Information Technology Adoption in Islamic Higher Education

Institutions in Indonesia

Yusuf Amrozi

1,2

, Mujib Ridwan

, and Eni Purwati

Department of Information System, Sunan Ampel State Islamic University, Surabaya, Indonesia

Department of Management, Airlangga University, Surabaya, Indonesia

Department of Technology, Sunan Ampel State Islamic University, Surabaya, Indonesia

Faculty of Islamic Education, Sunan Ampel State Islamic University, Surabaya, Indonesia

Keywords: IT Adoption, Organizational Capabilities, SCA, NU University.

Abstract: Business in the higher education sector in Indonesia, especially in the environment of private Islamic higher

education, has been showing a significant increase. The winner is largely determined by the business strategies

designed, supported by organizational resources, rarity, difficulty to imitate the product, and difficulty to

substitute the product, in order to create a sustainable competitive advantage. According to the existing

research, support for ERP (enterprise resource planning) information system plays an important role in

realizing organizational capabilities towards a sustained competitive advantage (SCA). This research focused

on the extent of information technology adoption to encourage Islamic higher education institutions—

especially NU Universities—to realize a competitive advantage in order to win the competition. The results

show that IT Adoption did not have any significant effect on Organizational Capabilities and Sustained

Competitive Advantage, but Organizational Capabilities had a significant effect on Sustained Competitive

Advantage. Implications of the research findings will be discussed.

1 INTRODUCTION

Higher education institutions in Indonesia, especially

the private ones which are based on Islamic religion

and fostered by the Ministry of Religious Affairs,

show a significant increase in number, now

numbering more than 6,000 (Directorate of Islamic

Higher Education–Ministry of Religious Affairs,

2017). The development of higher education amid

competition is largely determined by the business

strategies designed, supported by the management of

rare, valuable, hard-to-imitate resources, creating a

sustainable competitive advantage (Barney, 1991).

Porter (2008) explains that a competitive advantage

basically develops from a value that can be created by

a company for its buyers and exceeds the cost of the

company that created it. The resources for developing

a competitive advantage are the core competencies

owned by a company or organization.

In the Indonesian context, the existence of private

universities is heavily influenced by organizations or

social groups affiliated with religious professions or

organizations. In Indonesia, the majority of the

population are Muslims. Some of them are affiliated

with religious organizations. These religious

organizations were established prior to the state of

Indonesia establishment or during the colonial period.

There are two major Islamic religious organizations

in Indonesia: Nahdlatul Ulama (NU) and

Muhammadiyah. The subjects of this research were

private Islamic universities affiliated with Nahdlatul

Ulama (Nahdlatul Ulama universities). The reason

why the researchers focused on Nahdlatul Ulama

universities is that early in its development, NU

emphasized not secular sciences, but religious

education. However, in the last 20 years, it has been

concentrating on the establishment of higher

education. For quick reference, NU is a civil

organization founded by Islamic clerics in 1926 when

Indonesia was still in the colonial period. Of the 250

million Indonesian people 90 million join this

organization. The distinct characteristic of the NU-

style Islamic religion is that it combines the Middle

Eastern Islamic values with local values prevailing in

a given period. Therefore, later in its development,

NU is known as a moderate community organization

tolerant toward other traditions, cultures, and tribes or

groups. Institutionally, NU universities are managed

326

Amrozi, Y., Ridwan, M. and Purwati, E.

Information Technology Adoption in Islamic Higher Education Institutions in Indonesia.

DOI: 10.5220/0008904100002481

In Proceedings of the Built Environment, Science and Technology International Conference (BEST ICON 2018), pages 326-332

ISBN: 978-989-758-414-5

by legal entities, either foundations or legal entities of

NU associations, of 250 institutions (Data of the

National Board of Nahdlatul Ulama/PBNU, 2018).

The growing number of NU universities poses a

challenge to their management in generating

competitive advantages in order to win the market

competition. Competitive advantages can be gained

through the application of information technology

(Aggarwal, 2017). Information technology can meet

the information needs of the business world quickly,

effectively, accurately, and relevantly. In addition, to

companies, information technology has an important

role in the strategy to obtain competitive advantages.

Information technology will contribute an effect on

almost all aspects of business management and can

provide an added value if properly managed and

designed into an effective information system.

