Enterprise Resource Planning Adoption and Organizational Performance: An Investigated Study in Libyan Public Organizations Using Structural Equation Modeling ()
1. Introduction
Today, the most significant discussion in businesses, industries, and service environments concerns organizational performance (OP) in several developed and developing countries. Measuring the OP for each organization has become a requirement of contemporary business environments to ensure better services (Chatterjee et al., 2021). Improving performance requires knowledge of the most effective ways to determine the extent to which management’s wealth and success benefit recipients and how those services are delivered (Shaik & Abdul-Kader, 2014). Achieving excellence and enhancing the OP requires developing and implementing a new system (Olan et al., 2022). ERP is one of the most recent and relevant information technology choices for the organizational manager to enhance OP (Zheng & Khalid, 2022).
In the modern era, selecting and adopting or implementing the latest information technology systems, such as ERP, has received considerable attention. Information technology plays a vital role in the capability of organizations to enhance performance, and it has become necessary to better understand the ERP system as one of the enterprise products that provide suitable solutions which support primary activities that are converted to benefits in organizations (Egdair et al., 2020a). ERP was a replacement for the material resource planning (MRP) system and has many benefits, including information availability and coordinating operations, reducing costs and cycle time, and improving responsiveness to customer needs (Katuu, 2020).
ERP systems represent substantial activities to improve efficiency, have a significant impact on the future OP, and were developed to meet such needs. ERP systems integrate and unify all the business operations of different jobs to provide a single view of the organization of data and information as part of a unified technological structure (Karimi et al., 2007). On the other hand, developing countries still face significant challenges regarding the deployment of ERP to improve performance (Mahmood et al., 2023).
The Libyan public organizations are seeking to improve their performance in terms of information availability, quality information, standardization, inventory management and time of service. Improvement is essential and critical to the successful OP of the public sector to protect the performance of these organizations and strengthen the role of the government in providing essential services and development, leading to increased effectiveness and efficiency (Egdair et al., 2020b). The organization’s profitability depends on its adoption and development of information technology, including the ERP system, which will facilitate more internal procedures and services (Balić et al., 2022).
Moreover, the growing technological developments and the dissemination of the internal technical information systems development engine can help the organization to survive. This can lead to formulating the question, what is ERP’s role in improving public organizational performance in developing countries, especially in Libya? Most organizations in Libya are suffering from weakness in overall performance. Several reasons should be considered, and more importantly, the reflection of the ERP systems and organizational performance in Libyan public organizations by studying the most critical variables to fill the theoretical gap in previous studies. The public sector and government organizations help investigate and enrich the knowledge body (Aljileedi & Amoozegar, 2023).
The current research is limited to Libyan public organizations in the service sector and investigates the relationship between the ERP system and organizational performance (Merhi, 2021).
2. Problem Statement
Organizational performance (OP) is an essential constant in organizational studies. One of the most recent and vital observations of organizational studies concerns the challenges and opportunities facing public organizations in improving their performance, reducing the gap in updating their systems, and helping organizations accomplish competitive benefits (Merhi, 2021). This has been emphasized in public organizations in developing Arab countries and the Libyan context. The current study is motivated by performance development at Libyan public organizations by investigating the relationship between the ERP system and the OP in Libyan public organizations (Egdair et al., 2017). In addition, organizational performance faces the challenge of attracting and winning the best customers who have considerable influence on organizations and the public services provided (Rana et al., 2022).
Accordingly, exploring previous studies for answers to the nature of the relationship between new technology and performance has exposed several studies that show the successful selection of effective technology to be a major contributor to performance (Ali & Miller, 2017; Mahmood et al., 2023). The ERP system was undoubtedly not an antecedent of job performance as much as it provided the bedrock for organizational advantages, such as better performance (Ali & Miller, 2017). The ERP system was selected for the current study because it has become a significant module for organizations to gain performance success and is considered an organizational advantage in achieving high performance (Anaya et al., 2023).
The ERP system requires changing procedures and the relocation of a stable environment to successful adoption or implementation (Anaya et al., 2023; Dumitru et al., 2013). ERP has become widely considered in several large government organizations in developed countries; large organizations have adopted ERP to improve financial and non-financial performance, while developing countries are still behind in ERP system adoption (Nugraha et al., 2023). Theoretically, there is still a lack of ERP studies and their benefits in the developing country context (Ali et al., 2023). Recent studies argued that researchers do not pay attention to conducting studies about ERP systems and OP in developing countries (Alkraiji et al., 2023; Egdair et al., 2020a).
