Expert Systems With Applications 93 (2018) 376–394

Contents lists available at ScienceDirect

Expert Systems With Applications

journal homepage: www.elsevier.com/locate/eswa

Cloud computing in manufacturing: The next industrial revolution in

Malaysia?
Keng-Boon Ooi a,∗, Voon-Hsien Lee b, Garry Wei-Han Tan b, Teck-Soon Hew c, Jun-Jie Hew b
a
Faculty of Business & Information Science, UCSI University, Malaysia
b
Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Malaysia
c
Faculty of Business and Accountancy, University of Malaya, Malaysia

a r t i c l e i n f o a b s t r a c t

Article history: This study explores how performance expectancy (PE), effort expectancy (EE), firm size (FS), top manage-
Received 28 June 2017 ment support (MS) and absorptive capacity (AC) of cloud computing technology can lead to innovative-
Revised 1 October 2017
ness (IN) and firm performance (FP) among the manufacturing firms. Data gathered from 188 managerial
Accepted 3 October 2017
positions were analysed using Partial Least Squares (PLS) Structural Equation Modelling (SEM) analysis,
Available online 6 October 2017
together with the Artificial Neural Network (ANN) analysis. Findings revealed that PE, FS, AC have a pos-
Keywords: itive significant influence on IN; while IN positively influences FP. This study offers valuable perspective
Cloud computing on the applicability of cloud computing technology to improve IN and FP, and subsequently be aligned
Industry 4.0 with Industry 4.0, the next industrial revolution.
Innovativeness © 2017 Elsevier Ltd. All rights reserved.
Firm performance
Manufacturing firms
PLS-SEM-ANN

1. Introduction
Enterprises worldwide are currently being reshaped by key
business technology trends such as Semantic Web, embedded sys-
tems, Internet of things (IoT), virtualisation technologies, and cloud
computing (Bughin, Chui & Manyika, 2010). Son, Narasimhan, and
Riggins (2005) claimed that the cloud concept not only has a pro-
pitious future for the IT industry, but changing business in other
industries. They further asserted that the usage of cloud comput-
ing has become increasingly popular for both public and private
sectors. Many successful business cases related to cloud computing
(Amazon, 2012; Apple, 2012; Google, 2012; Microsoft, 2012; Oracle,
2012) were reported world-wide over the last few years.
Cloud computing services adoption is appealing. Cloud comput-
ing enables network access that is convenient and universal to
a shared pool of computing resources such as networks, servers,
storage, services and applications which are configurable, and can
be provisioned to release swiftly with little effort from the man-
agement or interactions from the service provider (Mell & Grance,
2009, 2011). Thus this helps to minimise investment costs and
reduce maintenance work related to IT infrastructure (Khorshed,
∗
Corresponding author.
E-mail addresses: ooikb@ucsiuniversity.edu.my (K.-B. Ooi), leevh@utar.edu.my
(V.-H. Lee), tanwh@utar.edu.my (G.W.-H. Tan), hewts@siswa.um.edu.my (T.-S. Hew),
hewjj@utar.edu.my (J.-J. Hew).
Ali, & Wasimi, 2012), providing firms the opportunity to innovate
and maintain their position in the global market (Mourtzis & Vla-
chou, 2016).
With the use of cloud computing technology, enterprise sys-
tems are transformed, providing firms with more agility in the
employment of services, expanding flexibility, and improving pro-
ductivity (Kunio, 2010). Lu, Xu, and Xu (2014) further elaborated
that cloud computing helps to transform traditional manufactur-
ing business model, encourages effective collaboration, and enables
the management process of a complete product lifecycle to be pro-
vided and the alignment of product innovation with business strat-
egy. Due to its surmountable advantages, manufacturers are urged
to embrace cloud computing, which may in turn give rise to “cloud
manufacturing”. It is logical to have such mind-set as the manufac-
turing businesses are becoming more distributed, increasingly re-
liant on IT, more agile-demanding and globalised in the new mil-
lennium.
Driven by the digital revolution and the IoT, it is inevitable
that the Malaysian manufacturing industry is being transformed
by yet another monumental area. The fourth industrial revo-
lution, also known as Industry 4.0, integrates computers and
robotics in manufacturing, giving birth to digitisation and au-
tomation of manufacturing processes (Ruban, 2017). These cyber-
physical platforms help monitor factory processes, resulting in
smart manufacturing or intelligent factories. Ultimately, there is
less storage and wastage, better operational efficiency, leading