Jogiyanto (2007) argues that the information

technology system has developed very rapidly and is

seen to be quite significant in this era. In relation to

the development of higher education, Indrajit (2013)

argues that universities can utilize information

technology in three ways: by providing support for

services and administration; by using it as a teaching

aid and means of communication; and by using it for

decision-making.

Therefore, it is necessary to support ERP

(enterprise resource planning) information systems,

such as academic information systems, which can

play a real role in realizing organizational capabilities

toward a sustained competitive advantage (SCA). The

early view of the research target (NU Universities) in

relation to the adoption and use of information

technology, according to the vision, is how to become

excellent universities in the national and local

contexts to be able to compete with other universities,

especially Islamic universities, in Indonesia.

Meanwhile, the vision of IT utilization is how IT is

able to support the universities’ operational

performance. In fact, based on preliminary

observations, some technological mastery and

environmental problems were found, requiring more

in-depth research.

This research focused on how far the adoption of

ERP information technology encourages private

higher education institutions to realize competitive

advantages that can empower them to win the

competition eventually. This research was conducted

quantitatively at NU universities as private

universities in Indonesia which had adopted

information technology.

Some studies have been carried out by several

researchers, for example, one by Miranda et al. (2016)

on the adoption of ERP technology at non-profit

organizations such as higher education organizations.

The results of the study show that process factors and

administrative service innovations that used

technology could effectively reach organizational

goals. The connection with our research is that at NU

universities, the adoption of information technology

is relatively new. Meanwhile, Abugabah, Sanzogni,

and Alfarraj (2015) examined the impact of the

implementation of ERP information systems in

universities. The results of the study indicate that the

quality of the system adopted at a university, the

suitability of the role of technology, and the quality

of information were the most important factors in the

university’s performance. Another study was

conducted by Melitski and Gavin (2010), which was

about technology adoption and organizational culture

in public organizations. The study found that there

was a relationship between individuals’ perception of

organizational culture and their willingness to adopt

a technology.

None of the related research that we have

described above studied other factors besides the use

of technology, for example, an organization’s

capabilities to improve its performance. Therefore,

the addition of the factor organizational capabilities is

expected to be a differentiator from previous studies

in relation to factors of technology adoption in higher

education.

2 LITERATURE REVIEW

2.1 IT Adoption

Adoption is a person's new behavior in accordance

with the background of knowledge, awareness, and

attitude towards excitement or stimuli (Notoatmodjo,

2003). Adoption may essentially be interpreted as the

process of accepting an innovation and/or changing

good behavior in the form of knowledge (cognitive),

attitude (affective), and skill (psycho-motoric) after

receiving the "innovation" received by a target

community. In this context, "adoption" refers to the

stage at which technology is accepted and preferred

to be used by an individual or organization.

Technology adoption basically aims to raise

human awareness of learning technology, with a

technology being utilized, applied, and adopted to

improve the quality of learning in all aspects of life.

As Prawiradilaga (2012) says, the existence of

technology in education permits the programming of

education, thus an educational process can be

organized and detailed. This includes a technology

model that is intentionally created to facilitate the

learning process to achieve educational goals.

According to the explanation above, it can be seen

that the adoption of an information technology is the

Information Technology Adoption in Islamic Higher Education Institutions in Indonesia

327

release of an idea (innovation) until it is accepted and

implemented by someone so that it becomes a

behavior which is a combination of knowledge

(cognitive), attitude (affective), and skills

(psychomotor) in using information technology. In

the context of technology adoption and organizational

environment changes, Aggarwal (2017) points out

two influencing factors, namely inducement to adapt

and difficulty of adaptation.

2.2 Organizational Capabilities

An organizational capability is defined as the ability

of a company to mobilize both tangible and intangible

resources in order to perform tasks or activities to

improve its performance (Amit and Schoemaker,

1993; Grant, 1991; Teece et al., 1997). Helfat and

Peteraf (2003) define it as an organization’s ability to

coordinate a series of tasks to utilize organizational

resources to achieve its ultimate goal.

Organizational capability is very important for an

organization to solve organizational problems

effectively. Sampurno (2011) describes capabilities

as representing a set of integrated sources used to

carry out important activities. The ability is integrated

into the knowledge (capability) and skills of workers

or individuals in the company or organization.