3. Literature Review
3.1. Public Organizational Performance
Many organizations are looking to improve their performance by using available resources and trying to search for the best essential alternatives. From the literature review, it is found that public organizations (government) aim to have citizens participate, achieve customer satisfaction, promote transparency, enhance integrity, fight against corruption, and be accountable (Egdair et al., 2020a). The introduction of modern systems is an essential factor in enhancing and protecting the public organization’s performance in providing essential services and development (Mahmood et al., 2023).
An OP of the public sector has become an integral part of the evaluation process management to see if they are achieving the strategic objectives or not and to try to find a solution for public organizations to measure performance quality, service provision, value for money, and so on (Anaya et al., 2023). The public sector seeks to achieve quality customer satisfaction, and excellent performance in providing the needs of the communities. It has to be within the available budget as public organizations have more intangible goals and objectives than the private sector (Rana et al., 2022).
In addition, the performance of the public sector, like that of the private sector, varies according to the goals of the business. The private sector, meanwhile, intends to make a profit. The public sector seeks to achieve quality customer satisfaction and excellent performance in meeting the needs of the communities. It has to be within the available budget, as public organizations have more intangible goals and objectives than the private sector (Egdair et al., 2020a).
The empirical search gap offered valuable insight into establishing ERP implementation, improving internal operational efficiency services in Libyan public sector organizations, and ensuring the organization’s sustainability services to citizens, as the core services are provided only by government organizations (Egdair et al., 2020a).
Finally, the study is an excellent way for managers to make the right decisions at the right time, even under the most challenging conditions in Libya. Furthermore, the economy is still motivated by state-owned organizations active in several sectors, and most employees are in the public sector (Egdair et al., 2017).
3.2. Enterprise Resource Planning (ERP)
Since the first waves of information and technology that emerged in most organizations worldwide in late 1990 and early 2000, it has been looking to provide the best solution for enhancing organizational performance. The ERP system is a new class of packaged application software developed the first generation by vendors of ERP systems in the era of information technology. The ERP system is complete integration software that can unify all the departments in an organization to assist in completing work with high quality and in the lowest time. Organizations worldwide have implemented the ERP system previously due to the advantages. Despite the high-cost implementations and failures in so many cases, organizations still succeed in the system in developed countries (Mohammed & Hachicha, 2024).
However, the adoption and implementation of such modern systems in organizations operating in most developing countries, are still slow in most cases and not yet up to the level of the systems used in developed countries, due to the financial cost of implementing the advanced systems (Mukred et al., 2023).
From another perspective, the ERP has become a rapidly growing system that is needed in organizational work practices. As to considering the importance of exploiting the new technology, there are still some organizations facing possibility to adopt and implement ERP due to different factors failingly (Hammad et al., 2024).
The ERP system has made it imperative for every organization to get employees’ support and encourage them to accept the system. This is because the system’s success and failure depend on the method introduced in the organization. The adoption of an ERP system has been related to realizing abilities such as changing the dynamics of competition in terms of financial and non-financial dimensions (Bhattacharya et al., 2023).
The previous researches (Mahmood et al., 2020; Ranjan et al., 2016) have identified a number of issues and challenges, which may be termed as most critical based on their frequency and occurrence. The most first ten issues and challenges are identified include top management approach, training and development, misfits between the ERP system’s built-in processes and the organizations, change management, system integration, effective communication, business process reengineering, unreliable vendors, project management, project team formation, team empowerment, lack of skilled human resources.
However, other issues and challenges identified in Arab countries, especially in Libya, such as security risks, IT infrastructure, employees’ resistance to using the system, and misalignment between the ERP system’s offerings and the organization’s business processes are involved in ERP implementation (Alzahrani, 2022; Hammad et al., 2024; Oumran et al., 2021).