https://doi.org/10.1016/j.eswa.2017.10.009
0957-4174/© 2017 Elsevier Ltd. All rights reserved.
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394
to lower costs and accelerated growth in productivity (Thames
& Schaefer, 2016). More countries are moving towards Industry
4.0. In South-East Asia, countries such as Vietnam, Myanmar, and
Thailand are already making its transition to Industry 4.0
(Ganapathy-Wallace, 2017). Sadly, Malaysia has been rather slow
on the uptake of Industry 4.0 as many of them are still holding on
to their 2.0 and 2.5 systems, and would rather keep their foreign
workers than investing in automation and IT (Pandiyan, 2017). In
terms of manufacturing technology, Malaysia is still at the infancy
stage of automating.
Given the benefits of investing into smart manufacturing will
be seen in the long run, it is imperative to carry out this empir-
ical research to ascertain the benefits of cloud computing adop-
tion on firm’s innovativeness (IN) and overall performance, so
that the local firms can be groomed to increase its competi-
tiveness and share technical know-how. This research undertakes
a modified “Unified Theory of Acceptance and Use of Technol-
ogy” (UTAUT) and “Technology-Organization-Environmental” (TOE)
framework. Specifically, the study explores how performance ex-
pectancy (PE) and effort expectancy (EE) from UTAUT; and firm
size (FS), top management support (MS) and absorptive capacity
(AC) from the organisation context of TOE, will lead to IN and
firm performance (FP). As compared to the past studies (Adamson,
Wang, Holm, & Moore, 2017; Lin, Xia, Wang, & Gao, 2013; Wu,
Greer, Rosen, & Schaefer, 2013), our study differs and contributes
in a different light as this paper (1) presents a specially selected
adoption factors that drives the innovative ability and performance
of firms, (2) presents statistical evidence summarizing the research
areas and publications related to cloud computing, and (3) iden-
tifies outstanding research issues related to cloud computing and
points out future trends and directions.
The remaining of the paper is outline as follows: The back-
ground of cloud computing and the essential keywords related to
this paper will be described in the next section. A set of testable
hypotheses, accompanied by a theoretical framework is then de-
veloped. Following that, the methodology component of this paper
explaining the cross-sectional data gathered from the Malaysian
manufacturers is outlined before presenting the results. Finally, the
conclusions, outstanding research issue and future directions are
identified and discussed.
2. Literature review
2.1. Application of cloud computing in manufacturing context
Fernando et al. (2013) described cloud computing as the “aggre-
gation of computing as a utility and software as a service where
the applications are delivered as services over the Internet and the
hardware and systems software in data centres provide those ser-
vices” (p.84). It is a model that renders network-access and on-
demand ability to a common pool of computing resources which
includes software and hardware (Lu et al., 2014). Cloud computing
has received much attention from researchers, as it was found to
(1) promote inter-organisational relationships (Demirkan & Delen,
2013; Grant & Tan, 2013), (2) encourage collaboration with cus-
tomer (Sultan, 2011), (3) create agility in responding to environ-
mental changes (Iyer & Henderson, 2010), and (4) creating value
for firms (Liu, Yang, Qu, & Liu , 2016).
Cloud technology enables on-demand service and resource ac-
cess, which revolutionised the computing service market. The flex-
ibility and borderless resource provided by cloud technology mo-
tivated manufacturers to take advantage of the cloud application
service in an effort to improve and innovate their manufacturing
process. The cloud application service provided manufacturers with
cloud-based software application, web-based management dash-
board and cloud-based collaboration, which bring the manufac-
377
turing process, management and monitoring to the cloud, hence
the birth of cloud manufacturing. The cloud application service
are generally divided in three (3) categories, namely Infrastructure-
as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-
Service (SaaS) (Xu, 2012). SaaS provides users with the underlying
physical resources to software setup and configuration, to enable
and use a software application such as Computer-Aided-Design
(CAD) software and Enterprise Resource Planning (ERP) software,
leaving user a worry-free experience as well as lower total cost of
ownership (TCO). PaaS on the other hand provides users with re-
sources from physical infrastructure to software platform, enable
users to build application on their preferred platform such as web-
server, database and operating system, without concern on the re-
source availability and maintenance. IaaS provides users with phys-
ical resource, allowing users to deploy their own preferred configu-
ration of platform and software. IaaS, PaaS, SaaS enable users with
Internet-based resource and service access over the cloud. The flex-
ibility and the rich resource provided by cloud technology for the
processing and management of manufacturing information encour-
ages the manufacturer to migrate their manufacturing technology
into the cloud, creating the phenomenon of cloud manufacturing
(Li et al., 2010; Wang & Xu, 2013).
With the support of cloud computing and IoT, cloud manufac-
turing (CM) has emerged as the next innovative manufacturing
paradigm. Termed as the manufacturing version of cloud comput-
ing (Hao & Helo, 2017; Putnik, 2012; Xu, 2012). CM is defined as
a smart networked model for manufacturing that embraces cloud
computing, which aims to meet the increasing demands for higher
product individualisation, wider global cooperation, knowledge-
intensive innovation, and rising market-response agility (Xu, 2012).
Considered as an emerging service-oriented business model, its
purpose is to share and collaborate large-scale manufacturing re-
sources (Liu, Xu, Zhang, Wang, & Zhong, 2017). Its objective is re-
alised via establishing a common cloud manufacturing platform,
which integrates distributed manufacturing resources, transform-
ing them into manufacturing services, and manages them centrally
(Adamson et al., 2017; Xu, 2012). CM permits multiple users to re-
quest services at the same time by submitting their required tasks
through a cloud manufacturing platform. Through a centralised
management and operation of manufacturing services, cloud man-
ufacturing is able to deal with multiple manufacturing tasks in par-
allel. By handling a large number of distributed and idle manufac-
turing resources in order to meet the various manufacturing re-
quirements, CM is able to provide a sustainable mean to achieve a
cleaner production (Zhang, Zhang, Qu, Liu, & Zhong, 2017).
Nevertheless, there is no single standard for implementation of
CM. There are several different CM architecture as stated in the
studies carried out by researchers (Li et al., 2010; Liu, Shahriar,
Al Sunny, Leu, & Hu, 2017; Tao, Zhang, Venkatesh, Luo, & Cheng,
2011; Wang, Gao, & Ragai, 2014; Wu, Rosen, Wang, & Schaefer,
2015). Whether it is termed as Cloud-based Design Manufactur-
ing (CBDM), Cyber-Physical Manufacturing Cloud (CPMC), or sim-
ply cloud manufacturing (CMfg), the manufacturing service is man-
aged and accessed through the cloud platform. The implemen-
tation architecture can generally be divided into four (4) differ-
ent approaches namely public, private, community or hybrid CM.
Each of the architecture have their own implementation complex-
ity, performance advantages and limitations. CM is as much as an
advancement in manufacturing approach, however there is still gap
to be studied and innovation for improvement.
2.2. Innovativeness
According to Damanpour (1991), innovation is defined as gen-
erating, accepting and implementing new ideas, services, products
or processes, which brings enhancement to customers and firms
378 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394
who adopted them. Innovation has been well acknowledged as one
of the keys that unlocks organisational high performance and suc-
cess, regardless of its size and sector ensuring survivability of the
company. Several empirical studies from Li, Kehoe, and Drake
(2006), Mohezar and Nor (2014) have suggested that supply chain
technology positively influences innovation performance. Thus
firms can cultivate innovative capabilities in areas such as pro-
cess improvement, new product development, capacity planning,
service delivery and market penetration. As for this study, the im-
pact of cloud computing technology on a firm’s innovative capa-
bility was investigated in terms of process, product and relational
innovation (Mohezar & Nor, 2014).
In accordance to researchers like Jusoh and Parnell (2008) and
Prajogo et al. (2007), the introduction of process innovation is
able to reduce costs, improve operational efficiency, increase a
firm’s production and distribution activities’ flexibility, responsive-
ness and performance. Substantial empirical evidence (Hill & Scud-
der, 2002; Kelepouris, Pramatari, & Doukidis, 2007) has confirmed
the significance of technology in process innovation. An example
would be the investment in Radio Frequency Identification (RFID),
a supply chain technology device that can assist in product track-
ing, offering firms a greater efficiency of the process traceability in
the supply chain, from the production, through to the transporta-
tion, storing, processing, distributing and sales, all at a significantly
lower labour costs (Attaran, 2007; Opara, 2003). Basing upon these
past literatures, supply chain technology has therefore established
to be pertinent to the process innovation performance of a firm.
Improving the quality of existing products and introducing new
goods and services into the marketplace is how Jusoh and Parnell
(2008), Prajogo, Laosirihongthong, Sohal, and Boonitt (2007) de-
fined product innovation. Studies such as Dobbs, Stone, and Abbott
(2002), Fearne and Hughes (1999) have demonstrated the positive
effect of IT adoption on a firm’s product innovation. By integrat-
ing the technology of bar-coding, electronic point of sales (EPOS)
and data warehousing, the innovation enables firms to collect and
exploit customers’ details to develop new knowledge in their pur-
chasing behaviours. Such capability has eventually equipped firms
to involve in developing new products, which could satisfy the var-
ious demands of the customers. Following this trait, it is well as-
serted that the relation between adoption of supply chain technol-
ogy and product innovation is a positive one.
Relational innovation as defined by Lefebvre, Cassivi, Lefebvre,
and Leger (2003), refers to a firm’s ability to venture into new
markets, strengthening the networking among businesses, and im-
proving the relations between suppliers and customers. The sup-
ply chain technology acts as a new platform for communication,
creating opportunities for manufacturers to form an interactive re-
lationship among supply chain partners via sharing of informa-
tion. For example, the utilisation of an e-procurement system al-
lows exchanging of operational data such as the placement of a
new order, payment status, in-voice and transportations schedule,
and inventory level between firms (Angeles & Nath, 2007). Other
forms of supply chain technologies in the electronic marketplace
enable firms to recognise business opportunities such as deter-
mining suppliers and meeting customer requirements, comparing
prices, terms and negotiations, and to be able to carry out basic
commercial transactions online (Teng, 2004; White, Daniel, Ward,
& Wilson, 2007). With the use of such technology, companies are
able to venture into new markets and expand globally. Hence, it
is obvious that IT in the form of cloud computing can serve as an
enabler at a firm level for relational innovation to occur.
2.3. Firm performance
The adoption of IT innovation on the performance impact has
stir up considerable interest among scholars. Scholars have exam-
ined the payback of IT investment at the firm position, from fi-
nancial and non-financial position (Chan, 20 0 0; Gallivan, 20 01; Ia-
covou, Benbasat, & Dexter, 1995; Tan, Kannan, & Handfield, 1998).
Traditionally, the performance of IT was measured using financial
performance, causing the move to measure performance from the
non-financial perspective. As such, our study is measuring FP from
a non-financial perspective, which consist of two attributes - flexi-
bility and quality (Wu & Chuang, 2010).
Flexibility has become increasingly vital when it comes to ac-
commodating for uncertainty in the ever volatile business envi-
ronment (Jin, Vonderembse, Ragu-Nathan, & Smith, 2014; Koste
& Malhotra, 1999; Narasimhan, Talluri, & Das, 2004). Flexibility
research, from the 80 s to the early years of 20 0 0, have high-
lighted and emphasised on the flexible manufacturing and prod-
uct development abilities of a firm’s reaction to uncertainty in the
environment, which could improve a firm’s performance (Koste
& Malhotra, 1999; Narasimhan et al., 2004; Stevenson & Spring,
2007). Given the supply chain management (SCM) arrival in the
late 1990 s, flexibility research has extended to incorporate a firm’s
supply chain elements. A manufacturing firm’s flexibility is essen-
tial in a dynamic supply chain, to withstand a firm’s competi-
tive position and long-term profitability successfully (Stevenson &
Spring, 2007). A manufacturing firm’s flexibility is a firm’s capa-
bility to alter its product development, production processes and
logistics effectively and efficiently, so that it can adjust to environ-
mental changes, in particular changes in the final consumer de-
mand (Narasimhan et al., 2004).
Another main essential performance criteria is qual-
ity (Choi & Hartley, 1996; Dempsey, 1978; Dickson, 1966;
Helper, 1991; Hillman-Willis & Huston, 1990; Weber, 1991).
Dickson (1966) stressed that (1) the capacity to fulfil quality
standards; (2) the capability to deliver products on time; and
(3) the history of performance, are the main reasons to consider
when selecting suppliers. According to Beamon (2007), there exists
several output performance measures that are harder to express
in numbers, one of which is product quality. The output of a
supply chain is affected by resources, and the output of the supply
chain system (quantity, quality, and etc.) is vital determination
on the flexibility of the system. With product quality flexibility,
a company will be able to produce a high quality product which
is certain to meet customer future demands (Beamon, 2007).
Therefore, in this study, FP is measured using the dimensions of
flexibility and quality.
2.4. UTAUT and TOE framework
Recognizing the limitations of past IT models (Teo, Tan,
Ooi Hew, & Yew, 2015), Venkatesh, Morris, Davis, and
Davis (2003) proposed UTAUT to increase the explanatory power.
The model comprises of eight prominent IT models which in-
cludes “Technology Acceptance Model (TAM), Theory of Reasoned
Action (TRA), Motivational Model (MM), Model of PC Utilization
(MPCU), Social Cognitive Theory (SCT), Innovation Diffusion The-
ory (IDT), Theory of Planned Behavior (TPB) and Combined TAM
and TPB (C-TAM-TPB)”. The variance of behaviour intention of
technology explained by the unified model is up to 70% (Wong,
Tan, Tan, & Ooi, 2015). UTAUT consists of four core constructs
which determines the usage intention and behaviour. They are
PE, EE, social influence and facilitating conditions. Additionally,
Venkatesh et al. (2003) also introduced moderating constructs
(age, gender, experience and voluntariness) in better comprehend-
ing the acceptance of technology.
TOE framework on the other hand was developed by Tornatzky,
Fleischer, and Chakrabarti (1990) to explain on the factors influ-
encing technology adoption among firms level. The TOE frame-
work explained that three factors namely technological context,
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 379

Table 1
Definition for the constructs.