Furthermore, Sampurno (2011) explained that

organizational capability is the capacity of an

organization to place and utilize resources to fulfil its

desires and achieve expected outcomes.

Organizational capability requires a variety of

individual skills that are integrated with technology,

equipment, and various other resources.

According to Teece (2017), organizational

capabilities go through three processes, namely

sensing, seizing, and transforming. Meanwhile,

Gurkan (2015) states that a collaboration can take

place in two ways: strategy development and

implementation as well as continuous improvement

process.

2.3 Sustained Competitive Advantage

According to Schermerhorn (2011), a competitive

advantage is the ability to do something so well that

one outperforms competitors. Kotler and Armstrong

(2015) define competitive advantage as an advantage

over competitors obtained by offering value to

consumers, either through lower prices or by

providing more benefits that support higher price

revenues. David (2010) describes competitive

advantage as a situation where a company can do

something and other companies cannot or has

something their competitors want.

Grant (2011) proposes five steps to achieve

competitive advantages through the company's

resources:

1. Identifying and classifying resources that can

affect the strengths and weaknesses of the

company.

2. Combining the strength of the company with

the specific capabilities of the company.

Company capability (commonly referred to as

core competence) is everything that the

company can do very well. When the

capability/competency is superior to its

competitors’, it becomes a special competence

for the company.

3. Assessing the potential benefits of the

resources and the potential capabilities the

company has to be able to gain benefits

generated and to achieve a sustainable

competitive advantage.

4. Selecting strategies that can well exploit the

company's resources and capabilities to

achieve external opportunities.

5. Identifying resource gaps and invest in

transforming weaknesses into strengths.

Competitive advantages in this research can be

measured by three indicators proposed in Tuan and

Yoshi’s research (2010):

1. Cost strategy, measured by emphasizing cost

reduction through process innovation in the

operating system business, investment in

machinery, and increase in employee

productivity and operations.

2. Quality strategy, measured through product

quality, strict quality control, fulfilment of

customer needs, and handling of customer’s

product requirements.

3. Innovation strategy, measured by the level at

which the company strives to introduce new

products, emphasis in the innovation in the

production process, and engagement in new

marketing.

Barney (1991) explains that, based on Resource

Base theory, a competitive advantage needs to be

sustainable (sustained competitive advantage). In his

opinion, there are five pre-requisites for the creation

of a sustainable competitive advantage. The company

must have organizational resources which are (a)

valuable, (b) substitutable, (c) imitable, and (d) rare.

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3 RESEARCH METHODS

In this study, data were collected using questionnaires

and analysed quantitatively. This research is

categorised as causal research because one variable as

an independent variable was related to another

variable as a dependent variable. According to

Sugiyono (2014), a causal relationship is a

relationship in which independent variables

(affecting variables) are related to a dependent

variable (influenced variable).

Population is an area of generalization consisting

of objects or subjects that have the quality and

characteristics set by researchers to be studied and

from which conclusions are drawn (Sugiyono, 2014).

The population in this study consisted of all of the 250

Islamic private higher education institutions in

Indonesia which were affiliated with Nahdlatul

Ulama. The sample used consisted of NU universities

spread across East Java and outside East Java, such as

those in Central Java, West Java, Jakarta, Sumatera,

Kalimantan, and Sulawesi. Nonetheless, the majority

of members of NU and NU universities were more

likely to be spread in East Java province. The analysis

unit was institutional (one questinnaire for each

campus). There were 52 validated questionnaires.

3.1 Hypotheses

H1 : IT Adoption has a significant effect on

Sustained Competitive Advantage.

H2 : IT Adoption has a significant effect on

Organizational Capabilities.

H3 : Organizational Capabilities have a significant

effect on Sustained Competitive Advantage.

3.2 Operational Definition

3.2.1 IT Adoption (X

)

IT Adoption is the release of an idea (innovation)

until it is accepted and implemented by someone so

that it becomes a behavior which is a combination of

knowledge (cognitive), attitude (affective), and skills

(psychomotor) in using information technology. The

indicator of the variable IT Adoption, according to

Aggarwal (2017), are the following:

1. Inducements to adapt

In this context, researchers operationalized into

five things, namely: encouragement of IT

acceptance from organizational culture,

organizational conditions, internal drive to

adopt IT, and encouragement from external

stakeholders.