Moreover, the adoption of the ERP system in Libyan organizations is not adequate although Libya has been able to enjoy wealth, and a spread of public sector. The financing of these projects is not a problem in most public organizations, whether productivity or services. Libya as one of the wealthiest countries in North Africa, did not attain enough use of technology in most public organizations be it manufacturing or services. As it was only at its infancy, there was little information about the ERP in Libya, or information technology in general. The current study tries to identify the effect of the adoption of ERP and organizational performance (Egdair et al., 2020b; Malik & Khan, 2021).
With Libyan organizations starting to get interested in adopting information technology (IT), such as ERP systems in different areas, the organizations in Libya are trying to improve their performance; the vigorous sectors of the state, including services and productive organizations, are trying to provide the country with a significant proportion of income. These organizations spend a lot of money and time to improve the areas of technology and the development of systems that allow organizations in the future to improve their performance still in need (Emhmed et al., 2021).
On the other hand, it is becoming increasingly difficult to overlook the ERP system in Libyan organizations. The empirical gap in the information technology systems in Libyan organizations of public sector, which is related to the lack of accurate information, and service by the long procedures routine that created challenges and obstacles which can be classified into technological and organizational factors (Egdair et al., 2020b).
ERP System Measurement
Measuring ERP adoption as the independent variable of this study will be adopted in accordance with the model provided by the ERP. As one of the computer systems and the success of information systems based on key dimensions of the model provided by (DeLone & McLean, 2003). This model was successful in information systems studies, information technology, electronic systems measurement, etc. In addition, these dimensions have been adopted as a standard in several studies and have received the most attention from researchers (Delone & Mclean, 2004; Jenatabadi et al., 2013; Tsai et al., 2012). As follows, system quality, user satisfaction, individual impact, the organization impact.
1) System Quality: determines the degree of the information processing system itself. Measuring quality system focused mostly on the performance characteristics of the system under study ERP system (Udo et al., 2010). In terms of resource use and benefit, the system also considers the best investment of resources, timing and response time, reliability and accuracy, the ability to adapt, and the possibility of maintenance (Sohn & Tadisina, 2008).
2) User Satisfaction: is to determine the degree of recipient response to the use of the output of an information system (Jenatabadi et al., 2013; Thong, 1999), user satisfaction is associated with comparing the new system and the old system; an effective response is a measure of satisfaction that determines user satisfaction (Zaied, 2012).
3) Individual Impact: determines the degree of information derived by the beneficiary of the system through data processing, and how it is reflected on the impact of the behaviour of the recipient, more true, correct and quick access to achieve positive results, and this is what the organization aims to achieve generally (Jenatabadi et al., 2013).
4) Organizational Impact: reflects the extent of the data and information provided by the system that impacts both already existing systems or modern system (Mahmood & Mann, 1993; Melville et al., 2004). Then, the system provides quick and corrective information and responds to the recipients of the information accurately and in record time, as reflected in the possibility of the confidence of the beneficiary organization (Qrunfleh & Tarafdar, 2014). In Table 1. Summary measurement of variables and questionnaire instruments.
Table 1. Summary measurement of variables and questionnaire instruments sources.
| Main Variable |
Dimension |
Scale type |
Scale used |
No of items |
Main Key sources & items development from literature |
| OP |
CS |
Interval |
6 point scale |
4 |
Kaplan & Norton, 1992;
Al-Dhaafri & Al-Swidi, 2014 |
| IP |
Interval |
6 point scale |
4 |
Kaplan & Norton, 1992;
Al-Dhaafri & Al-Swidi, 2014 |
| GL |
Interval |
6 point scale |
4 |
Kaplan & Norton, 1992;
Al-Dhaafri & Al-Swidi, 2014 |
| ERP |
II |
Interval |
6 point scale |
4 |
DeLone & McLean, 1992 |
| OI |
Interval |
6 point scale |
4 |
DeLone & McLean, 1992 |
| SQ |
Interval |
6 point scale |
4 |
DeLone & McLean, 1992 |
| US |
Interval |
6 point scale |
4 |
DeLone & McLean, 1992 |
3.3. The Relationship between ERP System and Organizational Performance
Most organizations in developed and developing countries recognize the ERP system, which is popular for information management in the professional environment worldwide (Mahmood et al., 2023). For the different management areas and activities, the system highlights the advantages it offers significantly. There are other results such as a clear advantage that organizations can show higher rates of return following the implementation of the ERP. The ERP advantage cannot appear directly, but it may take a few years, at least two years, after the continued implementation of the system (Barna et al., 2021).