Constructs Definition Source

Performance The degree in which an individual believes that using cloud computing will help Venkatesh et al. (2003,
expectancy him/her achieve gains in job performance. p.447).
Effort expectancy The degree of ease associated with the use of cloud computing tools. Venkatesh et al. (2003,
p.450).
Firm size Larger firms having greater ability and more resources to invest in cloud computing Wang et al. (2010).
tools.
Top management The degree to which top management understands the importance of and is involved Lin (2014).
support in cloud computing tools.
Absorptive capacity The capability that enables firms to obtain and effectively harness the internal and Lin (2014).
external knowledge, so that opportunity for firms to gain profits can be created.
Innovativeness Consists of process, product, and relational innovation. Mohezar and
Nor (2014).
Firm performance Consists of two attributes - flexibility and quality. Wu and Chuang (2010).

the organisational context and the environment context influ-
ence the decision to adopt technological innovations (Lin, 2014).
Tornatzky et al. (1990) further added that the factors present
“both constraints and opportunities for technological innovation”
(p.154). Wang, Wang, and Yang (2010) in the study on RFID
adoption in manufacturing firms referred technological context as
the existing and emerging technologies relevant to the organisa-
tion. Lin (2014) in the study of e-SCM adoption characterised or-
ganisation context to include common organisation characteris-
tics/resources such as FS, MS and AC. The environment context
refers to the macroeconomic context where the organisation op-
erates. This includes the interaction with firm’s competitors, regu-
latory and trading partners (Wang et al., 2010).
Past researchers have mainly explored the significance of tech-
nological factors in influencing the adoption of cloud computing
(Kouatli, 2014; Okai, Uddin, Arshad, Alsaqour, & Shah, 2014; Ross &
Blumenstein, 2013; Willcocks, Venters, & Whitley, 2013). However,
the influence of organisation context has mainly been overlooked.
Therefore, the organisation context of TOE framework was specifi-
cally adopted in view of the appropriateness in analysing the adop-
tion of technology at the firm level. Noting that the constructs of
technological contexts from TOE are similar or in tandem with PE
and EE, the study therefore decided to adopt the modified UTAUT.
Specifically, the study will extend PE and EE from UTAUT with FS,
MS and AC from the organisation context of TOE to better com-
prehend on cloud computing adoption among manufacturing firms
in Malaysia. As the technology is still a new approach in the man-
ufacturing environment, it is decided to exclude the environment
context from this study. To sum it all up, the definitions for the
major constructs of this study are summarised in the Table 1:
3. Hypotheses development
3.1. Performance expectancy
A significant literature gap that is yet to be filled by the
past empirical studies is the focus on the users’ characteristics in
the implementation of cloud-computing tools. This is because the
users (e.g. employees, managers, supervisors, and etc.) are the ones
who adopt cloud-computing tools. However, little effort has been
devoted to investigate such relationship. One of the hallmarks of
UTAUT model is the dimension of PE. PE is perceived to be simi-
lar to the usefulness variable founded by Davis (1989) in the TAM
model. Cloud-computing tools can be accessed anywhere and any-
time and PE is a strong predictor of an individual’s willingness
to adopt/use a technology to help improve his/her performance.
Past research such as that of Hazenk, Overstreet, and Cegielski
(2012) have considered the influence of PE on the acceptance of a
supply chain innovation in the post-adoption stages; while PE was
investigated in the study of Lian (2015) to understand the adoption
of cloud based e-invoicing services. In this research, it is posited
that PE can indeed improve the innovative capability of a firm. It
is therefore hypothesised in this research that:
H1. Performance expectancy has a positive influence on innova-
tiveness.
3.2. Effort expectancy
Another hallmark of UTAUT is the EE construct, which is similar
with the dimensions of (e.g. perceived ease of use, complexity, ease
of use) past models (e.g. TAM, TAM2) by Venkatesh et al. (2003).
It has been proven that EE plays a major role on the new tech-
nology adoption in the beginning stages (Agarwal & Prasad, 1998;
Venkatesh et al., 2003). However, once the users are familiar with
the technology in the later stages, it will eventually decline. As
for this research, we also believe likewise, in that EE will have a
greater effect during early stages of cloud computing diffusion, as
users are faced with unfamiliarity issues. However, when users fa-
miliarise themselves with the technology, they will be more con-
cerned with other issues such as the performance of cloud com-
puting tool. While EE was found to positively influence a user’s
intention to use cloud based e-invoicing in Lian (2015)’s study; EE
was also considered as a strong predictor in realizing the antici-
pated benefits of an adopted innovation during the post-adoption
stages (Hazen et al., 2012). Hence, we hypothesised that:
H2. Effort expectancy has a positive influence on firm perfor-
mance.
Many empirical studies also discovered that EE have a sig-
nificant influencing power over PE, such as in the area of mo-
bile advertising (Wong, Tan, Tan, et al., 2015); mobile social net-
working sites for learning (Wong, Tan, Loke, & Ooi, 2015), mobile
banking (Zhou, Lu, & Wang, 2010) and mobile shopping services
(Yang, 2010). When less effort is needed in learning to use cloud
computing, this will subsequently lead to a higher expectation on
the usefulness of cloud computing. It is therefore hypothesised in
this research that:
H3. Effort expectancy has a positive influence on performance ex-
pectancy.
3.3. Top management support
Top management, according to Hart (1992), is responsible in
charting a vision for the company and nurtures organisational val-
ues, steering the firm and giving the firm a sense of identity.
Therefore, MS’s role cannot be underrated, as managers are the
ones that spearhead the company, driving institutional systems and
organisational culture that promotes desirable behaviour (Daily &
380 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394
Huang, 2001). Past empirical research has proven MS to be an
important driver in many of the management practices and or-
ganisational outcomes, be it in information systems (Thong, Yap,
& Raman, 1996), customer relations (King & Burgees, 2008), the
successfulness of a project (Young & Jordan, 2008) and product de-
velopment (Wren, Souder, & Berkowitz, 20 0 0). MS has also been
proven by Grover (1993), Premkumar and Roberts (1999) to be a
vital determinant of new technologies adoption and the result have
been shown to be positively correlated. This is because top man-
agement is able to provide the vision, to lend the necessary sup-
port, and also to commit in creating a healthy working environ-
ment. Additionally, top management has been argued to be deci-
sion makers with respect to “innovative” investments that shape
the supply chain, as they are known as the signallers to the dif-
ferent departments of the firm regarding the importance of inno-
vation (McGowan & Madey, 1998). However, centralisation in the
study of Russell and Hoag (2004), in which the decision-making
authority lies with the top levels of management and less em-
phasis on employee empowerment, shows the propensity to in-
novate is lesser, regardless how creative and innovation oriented
the decision-makers are. Nevertheless, in a recent research carried
out by Wang et al. (2010) in Taiwan, the TOE framework, which
includes MS, was proposed to be one of the determinants for RFID
adoption - a promising technological invention to improve the sup-
ply chain visibility and enhance process efficiency. In a related re-
search, Hoejmose, Brammer, and Millington (2012) found a strong
positive support between top management and green SCM in the
B2B sector in the United Kingdom. As such, it can be concluded
that MS is vital in the SCM (Min & Galle, 2001; Walton, Handfield,
& Melnyk, 1998). As suggested in past literature, top management
is vital in the adoption of SCM (Badenhorst, 1994; Drumwright,
1994; Lee, 2008; Walker, Sisto, & McBain, 2008; Zhu, Sarkis, & Lai,
2008). Top management total commitment can ensure the success
of SCM performance (Zhu, Sarkis, & Geng, 2005). Accordingly, the
next hypothesis was suggested:
H4. Top management support has a positive influence on firm per-
formance.
In general, support from the top management acts as a direct
facilitator for the adoption of a technology to be successful. Being
at the forefront of the company, the decision makers, key drivers
of their own company culture and institutional systems (Daily &
Huang, 2001), the role of MS is undeniable. In other words, their
support is necessary. In improving the integration of technology
into business process, past studies have proven MS as vital, which
assists IS adoption and usage (Pijpers, Bemelmans, Heemstra, &
Van Montfort, 2001; Ragunathan, & Tu, 2004; Tarofder, 2010; Weill,
Subramani, & Broadbent, 2002). When top management envision
to project and promote the use of cloud computing tools in their
company, they must take the lead in supporting and conceiving
strategies that directs the company to successful cloud comput-
ing adoption. However, by committing the necessary resources and
sanctioning investment into developing cloud computing technol-
ogy is not enough; they need to also be involved in educating their
staff to become more skilful at using cloud computing tools. When
such technology becomes effortless to use, the barriers and resis-
tance to change will be overcome. Hence, it is posited that:
H5. Top management support has a positive influence on effort ex-
pectancy.
3.4. Firm size
Many studies in the past have proven that the size of a firm
can facilitate innovation (Damanpour, 1992; Grover, 1993; Moon &
Bretschneider, 1997; Premkumar & Roberts, 1999; Tornatzky et al.,
1990) though there are some studies that have proven the insignif-
icant effect of company size on perceived strategic importance of
RFID experience (Leimeister, Leimeister, Knebel, & Krcmar, 2009).
As established by the past research (Dholakia & Kshetri, 2004;
Lin, 2014; Low, Chen, & Wu, 2011; Teo, Lin, & Lai, 2009), FS has
been proven to be a key determinant of IT innovation adoption.
It was empirically tested in Wang et al. (2010)’s study that RFID
technology is mainly driven by organisational factors in the TOE
framework, one of which is FS. In an earlier research, Brown and
Russell (2007) in their exploratory findings also approved of the
applicability of TOE on the RFID adoption intention, in which
the organisational factors encompass organisation size. There are
some researchers, Patterson, Grimm, and Corsi (2003) being one
of them, proposed that smaller firms have a higher propensity
to innovate due to its flexibility attributed by its smaller size
and fewer level of bureaucracy. Iskandar, Kurokawa, and LeBlanc
(2001) shared the same viewpoint in that smaller firms, when
compared to their larger counterparts, can more readily adjust to
changes in the market forces, technology and manufacturing pro-
cesses. Though they often lack of financial resources, smaller firms
tend to be more flexible, responsive, innovative and less bureau-
cratic, hence having a higher incentive to adopt and integrate EDI,
added Iskandar et al. (2001). Alternatively, it was mentioned in
James (1999), Sharma and Rai (2003), more resources to experi-
ment with new inventions can be usually found in larger firms,
and that they have a greater capacity to absorb the costs and risks
of implementing such innovations. As the cost to ensure the suc-
cessful implementation of cloud computing systems is still an es-
sential issue, only large companies are found to have the finan-
cial capability to invest in prototype cloud computing installations
at this point in time (Frambach & Schillewaert, 1999; Wang et al.,
2006) to support and enhance their performance. FS has thus been
emphasised its importance by several researchers as a construct
that can affect firms’ performance (González-Benito & González-
Benito, 2006). These considerations thus led to the proposition of
the following hypotheses:
H6. Firm size has a positive influence on innovativeness.
H7. Firm size has a positive influence on firm performance.
In general, larger firms possess more financial and technologi-
cal resources, risk capacity (Pan & Jang, 2008; Zhu, Kraemer, Xu, &
Dedrick, 2004) and the necessary skills to assimilate the technol-
ogy effectively, in which small firms are lacking. Researchers like
Murillo-Luna, Garcés-Ayerbe, and Rivera-Torres (2011) have found
likewise that smaller firms encounter a higher level of difficulty
when adopting more advanced practices for environmental protec-
tion. Concerning the ease of use of cloud computing technology,
size also appears relevant. It is posited that large firms have the
upper hand in terms of capital, revenue and number of employees
it possesses; and with a larger pool of resources, they are able to
conduct more trainings for its people to learn the skills of operat-
ing a cloud computing system within their firms, making the tech-
nology clearly understandable and easy to use. Such a relation does
not come as a surprise as larger firms have been proven to take on
a technology more easily as compared to smaller firms (Lin, 2014).
Hence, we hypothesised that:
H8. Firm size has a positive influence on effort expectancy.
3.5. Absorptive capacity
Cohen and Levinthal (1990), together with Rostow (1963), de-
scribed AC as the capability that enables firms to obtain and ef-
fectively harness the internal and external knowledge, so that op-
portunity for firms to gain profits can be created (Lin, 2014). Ab-
sorptive capacity was further specified as a set of organisational
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394
routines and processes, where firms obtain, integrate, transform,
and utilise knowledge to generate various capacities that eventu-
ally encourage change to the organisation (Zahra & George, 2002).
Despite the technical composition in e-SCM adoption, it is vital
to address the management issues with regards to the changes
in organisational processes and communication within and among
firms first (Tummala, Phillips, & Johnson, 2006). This is due to
the fact that firms might be plague with significant barriers when
adopting a new IT innovation, an example would be the short-
age of AC among knowledge workers (Harrington & Guimaraes,
2005; Park, Suh, & Yang, 2007). Schilling (1998) recommended
that firms have the capability to advance their skill and knowl-
edge base via AC, thus facilitating their ability in future IS develop-
ment. It was also suggested in Tu, Vonderembse, Ragu-Nathan, and
Sharkey (2006)’s study that firms with a higher AC exert more ef-
fort in inter-organisational collaboration relationships. It was also
later proven in Lin (2014)’s research on IS managers working in
large Taiwanese firms that firms with AC have a higher likelihood
to take on e-SCM. From the perspective of e-SCM adoption (such
as cloud computing), a firm may acquire knowledge from their
supply chain partners as to the adoption of e-SCM initiatives be-
tween organisations. A firm’s AC can ascertain a firm’s adaptability
(Daghfous, 2004). As such, it is anticipated to enhance the likeli-
hood and degree of firm’s innovative capability and FP. Based on
the above discussion, it can be hypothesised that:
H9. Absorptive capacity has a positive influence on innovativeness.
H10. Absorptive capacity has a positive influence on firm perfor-
mance.
3.6. The relationship between innovativeness and firm performance
One of the key drivers to enhance corporate performance is in-
novation. In the study of Chiou, Chan, Lettice, and Chung (2011),
green innovation (i.e. product, process and managerial innovation)
has been found to improve the environmental performance of 124
organisations in Taiwan from eight industry sectors using the anal-
ysis of SEM. In line with this, Chen, Lai, and Wen (2012) have also
explored the effects of green process innovation on corporate rel-
ative advantage among Taiwanese firms and found it to be a posi-
tive one. In an earlier study, Chen (2008) has also considered how
green innovation can affect the green image of firms and the study
has also proved that FS can affect the level of green innovation
performance as well as green images among the information and
electronics industry in Taiwan. Although past studies have explic-
itly considered the links between innovation and FP, our study is
exploring whether IN in cloud computing can improve the FP of
Malaysian manufacturers in terms of quality and flexibility. Hence,
the following hypothesis is therefore proposed.
H11. Innovativeness has a positive influence on firm performance.
3.7. The conceptual model
Based on the discussion in the hypotheses development section,
Fig. 1 was presented, in which our research posited five predictors
from UTAUT and TOE framework that can influence a firm’s inno-
vativeness and performance.
4. Methodology
4.1. Research design
Using data gathered from the manufacturing firms in Malaysia,
we tested our model. The sample for this research was taken from
individuals who are in the managerial positions in charge of the
381
cloud computing in their respective firms. The setting of our data
collection supplies us with a rich context to test our cloud com-
puting effectiveness model. The manufacturing industry is suitable
to test our research hypotheses in view that the industry provides
an environment rich with extensive training and career develop-
ment. Self-administered questionnaire was used as a tool to gather
data. A professional data collector was engaged to assist the re-
searchers to collect data, in which 500 surveys were given out and
200 responses were returned (response rate = 40%). 12 were dis-
carded due to incomplete data, resulting in 188 usable question-
naires. It was then the early and late respondents are compared
on main variables and no indication of non-response bias were
found.
4.2. Constructs and their operationalisation
Research instrument was developed according to the scales or
validated measures that have been used in the previous studies.
The variables of the scale development was adapted from Chan,
Chong, and Zhou (2012) for PE and EE; Wang et al. (2010) for FS;
Lin (2014) for MS and AC; Mohezar and Nor (2014) for IN and
Wu and Chuang (2010) for FP. The respondents are required to
evaluate their perception of cloud computing effectiveness on the
manufacturing environment using the “seven-point Likert scale”
(from strongly disagree to strongly agree). The survey was kept
short with the avoidance of unnecessary items that are similar and
making sure that the wordings are clear. A questionnaire draft was
developed and pilot tested with three professors and four industry
experts who specialize in this field. Appendix A shows the items
and scales used in our measurement instrument.
4.3. Demographic of the respondents
The demographic profile of our samples is shown in Table 2.
5. Statistical analyses
5.1. Assessment of multivariate assumptions
Most of the times we need to evaluate the dataset in order to
ensure that certain multivariate assumptions are satisfied (Wong,
Tan, Hew, & Ooi, 2016). Among the multivariate assumptions, we
first examined the normality of the dataset by using Kolmogorov–
Smirnov’s test. Table 3 indicated that all p-values are less than 0.05
and thus we conclude that the dataset is not normally distributed.
Next, we tested the linearity of relationships among the con-
structs. At the beginning, we examined the p-value of the deviation
from linearity with ANOVA. We found a mixture of linear and non-
linear relationships between the constructs. Hence, we decided to
further investigate these non-linear relationships using Ordinary
Least Squares (OLS) and the p-values showed that there are indeed
linear relationships. Tables 4 and 5 showed these results.
To verify the existence of multicollinearity problem among de-
pendent variables, we examined the correlation coefficients and
the values of Variance Inflation Factor (VIF). Based on the results
in Table 6, the highest correlation coefficient is 0.823 between PE
and EE. This is lower than the threshold of 0.90 (Hair, Black, Babin,
& Anderson, 2010) and hence multicollinearity is not a problem
(Leong, Hew, Lee, & Ooi, 2015). Besides that the largest VIF is 3.495
in MS which is less than the standard threshold of 10 (Hair et al.,
2010). Therefore, the problem of multicollinearity is statistically
ruled out (Tan, Siah, Ooi, Hew, & Chong, 2015).
Finally, we examined the homoscedasticity of distribution by
using scatter plots (Teo et al., 2015). Based on the distribution of
the regression standardised residuals, we found that all residuals
are evenly scattered along a straight line and conclude that the
382 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394

