to supplier involvement. In implementing e-procurement, it is important to maintain mutual trust between sellers and buyers (suppliers) because all transactions are carried out online (internet). According to Ramantoko and Irawan [40
], information quality has a significant effect on perceptions in supporting the implementation of e-procurement through usability and user satisfaction. Kassim & Hussin [39
] predict the success of a public e-procurement system. This study finds that electronic behavior contributes to improving service performance, efficiency, transparency, and information quality. The hypothesis testing results show that the t
-statistics value of 9.085 is significant (α is 5%) so that the t
-table = 1.96, which means that the t
-statistics value is greater than the t-table. This shows that there is a positive influence between information quality and the implementation of e-procurement.
Implementation of e-procurement has a significant effect on company performance.
In this study, the implementation of e-procurement has a significant effect on company performance. This effect was previously tested in data processing, while the t-statistical value for H3 values reached a significant level. It is also supported by Chang and Wong [41
], who state that e-procurement implementation increases competitive advantage by increasing the efficiency of procurement activities and serving customers efficiently.
This strengthens research by Sumah, Masudin, Zulfikarijah, and Restuputri [59
], who state that optimal company performance is the primary goal. Therefore, any changes in processes or technology must have a positive impact on company performance. E-procurement is involved in improving the procurement process and affects company performance both from a financial and non-financial perspective. According to Raghavan and Prabhu [60
], e-procurement has several advantages: reducing overall procurement costs compared to current traditional methods, enabling shorter processing and order fulfillment cycles, reducing administrative costs, increasing strategic resources, and reducing inventory costs.
From the results of the path coefficient test in the inner model evaluation, it can be seen that the effect of e-procurement implementation on company performance has the highest significant level among the other three variables. Oh and Yang support this result, and Kim [61
] shows that additional factors such as IT capabilities can help companies improve their performance through the implementation of e-procurement.
4.12. Theoretical Contribution
This section discusses theoretical contributions from the results of this study. This study’s findings could enrich discussion of the usage of e-procurement for manufacturing sectors, from a developing country perspective. Most studies have previously discussed the implementation of e-procurement in developed countries with advanced infrastructures and educated human resources. This study’s findings indicate that management support has a lower impact on the implementation of e-procurement than information technology quality. This result is not in line with the study results of Teo et al. [2
]. Their study found that organizational factors are more important in e-procurement implementation in Singapore than technological factors. Dooley et al. [5
] also indicate that internal organization factors play a more significant role than technological factors in developed nations (Australia). This concludes that the information technology infrastructure is still more significant than organizational factors when implementing e-procurement in developing economies.
This study also indicates that the adoption of e-procurement in Indonesian manufacturing industries impacts the organization’s performance. Technological factors impact the implementation of e-procurement. The indicators of trust and risk perception are the factors that significantly affect the technological factors variable in e-procurement implementation. This indicates that the employee perceives new technology information applied in e-procurement in Indonesian manufacturing industries as positive and significant. This study’s results are relevant to a study by Masudin et al. [62
], who found that the perceived readiness of technology adoption among Indonesian employees in the manufacturing sector is not significant as it is in the retail sector. Moreover, Sani [62
] showed that the availability of a quality information system in logistical operations would help employees trust that technology implementation could be implemented appropriately. This also relates to potentially harmful consequences.
4.13. Managerial Implications
This section consists of the analysis results and managerial implications for the implementation of e-procurement on company performance. Managerial implications aim to develop organizational policies that are expected to provide theoretical contributions to management practice. The resulting analysis of the loading factor value aims to determine the indicators that influence company performance in implementing e-procurement. The company’s first recommendation regarding information quality that affects company performance is conducting staff training or job training for e-procurement staff. Dooley and Purchase [5
] believe that one of the factors influencing e-procurement usage is staff skills. Moreover, staff training is crucial for implementing e-procurement [28
]. Thus, internal organizational supports should allocate a budget for sufficient staff training in using e-procurement platforms. For a company that uses new technology or platforms for its e-procurement, it is highly recommended that the management provide adequate staff training [57
The second recommendation for companies regarding the quality of the information provided by e-procurement implementation is selecting appropriate technology or platforms. E-procurement technology or platforms play a significant role in the implementation of e-procurement [21
]. Senior internal management of the organization should provide a platform or appropriate technology for e-procurement and its infrastructures. The selection of platforms for the usage of e-procurement should consider the risk [63
], the future trend [33
], the effectiveness, and the costs [20
]. The selection of e-procurement platforms should also consider the type of organizations and users who use them. Some approaches can measure the acceptance of e-procurement platforms. Staff and customers’ readiness for using e-procurement technology can be measured by the technology readiness index [64
]. In contrast, the acceptance of e-procurement technology for users or customers can be rated by the technology acceptance model [66