ERP adoption is becoming widespread in the various public, governmental, and private organizations in the e-business world. It has become a powerful tool for supporting organizations’ operations, reducing operating costs, and increasing the sharing of information about resource activities (Putra et al., 2021).
However, the ERP system is complex due to its need to integrate all units and adequate support necessary to successfully continue that work. However, it improves the cost, flexibility and quality performance, user satisfaction and customer satisfaction (Mohanty et al., 2022).
In addition, the control process, benefits, and features that can help gather results helped explain the improved financial performance following the adoption of ERP. Information technology has affected the organisation’s ability to absorb the OP. Also, the ERP implementation aids in decision-making and proper administration and improves customer service and retention.
The successful system of ERP seems to improve the overall OP such as the efficiency and effectiveness. Recent studies have examined and addressed the concept of underlying systems, suggesting that organizations depend mostly on ERP applications. It can be utilized to maximize the benefits. ERP supports all business and internal activities of the organization. Through the integration of the functions of various business units of the organization, in one or more areas the organization provides complete information, and this leads to effective decision-making (Abobakr et al., 2024; Weerasekara & Gooneratne, 2023). Table 2 illustrates the study variables.
The above explanation of the proposed relationship suggests that a relationship has been formed between ERP and OP. Many results exist, including positive signals from previous studies (AlMuhayfith & Shaiti, 2020; Igna, 2021). Furthermore, there is a strong relationship between ERP and OP based on the confirmed model proposed by DeLone and McLean 1992 regarding the success of the information technology system (Chatzoglou et al., 2017). On the other hand, the ERP system dimension is found to have a positive impact on OP, with a significant positive relationship between the proposed variables ERP and OP (Mohamed & Farahat, 2019; Obeidat et al., 2016). ERP that has a direct impact on organisational performance is difficult to separate (Putra et al., 2021). Figure 1 shows the study framework.
Table 2. Summary of study variables
| Variable Name |
Variable Code |
Variable Type |
Variable Dimensions |
Dimensions Code |
| ERP system |
ERP |
Independent |
Individual ImpactOrganizational ImpactSystem QualityUser Satisfaction |
IIOISQUS |
| Organizational Performance |
OP |
Dependent |
Costumer ServiceInternal ProcessGrowth and Learning |
CSIPGL |
Figure 1. The study framework and hypotheses.
Thus, the hypothesizes of the study can be explained in the following:
H1: There is a significant positive relationship between the ERP system and organizational performance (OP) among Libyan public organization services.
H1a: There is a significant relationship between individual impact and ERP.
H1b: There is a significant relationship between organizational impact and ERP.
H1c: There is a significant relationship between system quality and ERP.
H1d: There is a significant relationship between user satisfaction and ERP.
4. Methodology
This study followed a quantitative methodology because it is more suitable for investigating the relationships between effect factors (Creswell & Creswell, 2017). The study adopted the analysis data using SPSS software and PLS-SEM as an indicator in interpreting factors. Furthermore, the main purpose of this study is to analyze the causal relationships in the study model. SEM is a statistical technique to test those relationships and assumptions associated with them. SEM is a combination of factor analysis and multiple regression analysis (Chou & Chiang, 2013). The PLS-SEM does not require any prior assumptions on sample distribution and can deal with small-sized samples (Abdullah et al., 2016).
The questionnaire used was tested for primary data collection on the relevant variables. As recognized, the ERP system is a strategic plan that can be used for an organization; thus, the questionnaire was sent to the relevant responsible parties for the direct ERP system success adoption and implementation in the selected organizations, such as the general and executive managers.
The current study reviewed the literature on enterprise systems (ES) studies in adoption and implementation models at the organizational level. The theoretical underpinnings of the current study model are adopted and adapted to explain the ERP system and organizational performance—the potential for application to ES adoption studies. The Technology Acceptance Model (TAM) and institutional theory conclude that the same context in a specific theoretical model can have different factors in implementing complex new technology studies.