2. Difficulty of adaptation

In this context, researchers operated into three

things, namely: resistance of the organizational

culture in adopting IT, organizational resource

conditions, and the absence of external

stakeholders who help adopt IT.

3.2.2 Organizational Capabilities (X

)

Organizational Capabilities are the capacity of an

organization to place and utilize resources to fulfil its

desires and achieve expected outcomes. The

indicators of the variable Organizational Capabilities,

according to Teece (2017) and Gurkan (2015), are as

follows: (a) Sensing; (b) Seizing; (c) Transforming;

(d) Strategy of Development & Implementation; and

(e) Continuous Improvement Process.

3.2.3 Sustained Competitive Advantage (Y)

Sustained Competitive Advantage (SCA) is an

advantage over competitors that is obtained by

offering values to consumers, either through lower

prices or by providing more benefits that support

higher price revenues. The indicators of the variable

Sustained Competitive Advantage, according to

Barney (1991), are as follows: (a) Rarity; (b)

Substitutability; (c) Imitability; and (d) State of Being

Valuable.

In the context of this research, the four SCA

indicators above were transformed into higher

education performance that could be operationalized

better, namely (a) SCA implications for the

performance of college, (b) institutional reputation,

knowledge.

3.3 Data Collection Technique

The method used by the researchers in this research

was a survey method using questionnaire. According

to Sugiyono (2014), questionnaire is a data collection

technique that is carried out by giving a set of written

statements to respondents to be responded to. A

Likert scale was used. The variables measured by the

Likert scale were re-elaborated into sub-variables,

which were reinterpreted into components that could

be measured.

Information Technology Adoption in Islamic Higher Education Institutions in Indonesia

329

3.4 Data Analysis Technique

The analysis technique chosen to analyze the data and

test the hypotheses in this study was Structural

Equation Model (SEM). To answer the hypotheses,

Partial Least Square (PLS) was used. Calculations

were carried out using Smart Partial Least Square

(PLS) following Ghozali (2012) due to the multi-lane

shape and model used in the form of reflective. The

calculations were performed using Smart PLS

because this study had a multi-lane, formative,

reflective relationship.

4 DATA ANALYSIS

The analysis used structural model testing to specify

the relationship between research variables. In some

references it is referred to as the inner model. The

results of the suitability analysis of the structural

model built show that the overall model was

"relevant" to explain the variables studied and their

relationship between each other. The Q2 value

calculated was 0.579. It exceeded the critical limit of

0.5, and, thus, the structural model was declared

suitable and appropriate.

Figure 1: Research findings

The exogenous variables studied in the inner

model were IT Adoption and Organizational

Capability, while the endogenous variable was

Sustained Competitive Advantage. The results of the

inner weight shown in Figure 1 above shows that the

variable Sustained Competitive Advantage was

influenced by the variables IT Adoption and

Organizational Capabilities, while the variable

Organizational Capabilities was influenced by the

variable IT Adoption following the equation below:

Y = 0.234 X

+ 0.446 X

= 0.572 X

The effect of the variable IT Adoption on the

variable Organizational Capabilities had an R

score

of 0.328, which indicates a "weak" model.

Meanwhile, the effect of the variables IT Adoption

and Organizational Capabilities on the variable

Sustained Competitive Advantage had an R

score of

0.373, which indicates a "moderate" model.

4.1 Hypothesis testing

The first hypothesis in this study was not proven true

because the results of the data analysis show a t value

of 1.106, which was smaller than 1.96. Thus, it can be

said that IT Adoption had no significant effect.

However, it had a positive direction toward Sustained

Competitive Advantage. The positive relationship

that occurred indicates that better IT Adoption would

be increasingly able to improve Sustained

Competitive Advantage at a value of 0.234.

The second hypothesis in this research was not

proven true because the results of the data analysis

show a t value of 1.715, which was smaller than 1.96.

Thus, it can be said that IT Adoption had no

significant effect but had a positive direction toward

Organizational Capabilities. The direction of the

relationship between the two variables was positive,

which means that better IT Adoption would be able

to increase Organizational Capabilities at a value of

0.572.