Table 2
Respondents’ profile.

Frequency Percentage

Gender Female 98 52.1

Male 90 47.9
Age Below 21 years old 14 7.4
21–29 years old 76 40.4
30–39 years old 44 23.4
40–49 years old 33 17.6
50–59 years old 20 10.6
Above 60 years old 1 0.5
Highest education completed No college degree 27 14.4
Diploma/Advanced diploma 60 31.9
Bachelor degree/Professional qualification 70 37.2
Postgraduate degree 19 10.1
Others 12 6.4
Length of time with your organisation Less than 1 year 26 13.8
1–2 years 33 17.6
3–5 years 51 27.1
6–10 years 42 22.3
11–20 years 31 16.5
Above 20 years 5 2.7
Your job position Junior management (e.g. Assistant manager, System analyst, Engineer etc.) 60 31.9
Middle manager/Head of department 51 27.1
Senior manager/CEO/Director 33 17.6
Others 44 23.4
Your primary job scope Research & Development 26 13.8
Production 47 25.0
Marketing 15 8.0
Administration 28 14.9
Human Resource 27 14.4
Information Technology 15 8.0
Procurement 13 6.9
Others 17 9.0
Age of the firm < 10 years old 70 37.2
> 10 years old 118 62.8
Category of your organisation’s product Electrical & electronics products 44 23.4
Food products 42 22.3
Chemical & chemical products 25 13.3
Rubber & plastic products 16 8.5
Textiles & textile products 19 10.1
Machinery & hardware 26 13.8
Others 16 8.5
Number of employees in your organisation Less than 200 108 57.4
Above 200 80 42.6
Status of your organisation ISO 90 0 0 certified 97 51.6
Planning to obtain ISO certification 50 26.6
Non-ISO certified 41 21.8

Table 3
Kolmogorov–Smirnov test for normal distribution.