Sample and Population
The main target of any empirical investigation is the accuracy of a sample size to make confident results in generalizing the results about a population. In practice, the current study is used to determine the sample size based on the expense of data gathering and the need to have appropriate statistical power; in this case, to get an accurate sample size the study used some equations and formula calculations sourced from www.calculator.net/sample-size-calculator
Based on the population of this study, there are public organizations in Libya, and the target is to obtain the actual number of public organizations in Libya. The statistics from the official website of the Libyan General Information Authority, www.gia.gov.ly indicate that Libya has 242 public organizations. According to a random sample, every organization has an equal opportunity to participate and be part of the sample.
To avoid an incorrect sample size, this formula used a formula with finite population correction in Equations (1) and (2).
(1)
(2)
with:
n0: sample size pre-correction (rounded up)
p̂ = 0.5
z = 1.96
MOE = 0.05
N = 242
n = sample size
(3)
n0 = 384
(4)
n = 148.44 ≃ 149
With a margin of error of ±0.05% and an expected sample proportion of 0.5, the sample size would need to be 149.
Based on the results above, 149 organizations are needed to complete the survey to fulfill the purpose of this study since a larger sample size would be more representative of the study population. The unit of analysis for this study is naturally the organization level.
Therefore, one of the top management or executive management team managers was selected from each organization to test the hypothesized relationships on the public organizational level (Christiansen et al., 2022). Only one questionnaire was submitted to be answered by the representative of the chosen organization, who is an expert in or dealing with an ERP system. That depends on the nature and role of the organisation, which differs from one organisation to another.
5. Results and Discussion
The main data used for this research are collected from public organizations in Libya. A total of 149 questionnaires were personally distributed. Almost 127 questionnaires were returned out of 149 that were collected within two and a half months. However, out of the 127 responses obtained, only 119 questionnaires were used for further analysis. This is because eight questionnaires with uncompleted answers were cancelled, as presented in Table 3.
Table 3. Response rate of the questionnaires.
| Response |
Total |
| The distributed questionnaire |
149 |
| Returned questionnaires |
127 |
| Usable questionnaires |
119 |
| Response rate |
79.8% |
In addition, Table 4 revealed no significant differences between the early and late respondents for all variables. This is done by comparing the mean and standard deviation between the two groups—early and late responses.
The mean of this study’s exogenous (independent) and endogenous (dependent) variables is arranged between 5.2424 and 5.4198. Particularly, the standard deviation ranged between 0.35953 and 0.55391, implying that the latent variables are slightly different from each other; the reason for this difference is due to the response of item’s score of each main variable of the study in Libyan public organizations, may have a different perspective from another organisation because of the nature of each organisation.
Table 4. Descriptive statistics of the group statistics early and late respondents.
| Constricts |
Response |
N |
Mean |
Std. Deviation |
Std. Error Mean |
| CS |
Early |
53 |
5.3208 |
0.50568 |
0.06946 |
| Late |
66 |
5.3182 |
0.55391 |
0.06818 |
| IP |
Early |
53 |
5.2500 |
0.53709 |
0.07377 |
| Late |
66 |
5.3295 |
0.47060 |
0.05793 |
| GL |
Early |
53 |
5.2453 |
0.46381 |
0.06371 |
| Late |
66 |
5.2992 |
0.49072 |
0.06040 |
| II |
Early |
53 |
5.2830 |
0.46003 |
0.06319 |
| Late |
66 |
5.2424 |
0.47021 |
0.05788 |
| OI |
Early |
53 |
5.3255 |
0.40899 |
0.05618 |
| Late |
66 |
5.3144 |
0.42361 |
0.05214 |
| SQ |
Early |
53 |
5.4198 |
0.35953 |
0.04939 |
| Late |
66 |
5.3447 |
0.48983 |
0.06029 |
| US |
Early |
53 |
5.3632 |
0.38156 |
0.05241 |
|
Late |
66 |
5.3409 |
0.45072 |
0.05548 |
Note: IP = Internal Process, GL = Growth Learning, CS = Customer Service, II = Individual Impact, OI = Organization Impact, SQ = System Quality, US = User Satisfaction.
In addition, (Armstrong & Overton, 1977; Hair et al., 2010) It emphasizes the use of the P-value to determine if there are any variances between the two samples. To support this recommendation, an independent-sample T-test was conducted to examine the alterations between the two groups (early and late respondents).
