The Moderating Role of Absorptive Capacity in the Assimilation of Enterprise Information Systems

We attempt to understand how external institutional forces affecting ERP assimilation within organizations need not impact all organizations uniformly but instead can be moderated by the enterprises’ knowledge-based capabilities. Building on an institutional model of ERP assimilation, we investigate the role of absorptive capacity (ACAP) in ERP assimilation. Specifically we examine how the ACAP of an organization can enhance or retard the effect of institutional forces on the degree of ERP assimilation. Following a recent framework we operationalize ACAP as potential ACAP (PACAP) and realized ACAP (RACAP) and find that both dimensions affect ERP assimilation in different ways. While both, PACAP and RACAP, have a direct positive impact on assimilation, PACAP moderates the impact of mimetic forces on assimilation whereas RACAP moderates the effect of normative pressures. While we find overall a strong support for our hypothesized model, interestingly, we also find that RACAP negatively moderates the effect of mimetic pressures on assimilation. We discuss the contributions of this study to a better understanding of IT assimilation processes.