N Normal Parametersa , b Most extreme differences Kolmogorov-Smirnov Z Asymp. Sig. (2-tailed)

Mean Std. deviation Absolute Positive Negative

RI1 188 4.3883 1.33776 0.200 0.141 −0.200 2.737 0.0 0 0

RI2 188 4.4521 1.30930 0.163 0.151 −0.163 2.232 0.0 0 0
RI3 188 4.5213 1.24298 0.157 0.157 −0.155 2.156 0.0 0 0
RI4 188 4.50 0 0 1.22584 0.171 0.169 −0.171 2.351 0.0 0 0
PS1 188 4.5957 1.18655 0.192 0.134 −0.192 2.630 0.0 0 0
PS2 188 4.5691 1.19737 0.178 0.145 −0.178 2.437 0.0 0 0
PS3 188 4.6064 1.16746 0.182 0.182 −0.158 2.500 0.0 0 0
PD1 188 4.5798 1.13242 0.182 0.158 −0.182 2.495 0.0 0 0
PD2 188 4.6862 1.24635 0.161 0.161 −0.153 2.210 0.0 0 0
FX1 188 4.6702 1.28245 0.168 0.152 −0.168 2.299 0.0 0 0
FX2 188 4.6915 1.18391 0.167 0.167 −0.156 2.293 0.0 0 0
FX3 188 4.6277 1.18803 0.180 0.180 −0.166 2.469 0.0 0 0
QL1 188 4.6223 1.17956 0.211 0.151 −0.211 2.889 0.0 0 0
QL2 188 4.5691 1.24553 0.181 0.181 −0.159 2.488 0.0 0 0
QL3 188 4.6489 1.17648 0.192 0.135 −0.192 2.629 0.0 0 0
QL4 188 4.7021 1.20 0 09 0.172 0.146 −0.172 2.365 0.0 0 0
a
Test distribution is Normal.
b
Calculated from data.
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 383

Performance Product
Expectancy H1

H3
Effort Expectancy Process
H8 H2
Innovativeness

H5
Top Management Relational
Support H4 H11 Innovation

H6 Firm Performance
Firm Size Flexibility
H7

H10
H9
Absorptive Capacity Quality

Notes:
First-order constructs

Second-order constructs

Fig. 1. The conceptual model.

Table 4
Deviation from linearity test.

ANOVA Table
Sum of squares df Mean square F Sig. Linear

FP ∗ AC Deviation from linearity 44.754 71 0.630 1.538 0.020 No

FP ∗ MS Deviation from linearity 51.334 78 0.658 1.767 0.003 No
FP ∗ EE Deviation from linearity 47.202 73 0.647 1.415 0.048 No
FP ∗ FS Deviation from linearity 32.376 47 0.689 1.275 0.141 Yes
FP ∗ IN Deviation from linearity 63.486 141 0.450 5.840 0.0 0 0 No
IN ∗ AC Deviation from linearity 30.229 71 0.426 0.982 0.528 Yes
IN ∗ FS Deviation from linearity 28.390 47 0.604 1.092 0.340 Yes
IN ∗ PE Deviation from linearity 32.667 67 0.488 1.281 0.120 Yes
PE ∗ EE Deviation from linearity 34.554 73 0.473 2.377 0.0 0 0 No
EE ∗ FS Deviation from linearity 29.330 47 0.624 1.062 0.385 Yes
EE ∗ MS Deviation from linearity 36.384 78 0.466 0.984 0.527 Yes

Note: AC = Absorptive Capacity, EE = Effort Expectancy, FP = Firm Performance, FS = Firm Size,

IN = Innovativeness, MS = Management Support, PE = Performance Expectancy.

homoscedasticity of the distribution is supported. Hence, we con-
cluded that all multivariate assumptions have been rigorously val-
idated.
For further multivariate analysis, we have chosen variance-
based Partial Least Squares (PLS) Structural Equation Modelling
(SEM) instead of the covariance-based SEM (CBSEM) for several
reasons. First, the nature of the study is more on theory building or
exploration rather than theory confirmation as the research model
is relatively new and less established. Secondly, the existences of
reflective and formative constructs have rendered CBSEM inappli-
cable. Third, the complexity of the model and the large number
of indicators may be problematic for CBSEM analysis. Fourth, the
sample size has met the minimum rule of thumb for PLS analy-
sis which is 10 times the largest number of arrows pointing to an
endogenous variable or the most complex variable. Five, the non-
normality of the data distribution has violated the multivariate as-
sumption and parametric test of CBSEM is unsuitable to be used.
Finally, the objective of the study is to maximise the variance ex-
plain which is data driven rather than estimation of model fit.
Nevertheless, as noted by Ooi and Tan (2016), PLS-SEM is in-
capable of capturing the non-linear relationships among the con-
structs. This might cause the actual complicated decision making
process be answered in a simplified manner (Sim, Tan, Wong, Ooi,
& Hew, 2014). From Tables 4 and 5, as there are non-linear re-
lationships among the constructs in this study, an Artificial Neu-
ral Network (ANN) analysis is needed to complement the PLS-
SEM analysis (Hew, Badaruddin, & Moorthy, 2017). We named this
dual-staged analysis as the PLS-SEM-ANN approach. PLS-SEM is
384 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394

Table 5 5.4. Measurement model

Ordinary Least Square test.

ANOVAa The quality of the measurement model is judged based on the

Model Sum of Squares df Mean Square F Sig. reliability and validity of the constructs in the measuring instru-
1 Regression 98.103 1 98.103 198.585 0.0 0 0b ment. These may include construct reliability and validity.
Residual 91.886 186 0.494
a. Dependent Variable: FP
5.5. Reliability and validity
b. Predictors: (Constant), AC
b
1 Regression 98.429 1 98.429 199.955 0.0 0 0
Residual 91.560 186 0.492 In order to assess the reliability of the constructs in the mea-
a. Dependent Variable: FP surement instrument, two indices were used. First, we examined
b. Predictors: (Constant), MS the Cronbach’s alpha of the constructs and the results (Table 7)
1 Regression 91.159 1 91.159 171.562 0.0 0 0b
showed that all alpha values are greater than the standard thresh-
Residual 98.831 186 0.531
a. Dependent Variable: FP old of 0.70 which implies that the constructs are indeed highly re-
b. Predictors: (Constant), EE liable (Hair et al., 2010). The construct reliability is further con-
1 Regression 123.034 1 123.034 341.786 0..0 0 0b firmed based on the Composite Reliability (CR) values that are
Residual 66.955 186 .360
greater than their respective Average Variance Extracted (AVE) as
a. Dependent Variable: FP
b. Predictors: (Constant), IN
shown in Table 6. Second, we assessed the CRs and found that all
1 Regression 119.106 1 119.106 388.302 0.0 0 0b CRs are also above the threshold of 0.70, leading to a conclusion
Residual 57.053 186 .307 that the constructs are substantially reliable (Leong, Hew, Ooi, &
a
Dependent Variable: PE. Lin, 2012). To evaluate convergent validity, three conditions must
b
Predictors: (Constant), EE. be fulfilled. First, all factor loadings should be significant and ex-
ceed 0.50 (Leong et al., 2011). Second, the AVE must exceed the
threshold of 0.50 (Sim et al., 2014) and third, the CR must exceed
conducted first to discover the statistically significant exogenous 0.70 (Nunnally & Bernstein, 1994). This is demonstrated in Table 7.
variables, whereas ANN analysis is performed secondly to rank the Besides that, we also checked the discriminant validity of the con-
importance of these variables towards their endogenous variable structs based on Fornell-Larcker’s criterion. Using this approach,
(Ooi & Tan, 2016). we found that all square roots of the AVEs (Table 5) are greater
than their respective correlation coefficients which are supported
5.2. Non-response bias by the Fornell–Larcker’s ratio of less than one. Table 6 shows fur-
ther confirmation of the discriminant validity, as the values of
Similar to Meng and Agarwal (2007), we tested the differences AVEs are greater than their respective MSV and ASV (Tan, Tan,
between all key constructs in the study using independent t-test Ooi, Chong, & Hew, 2014). Thus, the constructs are significantly dif-
and the result showed that except for FX, QL and FP, there are ferent from each other. Discriminant validity is further confirmed
no significant differences detected. To further verify these differ- based on the cross-loadings of the constructs as the relevant indi-
ences, we also performed chi-squared test for independence on cators loadings significantly strong to its construct but weakly to
FX, QL and FP and the result showed that except for the marginal unrelated constructs.
small difference in FX, there are no significant differences. Hence, To assess the quality of the second-order formative constructs,
we conclude that there is no substantial non-response bias in the we followed the recommendations by Petter, Straub, and Rai
dataset. (2007). First, multicollinearity was evaluated based on VIF of the
formative indicators of IN and FP. Table 8 indicates that all VIFs
5.3. Common method variance (CMV) are below 10 and thus there is no multicollinearity problem.
Next, we continued to assess the significance of the indicators’
To reduce the concern of CMV, we have engaged both proce- weights. Table 7 shows that all indicators weights for PS, RI, PD, FX
dural and statistical approaches. Procedurally, we ensured respon- and QL were highly significant. Finally, we checked the significance
dents about the anonymity of their identities and responses. We of the first-order constructs which serve as the indicators of the
also encouraged them to respond candidly. Finally, all items have second-order constructs and Table 9 shows that all criteria are met.
been worded to minimise ambiguity (Podsakoff, MacKenzie, Lee, &
Podsakoff, 2003). Finally, following Bagozzi, Yi, and Phillips (1991), 5.6. Structural model
we examined the correlation matrix of the constructs (Table 6) in
the measurement instrument and found that there is no correla- Bootstrap using 50 0 0 samples was performed using SmartPLS
tion greater than 0.90. Therefore, we concluded that there is no 2.0 M3 with no sign change. The model is able to explain 71.7%
issue of CMV in the dataset. variance in IN, 70.2% in FP, 67.6% in PE and 51.7% in EE. Based on

Table 6
Pearson’s correlation and discriminant validity.

AC EE FS IN MS PE CR AVE MSV ASV FLR

AC 0.924 0.959 0.855 0.612 0.536 0.715

EE 0.709 0.933 0.964 0.870 0.677 0.519 0.778
FS 0.758 0.612 0.940 0.958 0.884 0.584 0.456 0.660
IN 0.759 0.733 0.665 0.881 0.969 0.776 0.588 0.529 0.758
MS 0.782 0.711 0.764 0.708 0.910 0.951 0.828 0.612 0.521 0.738
PE 0.644 0.823 0.550 0.767 0.635 0.932 0.964 0.869 0.677 0.477 0.779

Note: Diagonal cells show the square roots of the AVE, CR = Composite Reliability, AVE = Average Vari-
ance Extracted, MSV = Maximum Shared Variance, Average Shared Variance, FLR = Fornell-Larcker’s Ratio,
AC = Absorptive Capacity, EE = Effort Expectancy, FS = Firm Size, IN = Innovativeness, MS = Management Sup-
port, PE = Performance Expectancy.
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 385

Table 7
Construct reliability and convergent validity.