Therefore, we can use the t-value, degree of freedom (df), and two-tail significance for the equal variance estimated to determine whether early and late response differences exist (George & Mallery, 2016). The consequences of the independent-sample T-test suggest that Levene’s test has a probability greater than 0.05. Levene’s Test (t-value > 0.001), and Sig. (2-tailed) > 0.05 can be summarised. In relation to the result of the independent samples test, there is no significant difference, and the equal variance estimated that no significant differences are apparent.
To conclude, Table 5 exposed that no response bias could significantly affect the study’s ability to generalise the results. Table 6 illustrates the Independent Samples Test of Constructs.
Table 5. Levene’s test for equality of variances.
| Construct |
Levene’s Test for Equality of Variances |
t-test for Equality of Means |
| F |
Sig. |
t |
df |
Sig. (2-tailed) |
Mean Difference |
| CS |
Equal variances assumed |
0.015 |
0.901 |
0.026 |
117 |
0.979 |
0.00257 |
| Equal variances not assumed |
|
|
0.026 |
115.041 |
0.979 |
0.00257 |
| IP |
Equal variances assumed |
0.569 |
0.452 |
−0.860 |
117 |
0.391 |
−0.07955 |
| Equal variances not assumed |
|
|
−0.848 |
104.198 |
0.398 |
−0.07955 |
| GL |
Equal variances assumed |
0.304 |
0.582 |
−0.611 |
117 |
0.543 |
−0.05396 |
| Equal variances not assumed |
|
|
−0.615 |
113.886 |
0.540 |
−0.05396 |
| II |
Equal variances assumed |
0.013 |
0.910 |
0.473 |
117 |
0.637 |
0.04059 |
| Equal variances not assumed |
|
|
0.474 |
112.503 |
0.637 |
0.04059 |
| OI |
Equal variances assumed |
0.776 |
0.380 |
0.144 |
117 |
0.886 |
0.01108 |
| Equal variances not assumed |
|
|
0.145 |
113.060 |
0.885 |
0.01108 |
| SQ |
Equal variances assumed |
0.463 |
0.065 |
0.932 |
117 |
0.353 |
0.07511 |
| Equal variances not assumed |
|
|
0.964 |
116.133 |
0.337 |
0.07511 |
5.1. Assessment of Significance of the Structure Model
This section discusses the assessments used to measure the validity of the structural model of the current study. Assessing the structural model involves evaluating the collinearity matters, implication and significance of the relationships, the R2 level, the effect sizes f2, and the predictive significance Q2 and the q2 effect sizes (Hair Jr et al., 2014).
As can be understood equally from Table 6 below, the estimates for the full structural model the direct effect is by evaluating the P-value.
Table 6. Direct relationship of the model.
| Research Hypotheses |
Direct relationship |
β |
Std.E |
T-Value |
P-Values |
Decision |
| H1 |
ERP -> OP |
0.636 |
0.099 |
6.452 |
0.000 |
Significant |
| H1a |
ERP -> II |
0.908 |
0.017 |
52.750 |
0.000 |
Significant |
| H1b |
ERP -> OI |
0.926 |
0.013 |
68.729 |
0.000 |
Significant |
| H1c |
ERP -> SQ |
0.887 |
0.030 |
29.420 |
0.000 |
Significant |
| H1d |
ERP -> US |
0.885 |
0.021 |
41.740 |
0.000 |
Significant |
P* < 0.10 (2 tailed), P** < 0.05, P*** < 0.01(2 tailed). Note: ERP = Enterprises Resources Planning, II = Individual Impact, OI = Organization Impact, SQ = System Quality, US = User Satisfaction, OP = Organization Performance.
As can be noticed in Table 6, the evaluation of the full model originally, it was predicted in the first hypothesis that ERP is positively related to organizational performance with (β = 0.636, T = 6.452, P = 0.000). By implication, the ERP system has a significant direct relationship with organizational performance, and it is necessary for achieving high performance, as has been explained by the values assessment. Furthermore, the main hypothesis has four sub-hypotheses: H1a, H1b, H1c, and H1d. The results are as follows.
H1a showed that individual impact (II) is positively related to ERP (β = 0.908, T-value = 52.750, P-value = 0.000) supported the hypothesis. H1b emphasised a positive significant relationship between organisational impact (OI) and the ERP system, and it is supported in the level of (β = 0.926, T-value = 68.729, P-value = 0.000). Results of H1c between system quality (SQ) and ERP confirmed a significant positive relationship by (β = 0.887, T-value = 29.420, P-value = 0.000). Finally, the H1d between user satisfaction (US) and ERP has been explained by (β = 0.885, T-value = 41.740, P-value = 0.001).
5.2. Assess the Predictive Relevance of the Model
In the final step of the structural model, the researcher needs to assess the predictive relevance (Q2). This procedure is accepted following the Stone-Geisser test for predictive relevance (Geisser, 1975; Sarstedt et al., 2014; Stone, 1974). It should be (Q2 > 0), and it can be calculated by the blindfolding procedure in PLS-SEM. The procedure aims to compare the original values with the predicted values of endogenous constructs that have a reflective measurement model specification and to the endogenous single-item construct (Sarstedt et al., 2019). The Stone-Geisser test of predictive relevance is normally used to calculate the goodness-of-fit in PLS-SEM (Duarte & Raposo, 2010).
However, the current study used blindfolding to define the predictive relevance of the study model. The use of the blindfolding method to achieve Q2 = 1-SSE/SSO is from the constructed cross-validated redundancy report. If Q2 is positive, the model has predictive validity; if it is negative, the model does not have any predictive validity (Hair Jr et al., 2014). The reflective dimension model recognises that a latent or unobservable perception causes a difference in some established indicators. Therefore, since all endogenous latent variables in the current study are reflective, a blindfolding technique was generally applied to these variables. The main results have been illustrated in Table 7.
Table 7. Construct cross-validated redundancy.
|
SSO |
SSE |
Q2 (=1-SSE/SSO) |
| OP |
354.000 |
172.496 |
0.513 |
| CS |
472.000 |
130.776 |
0.723 |
| GL |
472.000 |
154.968 |
0.672 |
| II |
472.000 |
155.958 |
0.670 |
| OI |
472.000 |
162.523 |
0.656 |
| SQ |
472.000 |
213.472 |
0.548 |
| US |
472.000 |
193.951 |
0.589 |
In Table 7, the sum of the squared observations (SSO) and the sum of the squared prediction errors (SSE) was obtained. The table also provides the model’s Q2 value. Q2 = 1-SSE/SSO, Q2 for all endogenous latent variables were above zero, suggesting the predictive relevance of the model (Chin, 1998; Henseler et al., 2009). The final assessment lies in the q2 effect size. This procedure should be computed manually because smart PLS does not provide this technique. Noticeably, the q2 values of 0.02, 0.015, and 0.35 represent small, medium, and large predictive relevance, respectively (Benitez et al., 2020).
The current study conducted these procedures for a certain endogenous construct with the Q2 of the main endogenous, which is (OP), predicted by ERP, as an exogenous construct. The result illustrated in Table 8 can conclude the model’s effect size of (q2).
Table 8. Effect Size for The Model
| Exogenous Construct |
q2 Included |
q2 Excluded |
q2 |
Total Effect |
| ERP |
0.513 |
0.381 |
0.271 |
Medium |
Generally, after presenting all the effects that have been presented in previous sections, including the main relationship among the effects, Table 9 illustrates the results of all hypotheses established and outlines the study findings.
Table 9. Summary of the study findings.
| Hypotheses |
Statement of Hypotheses |
Decision |
| H1 |
There is a relationship between ERP and OP. |
Supported |
| H1a |
There is a relationship between Individual impact and ERP. |
Supported |
| H1b |
There is a relationship between organizational impact and ERP. |
Supported |
| H1c |
There is a relationship between system quality and ERP. |
Supported |
| H1d |
There is a relationship between user satisfaction and ERP. |
Supported |
6. Discussion
The explanation of the importance of the ERP system to other public organizations in Libya appeared to have a significant relationship with the ERP system. To provide quality service. As a small country, Libya depends on public organizations, which are considered the main sector to service their citizens. The first objective is to understand the relationship between ERP and OP, which aligns with the first hypothesis. A positive and significant relationship between the ERP system and OP using PLS output was shown at (β = 0.636, T-value = 6.452, P-value = 0.000).