Construct/Indicators Scale Type Loadings/Weightsa AVEb CRc Cronbach’s Alpha T value

First-order constructs
Absorptive Capacity (AC) Reflective 0.8547 0.9592 0.9433
AC1 0.9095 56.2784∗∗∗
AC2 0.9390 96.8287∗∗∗
AC3 0.9345 61.4919∗∗∗
AC4 0.9147 47.1410∗∗∗
Management Support (MS) Reflective 0.8284 0.9507 0.9307
MS1 0.9073 62.0353∗∗∗
MS2 0.9329 50.4578∗∗∗
MS3 0.9256 72.5279∗∗∗
MS4 0.8737 49.4985∗∗∗
Performance Expectancy (PE) Reflective 0.8690 0.9637 0.9497
PE1 0.9165 55.0558∗∗∗
PE2 0.9587 122.2983∗∗∗
PE3 0.9322 64.7041∗∗∗
PE4 0.9209 57.1458∗∗∗
Effort Expectancy (EE) Reflective 0.8704 0.9641 0.9502
EE1 0.9042 57.3666∗∗∗
EE2 0.9413 95.2901∗∗∗
EE3 0.9461 100.7178∗∗∗
EE4 0.9395 83.5124∗∗∗
Firm Size (FS) Reflective 0.8841 0.9581 0.0.9344
FS1 0.9304 62.4991∗∗∗
FS2 0.9491 113.4648∗∗∗
FS3 0.9412 70.2462∗∗∗
Second-order constructs
Process (PS) Formative N/A N/A N/A
PS1 0.1284 40.8214∗∗∗
PS2 0.3637 53.3903∗∗∗
PS3 0.1253 34.2157∗∗∗
Relational Innovation (RI) Formative N/A N/A N/A
RI1 0.1261 42.2325∗∗∗
RI2 0.2679 41.1619∗∗∗
RI3 0.1271 28.1485∗∗∗
RI4 0.2674 58.8731∗∗∗
Product (PD) Formative N/A N/A N/A
PD1 0.1233 31.7179∗∗∗
PD2 0.5261 84.1398∗∗∗
Flexibility (FX) Formative N/A N/A N/A
FX1 0.1495 41.9530∗∗∗
FX2 0.3396 62.6460∗∗∗
FX3 0.1601 52.7956∗∗∗
Quality (QL) Formative N/A N/A N/A
QL1 0.1585 46.2601∗∗∗
QL2 0.2640 61.3936∗∗∗
QL3 0.1620 48.4523∗∗∗
QL4 0.2698 66.3646∗∗∗

Note:
∗∗∗
significant at p < .001, N/A = Not Applicable;
a
Loadings are for reflective items, Weights are for formative items;
b
AVE = Average variance extracted; c CR = Composite reliability.

Table 8
Multicollinearity test.

Coefficientsa
Model Unstandardised coefficients Standardised coefficients t Sig. Collinearity statistics

B Std. error Beta Tolerance VIF

1 (Constant) −1.404E-005 0.0 0 0 −0.138 0.890

PD 0.239 0.0 0 0 0.240 1300.310 0.0 0 0 0.302 3.308
PS 0.350 0.0 0 0 0.351 1748.660 0.0 0 0 0.255 3.918
RI 0.475 0.0 0 0 0.474 2340.169 0.0 0 0 0.250 3.993
a. Dependent Variable: IN
Coefficientsa
Model Unstandardised coefficients Standardised coefficients t Sig. Collinearity statistics

B Std. Error Beta Tolerance VIF

1 (Constant) 8.642E−006 0.0 0 0 3.369 0.001
FX 0.442 0.0 0 0 0.437 92,092.577 0.0 0 0 0.288 3.468
QL 0.603 0.0 0 0 0.603 126,924.182 0.0 0 0 0.288 3.468
a
Dependent Variable: FP
386 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394

Fig. 2. PLS structural path analysis.

Table 9 foundation for future studies while advancing the current literature
Weights of first-order constructs towards second-order
of FP.
constructs.

Second-order construct / path Weight T value

5.7. Predictive relevance
Innovativeness (IN)
∗∗∗
PD -> IN 0.2365 36.5920
PS -> IN 0.3507 44.4891∗∗∗ To measure predictive relevance of the endogenous variables,
RI -> IN 0.4768 50.3618∗∗∗ Stone–Geisser’s Q2 was engaged. Cohen (2013) recommended that
Firm Performance (FP) a Q2 of 0.02, 0.15 and 0.35 as small, medium and large amount
FX -> FP 0.4402 59.5176∗∗∗ of predictive relevance. As shown in Table 11, the Q2 for EE, PE,
QL -> FP 0.6003 70.7445∗∗∗
FP and IN are all positive and well above 0.35. Hence, we con-
Note: cluded that all endogenous variables possess large predictive rele-
∗∗∗
p < .001; FP = Firm Performance, FX = Flexibility, IN = vance. Besides that, the predictive power of these endogenous vari-
Innovativeness, PD = Product, PS = Process, QL = Quality,
RI = Relational Innovation.
ables were also measured based on their R2 values. As indicated in
Table 11, the R2 ranges from 0.517 to 0.717 which is greater than
the minimum threshold of 0.100. Hence, we concluded that these
variables have substantially large predictive power.
the path analysis (Table 10), H1 (PE→IN, β = 0.4592), H3 (EE→PE,
β = 0.8223), H5 (MS→EE, β = 0.5862), H6 (FS→IN, β = 0.1450), H8 5.8. Effect size
(FS→EE, β = 0.1637), H9 (AC→IN, β = 0.3537) and H11 (IN→FP,
β = 0.4985) were empirically supported. However, four hypothe- The effect size which determines an exogenous variable’s pre-
ses were found to be empirically insignificant. These include dictive power was assessed based on the f2 . A rule of thumb is
H2 (EE→FP, β = 0.1037), H4 (MS→FP, β = 0.1847), H7 (FS→FP, that a value of 0.02, 0.15 or 0.35 is taken as small, moderate and
β = 0.0712) and H10 (AC→FP, β = 0.0683). Fig. 2 shows the T- large effect size (Cohen, 2013). Similarly, the q2 was used to mea-
values of the paths in the structural model. In terms of predict- sure the predictive relevance of an exogenous variable. Both f2 and
ing power, PE is the most influential predictor for IN followed by q2 are tabled in Table 12. Again, the rule of thumb of 0.02, 0.15 or
AC and FS. Besides that, the most important predictor for EE is MS 0.35 is used as a criterion for small, medium and large effect size.
seconded by FS. However, there is only one predictor for PE (i.e. In terms of f2 , MS and FS were found to have large and small ef-
EE) and FP (i.e. IN). Surprisingly, we found no significant influence fect of EE. IN has a medium effect on FP and consistent with the
of EE, MS, FS and AC on FP. These findings will surely enrich our results from the structural PLS path analysis, EE, FS, AC and MS
understanding on the determinants of FP and may provide better were found to have insignificant small effect on FP. Finally, PE, AC
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 387

Table 10
PLS-SEM path analysis.

Original sample (O) Sample mean (M) Standard deviation (STDEV) Standard error (STERR) T statistics (|O/STERR|) Remark

PE → IN 0.4592 0.4592 0.0606 0.0606 7.5771∗∗∗ H1:Supported

EE → FP 0.1037 0.1020 0.0674 0.0674 1.5384 H2: Not supported
EE → PE 0.8223 0.8217 0.0276 0.0276 29.7429∗∗∗ H3: Supported
MS → FP 0.1847 0.1781 0.0992 0.0992 1.8613 H4: Not supported
MS → EE 0.5862 0.5894 0.0741 0.0741 7.9153∗∗∗ H5: Supported
FS → IN 0.1450 0.1449 0.0618 0.0618 2.3439∗ H6: Supported
FS → FP 0.0712 0.0737 0.0725 0.0725 0.9821 H7: Not supported
FS → EE 0.1637 0.1601 0.0768 0.0768 2.1315∗ H8: Supported
AC → IN 0.3537 0.3535 0.0714 0.0714 4.9568∗∗ H9: Supported
AC → FP 0.0683 0.0689 0.0728 0.0728 0.9380 H10: Not supported
IN → FP 0.4985 0.5046 0.0925 0.0925 5.3904∗∗ H11: Supported

Note:
∗
p < .05,
∗∗
p < .01,
∗∗∗
p < .001; AC = Absorptive Capacity, EE = Effort Expectancy, FP = Firm Performance, FS = Firm Size, IN = Innovativeness, MS = Management Support,
PE = Performance Expectancy.