It is confirmed that the ERP system is positively related to OP. This empirical result matches the results of earlier studies, which argue that ERP positively influences OP in such cases (Abobakr et al., 2024; Putra et al., 2021). Furthermore, the results advanced significantly from the initial subjects. There are several chances for ERP system studies to develop and expand organisational performance, mainly by focusing on procedure methods instead of different approaches (AL-Abrrow et al., 2018; Shen et al., 2016).
Thus, the indirect hypothesis has also investigated the dimensions of the ERP system to confirm the model which is provided by (DeLone & McLean, 1992) These hypotheses tests are mentioned in Table 6.
The results of the direct path, which reflect the relationship between the dimensions of the ERP system, confirmed positive significance relations. It is employed by the existence of four different and individually important dimensions (individual impact, organisation impact, system quality, and user satisfaction) of a successful ERP system, which is consent with (Goundar et al., 2021).
Although ERP systems have been increasingly adopted and used in Arab countries, in Libyan organizations, a few public organizations are interested in developing partly systems to provide services and facilitate internal procedures. At the same time, some of these organizations have attempted to outsource and have asked to build ERP applications. However, due to the instability of conditions of the country in the last few years, the organizations have failed to adopt and implement ERP systems broadly (Egdair et al., 2020a).
The implementation of ERP can provide the best performance conditions to Libyan public organizations. At the same time, internal processes, partly or totally, still need more and more automation to be established, and the effect of the implementation of such a complex ERP structure is to be considered (Bakeer, 2017; Egdair et al., 2020b).
Furthermore, some other variables, such as technical and organisational conditions, infrastructure, professionalism, human resources capacity, financial capacity, and managerial support, can be obstacles (Emhmed et al., 2021; Mahmood et al., 2020).
7. Limitations
Although the study investigated the direct relationship between the ERP system and OP in the Libyan public organisation context, the results may not be generalizable to longer time periods because of changes in related factors mentioned previously, such as time, financial cost, the unstable situation of Libya in the current study period, etc.
Conversely, this study proposed a practical and theoretical contribution. Nevertheless, it cannot escape some limitations:
First, the study carries out a casual examination research by investigating the hypothesised relationship. This strategy emphasises in a short time, although the organisation’s characteristics always change. So, the study’s assumptions may be different with new investigations.
This study strongly encourages future studies to investigate other factors in the organizational culture and technology involved in ERP implementations, including change management, leadership, and user training, which are critical for realizing the benefits of ERP in public organizations.
Additionally, the measurements used were adapted from previous studies as a quantitative method. The possibility of future investigation can adopt a mixed method research design, quantitative and qualitative research.
On the other hand, results showed that adopting an ERP system positively related to individual impact, organisation impact, system quality, and user satisfaction. This can introduce other theories to test different perspectives and enrich the body of knowledge.
8. Conclusion
The contribution of this study starts with the importance of the variables as discussed; the ERP system is one of the systems that can provide more benefits to organizations, both private and public. The current study attempted to provide evidence that says the importance of the ERP system to public organizations, especially in developing countries, in this case, in Libyan public organizations. The result exposed the strong relations between ERP and OP as main variables and their items, reflecting the study object’s goal and finding a solution for the investigated issue.
Thus, the successful introduction of an ERP system will increase the ability to provide quality customer services and accurate information and reduce the time consumption in the internal process. At the same time, there is still a need more and more for future investigate other factors that can affect the ERP system adoption and implementation on the organizational performance in Libyan public organizations not addressed in the main infrastructures and the organization culture and technology factors, and resistance to change for new system introduction.
As mentioned, this study’s implications are that ERP provides many strategic advantages, such as operational benefits, business process and management benefits, and strategic new systems planning benefits, to enhance performance sustainability through operational process integration.
The study investigation result can help managers to better understand the importance of ERP system implementations by addressing carefully such factors mentioned top management approach, training and development, misfits between the ERP system’s built-in processes and the organizations, change management, system integration, business process reengineering, lack of skilled human resources, also IT infrastructure, resistance of change to new systems.
This study was attempted in public government organizations; the next investigation is supposed to compare the public and private sectors to ensure the main differences between these sectors or SME organizations.