Table 11 1. The effect of independent variable (IV) on dependent variable

Predictive relevance of endogenous vari-
(DV) must be significant.
ables.
2. The effect of mediator variable (MV) on DV must be signifi-
Endogenous variable R2 Q2 cant.
EE 0.517 0.514 3. Partial mediation effect occurs if the path coefficient for the
FP 0.702 0.697 IV-DV path decreases in the mediated model and full medi-
IN 0.717 0.713 ation effect appears when the path coefficient for the IV-DV
PE 0.676 0.671
path becomes insignificant in the mediated model.
Note: EE = Effort Expectancy, FP = Firm Per-
formance, IN = Innovativeness, PE = Perfor- The result of the Baron–Kenny mediation test (Table 13) showed
mance Expectancy. that there are partial mediation effects of EE and IN on FP.
After assessing the size of the mediation effect, we proceed to
Table 12
evaluate the significance of these effects and based on Sobel’s test
Effect size.
(Table 14), we found that all mediation effects are significant at
IV DV Path coefficient f2 q2 0.0 0 01 significance levels.
MS EE 0.586 0.296 0.289
FS 0.164 0.023 0.023
5.10. Total, direct and indirect effects
EE FP 0.104 0.014 -0.015
FS 0.071 0.006 0.007
AC 0.068 0.004 -0.020 Besides evaluating the mediation effects, we also examine
MS 0.185 0.033 0.036 the direct, indirect and total effects of all the exogenous vari-
IN 0.499 0.279 0.277 ables. Table 15 shows that there were no indirect effects of AC
PE IN 0.459 0.430 0.428
and PE on IN; FS and MS on EE; IN on FP and EE on PE.
FS 0.145 0.031 0.031
AC 0.354 0.156 0.157 Other exogenous variables were found to have significant direct,
indirect and total effects on their respective endogenous vari-
Note: AC = Absorptive Capacity, EE = Effort Ex-
ables. In terms of indirect effects on FP, PE (0.2289) has the
pectancy, FP = Firm Performance, FS = Firm Size, IN =
Innovativeness, MS = Management Support, PE = greatest indirect effect followed by EE (0.1883), AC (0.1763), MS
Performance Expectancy. (0.1711) and FS (0.1200). On the other hand, EE (0.3776) con-
tributes the greatest indirect effect on IN and this is followed
by MS (0.2214) and FS (0.0618). Finally, for the indirect effect
and FS have large, medium and small size of effect on IN which is on PE, MS (0.4820) is the greatest contributor followed by FS
also consistent with the PLS path analysis. (0.1346).
In terms of q2 , MS and FS were found to have large and small
predictive relevance. IN has a medium predictive relevance on FP
5.11. Artificial neural network analysis
however EE, FS, AC and MS were found to have negative (i.e. neg-
ligible predictive relevance) or small predictive relevance on FP
ANN “is a huge processor consisting of simple processing units
(Fischer, 2012). This is in agreement with the results from the PLS
known as neurons that can store knowledge for future use” (Hew
path analysis. Last but not least, PE, AC and FS were found to have
& Kadir, 2016, p.1570). The knowledge is acquired through a learn-
large, medium and small predictive relevance on IN.
ing process and subsequently being stored in the interneuron con-
nection strengths, which are also known as the synaptic weights
5.9. Mediating effects (Leong et al., 2013). In this study, a feed forward-back propaga-
tion multi-layer perceptron ANN is utilised with sigmoid activation
The mediation effect of the mediator variables of EE and IN function being selected for both hidden and output layers (Tan,
were evaluated using Baron and Kenny (1986)’s approach. To assess Ooi, Leong, & Lin, 2014). The number of hidden layers is selected to
the significance of the mediation effect, Sobel’s test for mediation generate automatically (Teo et al., 2015). Moreover, for the purpose
significance was conducted. Based on the Baron-Kenny’s approach, of preventing over-fitting, a ten-fold cross-validation procedure is
mediation effect is applicable only if the following conditions are engaged with 90% of the data used in training, while the remain-
met: ing 10% used for testing (Lee, Leong, Hew, & Ooi, 2013). As IN and
388 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394

Table 13
Baron-Kenny’s mediation effect.

IV MV DV IV- > DV IV- > MV SE IV + MV -> DV Mediation

IV- > DV MV- > DV SE

FS EE FP 0.6590∗ 0.6114∗ 0.0482 0.3761∗ 0.4627∗ 0.0646 Partial

FS IN FP 0.6590∗ 0.6653∗ 0.0428 0.2218∗ 0.6572∗ 0.0660 Partial
MS EE FP 0.7198∗ 0.7112∗ 0.0447 0.4596∗ 0.3658∗ 0.0782 Partial
AC IN FP 0.7186∗ 0.7588∗ 0.0306 0.2544∗ 0.6116∗ 0.0871 Partial

Note:
∗
p < .001, SE = Standard Error, AC = Absorptive Capacity, EE = Effort Expectancy, FP = Firm Performance,
FS = Firm Size, IN = Innovativeness, MS = Management Support.

Table 14 positive predictors, in which all were found to explain 71.7% of the
Sobel’s test for significance of mediation effect.
variance in IN. Meanwhile, for FP, all predictors (EE, MS, FS, AC, IN)
IV M DV Sobel’s test were able to explain a 70.2% of the variance in FP. However, among
t-value p-value significance
all these predictors, only IN was found to be positive and signifi-
cant, supporting H11. In line with the studies of Chen (2008), Chen
FS EE FP 6.2369 0.0 0 0 0 Yes
et al. (2012), and Chiou et al. (2011), when a firm carries out in-
FS IN FP 8.3847 0.0 0 0 0 Yes
MS EE FP 4.4878 0.0 0 0 0 Yes novation (in this case relational, process and product innovation),
AC IN FP 6.7562 0.0 0 0 0 Yes this will improve the overall FP (i.e. flexibility and quality) of the
Malaysian manufacturers.
Note: AC = Absorptive Capacity, EE = Effort Expectancy,
FP = Firm Performance, FS = Firm Size, IN = Innovativeness, As discussed, IN is positively predicted by PE (i.e. H1
MS = Management Support. is supported), which is in line with Davis (1989) and
Venkatesh et al. (2003) perspectives that cloud computing tools
Table 15
are perceived to be useful and can be accessed anywhere anytime,
Total, direct and indirect effect.
improving the innovative ability of a firm. Apart from that, FS
IV DV Direct effect Indirect effect Total effect T Statistics was also found to be a positive and significant determinant of
AC FP 0.0683 0.1763 0.2446 3.1191 innovation (i.e. H6 is supported) but not to FP (i.e. H7 is not
AC IN 0.3537 0.0 0 0 0 0.3537 4.9175 supported). Consistent with that of Dholakia and Kshetri (2004),
EE FP 0.1037 0.1883 0.2920 3.9359 Low et al. (2011), Teo et al. (2009) and Lin (2014), the size of a
EE IN 0.0 0 0 0 0.3776 0.3776 7.2336
EE PE 0.8223 0.0 0 0 0 0.8223 29.5175
firm (in terms of capital, revenue, and number of employees in
FS EE 0.1637 0.0 0 0 0 0.1637 2.1587 a firm) has been empirically proven to support and improve the
FS FP 0.0712 0.1200 0.1912 2.2573 IN of the manufacturing environment in this study. Furthermore,
FS IN 0.1450 0.0618 0.2068 3.1128 FS was also found to be a significant determinant for the EE of
FS PE 0.0 0 0 0 0.1346 0.1346 2.1502
cloud computing technology, supporting H8. This is in line with
IN FP 0.4985 0.0 0 0 0 0.4985 5.3684
MS EE 0.5862 0.0 0 0 0 0.5862 7.9665 Lin (2014), Murillo-Luna et al. (2011), Pan and Jang (2008), in
MS FP 0.1847 0.1711 0.3558 3.7224 that larger firms have a larger pool of financial and technolog-
MS IN 0.0 0 0 0 0.2214 0.2214 5.1782 ical resources as compared to smaller firms that enable them
MS PE 0.0 0 0 0 0.4820 0.4820 7.4614 to conduct more trainings for its staff to clearly understand the
PE FP 0.0 0 0 0 0.2289 0.2289 4.5125
PE IN 0.4592 0.0 0 0 0 0.4592 7.6683
usage of how a cloud computing system operates, making it easy
to use.
Note: AC = Absorptive Capacity, EE = Effort Expectancy, FP = Firm Perfor- Yet, another construct which was concluded to be significant
mance, FS = Firm Size, IN = Innovativeness, MS = Management Support,
PE = Performance Expectancy.
and positively affecting the manufacturing IN is AC, supporting H9.
Even so, AC was found not significantly related with FP, in that H10
is not supported. This result has been found to be consistent with
EE have multiple significant predictors, two ANN models are built the approaches adopted by a few studies in the past (Lin, 2014;
and shown in Fig. 3. Schilling, 1998; Tummala et al., 2006), in that firm with a higher
To measure the prediction accuracy of the ANN models, Root competency and having the necessary knowledge to implement
Mean Squared Error (RMSE) values are calculated in Table 16 cloud computing will increase the capacity to advance in their IN
(Lee, Foo, Leong, & Ooi, 2016). Owing to the negligible amount of in terms of relational process and product innovation.
RMSE values in both training and testing stages, the ANN mod- In terms of FP, EE was found to be an insignificant factor (i.e.
els are showing a great level of prediction accuracy. Besides, sim- H2 is not supported), which contradicts that of Agarwal and Prasad
ilar to Leong, Hew, Ooi, and Lin (2017), a sensitivity analysis, as (1998), Venkatesh et al. (2003). The prime reason may be due to
displayed in Table 17, is used to rank the predictors or exogenous the ongoing revolution of cloud computing, resulting in users suf-
(i.e. the input neurons) in terms of their normalised relative impor- fering from unfamiliar issues especially in the early stages of adop-
tance towards the endogenous variable (i.e. the output neuron). In tion. However, when the employees are given some time to famil-
ANN Model 1, AC is the most important (100% normalised relative iarise themselves with cloud computing technology, this will in-
importance) predictor of IN, while PE (91.8%) and FS (80.7%) are crease the usage and the overall performance of the manufacturing
ranked at the second and third position. Pertaining to ANN Model firm. H3 clearly supported this view, in that EE was found to pos-
2, MS (100%) is of great importance to EE, whereas FS (45.9%) is itively and significantly affecting PE. As proven in studies (Wong,
the second most important predictor of EE. Tan, Loke, et al., 2015; Wong, Tan, Tan, et al., 2015), when less
effort is required to learn how to use cloud computing, this will
6. Discussion eventually lead to a higher expectation on the usefulness of cloud
computing. Top management support in promoting the operation
The findings revealed that 7 out of 11 hypotheses were sup- of cloud computing tools, on the other hand, was found having
ported. For IN, PE, FS, and AC, were found to be significant and no effect on FP (i.e. H4 is not supported), which contradicts with
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 389

Fig. 3. The ANN models developed.

Table 16
RMSE values during training and testing.

Neural Network ANN Model 1 ANN Model 2

Input neurons: AC, FS, and PE. Input neurons: FS and MS.
Output neurons: IN Output neurons: EE

Training Testing Training Testing

ANN1 0.0765 0.0765 0.1025 0.0725

ANN2 0.0782 0.0707 0.0961 0.1172
ANN3 0.0728 0.0654 0.1002 0.1295
ANN4 0.0920 0.0604 0.1028 0.1245
ANN5 0.0784 0.0470 0.1148 0.0966
ANN6 0.0805 0.0699 0.1126 0.1217
ANN7 0.0851 0.0686 0.1032 0.0648
ANN8 0.0714 0.0684 0.0998 0.0949
ANN9 0.0699 0.0714 0.1206 0.1269
ANN10 0.0763 0.0714 0.0998 0.0843
Mean 0.0781 0.0670 0.1052 0.1033
Standard deviation 0.0066 0.0082 0.0079 0.0239

Note: AC = Absorptive Capacity, EE = Effort Expectancy, FS = Firm Size,

IN = Innovativeness, MS = Management Support, PE = Performance Expectancy.

the past studies of Q. Wang et al. (2010), Zhu et al. (2005), and
Hoejmose et al. (2012). Despite the adequate funds allocated by the
top management to promote the usage of cloud computing, it has
not been found to directly affect the manufacturing overall perfor-
mance; however it was found to improve the integration of tech-
nology into business processes, which facilitates the adoption and
usage of cloud computing tools, supporting H5 (Ragunathan et al.,
2004; Tarofder, 2010; Weill et al., 2002).
7. Conclusion and implication
The emergence of cloud computing is one of the most promis-
ing technological innovations which has a potential to improve the
process efficiency of manufacturing firms. While there are tremen-
dous benefits adopting to this new innovation, as far as academia
is concerned, the study has been a neglected area. Recognizing
the limitations, the study draws on theories from UTAUT and TOE.
390 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394

Table 17
The normalised relative importance of predictors.

ANN Models ANN Model 1 ANN Model 2

Output neuron IN EE

Input neurons AC FS PE FS MS

ANN1 0.364 0.291 0.345 0.295 0.705

ANN2 0.351 0.389 0.260 0.262 0.738
ANN3 0.422 0.119 0.459 0.461 0.539
ANN4 0.442 0.405 0.153 0.574 0.426
ANN5 0.265 0.342 0.393 0.427 0.573
ANN6 0.342 0.421 0.237 0.387 0.613
ANN7 0.498 0.404 0.099 0.181 0.819
ANN8 0.341 0.127 0.532 0.244 0.756
ANN9 0.398 0.148 0.454 0.084 0.916
ANN10 0.247 0.317 0.436 0.231 0.769
Mean Relative Importance 0.367 0.296 0.337 0.315 0.685
Normalised Relative Importance (%) 100.0 80.7 91.8 45.9 100.0

Note: AC = Absorptive Capacity, EE = Effort Expectancy, FS = Firm Size, IN = Innovativeness,

MS = Management Support, PE = Performance Expectancy.

Specifically, the study examines how PE, EE, FS, MS and AC will
lead to IN and FP. The modified framework has valuable insights
for practitioners and academicians.
In terms of theoretical implication, our research model singles
out two most relevant constructs (e.g., PE and EE) from UTAUT and
integrates with three organisation contexts from TOE namely FS,
MS and AC. Our research model explicitly fills the gap of cloud
computing and IT/IS models from a critical insights of a developing
country. Hence the research adds value in providing an extended
literature review for future scientific investigation. Another contri-
bution of the study is the engagement of rigorous statistical tech-
nique of PLS-SEM-ANN approach. According to Leong et al. (2013),
“the use of ANN in examining non-linear and non-compensatory
relationships will provide more comprehensive findings since it is
able to compliment the SEM linear model” (p.5618). The advanced
statistical approach serves as an important reference point and
possibility a new statistical paradigm for future studies regarding
statistical analysis and methodologies.
The study also has insights for practitioners on how to apply
cloud computing to improve IN and FP. Since PE is the second
most important predictor of IN, organisations should promote the
potential advantages of cloud computing such as how the system
can be adopted in everyday business situations in improving pro-
ductivity. Apart from improving coordination with various stake-
holders, quicker mobilisation and improvement in the speed of
business communications, cloud computing for example can also
be adopted across all activities in the value chain. The increas-
ing awareness on the benefits of cloud computing will create a
favourable impression of usefulness among their employees which
will result to improvement in IN.
Next, as EE predicts PE, the cloud computing system should be
designed with user friendly interface. The system should also come
with efficiency of data transfer and seamless integration of other
specialised software with the cloud computing system. When em-
ployees can navigate the system with minimum effort and time,
this will render the perception of usefulness of the system.
Besides, MS resembles the most important predictor for EE. As
such, top management should build internal organisational readi-
ness through policy, procedure, training and support. The top man-
agement for example can play a role by supporting organisation
change through policy and training and cultivating positive envi-
ronment climate by reinforcing values and visions related to the
IT/IS innovation.
FS on the other hand also predicts IN and EE in this study. De-
spite that this particular predictor has the least importance to-
wards IN and EE, practitioners should not disregard this factor.
With larger financial and technological resources, organisations
could conduct more technical training for their employees which
will help to ease their understanding on the system and usage.
Last but not least, given that AC has the greatest importance
towards the development of IN, it is vital that the organisation
has the adequate knowledge and competencies to implement cloud
computing system. This could be done through the formation of
team with the necessary skills and expertise not only in conven-
tional IT environments but also across cloud platform. With such
effort, the Malaysian manufacturers will be positioning themselves
closer to achieving Industry 4.0 and subsequently achieving the
goal of TN50 (also known as Transformasi Nasional 2050), which
is to realise the dream of becoming one of the top 20 countries in
the world by the year 2050.
8. Limitations and future research directions
Despite some intriguing findings, there are several limitations
presence in this study which warrants investigations and can be
referenced by future studies. The findings of the research are fo-
cused on Malaysian manufacturing firms in general which implies
that the findings only reflect the unique situation in that nation.
However different industries and geographical locations may yield
different results. Even the different sectors in the manufacturing
industry are using cloud resources in their production chain differ-
ently, having varying impact of cloud computing adoption. There-
fore, we need to exercise caution when generalizing to the en-
tire population of the manufacturing industry. Future investigation
is suggested to replicate the proposed framework in other indus-
tries such as services, construction, chemical, agriculture and au-
tomotive of different geographical regions, even to the different
categories of the manufacturing sector, in order to determine if
there are significant differences. Additionally, the research model
was limited from the modified UTAUT and TOE perspective. There
might be other useful models principally focused on IT/IS studies
that were not explicitly included such as the diffusion of innova-
tion model (Balachandran & Tan, 2015), UTAUT2 (Wong, Tan, Loke,
& Ooi, 2014) and etc. Hence future studies may consider combin-
ing or extending the research models in enriching the findings of
this study. This would contribute greatly and provide a holistic
view of cloud computing. Lastly the dataset of the study is cross-
sectional and measured at a single point of time. As cloud com-
puting technology is still maturing and relatively new, the impact
on IN and FP of manufacturing firms in Malaysia may change over
time. Therefore, longitudinal approach could be adopted in differ-
ent time frames by future scholars.
 K.-B. Ooi et al. / Expert Systems With Applications 93 (2018) 376–394 391

Appendix A. Items for survey questionnaire

Construct/Indicators Items Source

Performance Expectancy Chan et al. (2012).

PE1 I find cloud computing useful in my job.
PE2 Using cloud computing enables me to accomplish tasks more quickly.
PE3 Using cloud computing increase my productivity.
PE4 Using the cloud computing will increase the supply chain performance.
Effort Expectancy Chan et al. (2012).
EE1 My interaction with the cloud computing would be clear and understandable.
EE2 It would be easy for me to become skilful at using cloud computing.
EE3 I would find cloud computing easy to use.
EE4 Learning to operate cloud computing is easy for me.
Firm Size (FS) Wang et al. (2010).
FS1 The capital of my company is high compared to the industry.
FS2 The revenue of my company is high compared to the industry.
FS3 The number of employees at my company of my company is high compared to
the industry.
Top Management Support Lin (2014).
MS1 Top management is highly interested in using cloud computing.
MS2 Top management is aware of the benefits cloud computing for future success
of firm.
MS3 Top management has allocated adequate financial and other resources for the
development and operation of cloud computing.
MS4 Top management has a vision to project in your company as a leader in the
promotion of cloud computing.
Absorptive Capacity Lin (2014).
AC1 Your firm has rich information on the state-of-art of cloud computing.
AC2 Your firm has a clear division of roles and responsibilities to implement cloud
computing.
AC3 Your firm has the necessary knowledge to learn and implement cloud
computing.
AC4 Your firm has the competences to implement cloud computing.
Innovativeness Mohezar and Nor (2014).
Relational Innovation
RI1 Using cloud computing helps to improve supplier and customer relationships.
RI2 Using cloud computing helps to increase market share.
RI3 Using cloud computing helps to improve customer satisfaction.
RI4 Using cloud computing helps to improve the ability to retain partners,
customers and suppliers.
Process Innovation
PS1 Using cloud computing helps to improve traceability and monitoring.
PS2 Using cloud computing helps to improve distribution and production
responsiveness.
PS3 Using cloud computing helps to improve storage and transport conditions that
are optimal for good quality product.
Product Innovation
PD1 Using cloud computing helps to improve the ability to produce variety of
products.
PD2 Using cloud computing helps to improve the ability to produce good quality
products.
Firm Performance Wu and Chuang (2010).
Flexibility
FX1 Using cloud computing helps my firm react to customer requirements.
FX2 Using cloud computing helps my firm react to market change.
FX3 Using cloud computing helps my firm react to new product development.
Quality
QL1 Using cloud computing helps my firm improves product performance.
QL2 Using cloud computing helps my firm improves product conformance to design
specifications.
QL3 Using cloud computing helps my firm improves product delivery on time.
QL4 Using cloud computing helps my firm improves customer service for product
complaints.

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