The third hypothesis in this research was proven

true because the results of the data analysis show a t

score of 2.752, which was greater than 1.96. Thus, it

can be said that Organizational Capabilities had a

significant influence on Sustained Competitive

Advantage. The direction of the relationship between

the two variables was positive, which means that

better Organizational Capabilities would be able to

improve Sustained Competitive Advantage at a value

of 0.446.

5 RESULTS AND DISCUSSION

The results of the data analysis show that IT Adoption

had no significant effect but had a positive direction

toward Sustained Competitive Advantage. With a t

score of 1.106, which was smaller than 1.96, it can be

explained that an increase in Sustained Competitive

Advantage could not necessarily be formed through

good IT Adoption. The effect of IT Adoption on

Sustained Competitive Advantage was positive,

which shows that the better IT Adoption, the greater

the Sustained Competitive Advantage.

The findings in this study indicate that IT

Adoption had an important role in enhancing the

Sustained Competitive Advantage of private Islamic

higher education institutions in Indonesia. Thus, if the

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universities want to improve their Sustained

Competitive Advantage, it is critical to pay attention

to IT Adoption. This is relevant to Aggarwal’s

research (2017), which shows that IT Adoption

played an important role in realizing organizational

performance, which in the context of this research

was Sustained Competitive Advantage.

The results of the analysis also show that IT

Adoption had no significant effect but had a positive

direction toward Organizational Capabilities. With a

t value of 1.715, which was smaller than 1.96, it can

be explained that an increase in Organizational

Capabilities might not be formed through good IT

Adoption. The influence of IT Adoption on

Organizational Capabilities was positive, which

indicates that better IT Adoption would be able to

improve Sustained Competitive Advantage.

The findings of this study prove that IT Adoption

played an important role in increasing Organizational

Capabilities. In other words, the organizational

capabilities of a higher education institution could be

formed with good IT Adoption. Therefore, if it wants

to increase its organizational capabilities, it is

necessary for it to pay attention to IT adoption. This

result is in line with the research conducted by Azim

and Sattar (2011), which proved that IT adoption

affects organizational capabilities.

The results of the analysis also prove that

Organizational Capabilities had a significant

influence on the Sustained Competitive Advantage of

private universities as evidenced by a t score of 2.752,

which was greater than 1.96. Thus, it can be explained

that an increase in Sustained Competitive Advantage

could be formed by good Organizational Capabilities.

The influence of Organizational Capabilities on

Sustained Competitive Advantage was positive,

which shows that the higher the Organizational

Capabilities possessed, the greater the Sustained

Competitive Advantage.

The findings in this study prove that

Organizational Capabilities played an important role

in improving the Sustained Competitive Advantage

of private universities. In other words, Sustained

Competitive Advantage of private universities could

be formed by the Organizational Capabilities of the

private universities. Wang and Ang (2004) revealed

that Sustained Competitive Advantage is generated

by organizational capabilities that are measured by

reducing costs, quality, and innovation. Tuan and

Yoshi (2010) explain that Organizational Capabilities

are the skills or expertise of employees or intangible

resources such as reputation or culture.

6 CONCLUSIONS AND

SUGGESTIONS

The researchers concluded the following: (a) in the

case of this study, IT Adoption did not have any

significant effect on Sustained Competitive

Advantage; (b) IT Adoption had no significant effect

on the Organizational Capabilities of private Islamic

higher education institutions; and (c) Organizational

Capabilities had a significant effect on Sustained

Competitive Advantage. It is recommended that the

next research should explore why IT Adoption has no

significant influence on SCA and Organizational

Capabilities. It is also necessary to conduct

comparative studies on different research objects, for

example, public universities with different cultures

and resource conditions.

The results of the study have the following

managerial implications: (a) for private Islamic

universities to be able to improve their sustained

competitive advantage, especially in terms of

organizational resources optimisation, it is necessary

to pay attention to cost efficiency strategies, quality

strategies, and innovation strategies (Tuan and Yoshi

(2010), and (b) a higher education institution can

improve its sustained competitive advantage through

IT adoption, in combination with the formulation of

appropriate strategies to encourage the performance

of organizational capabilities.

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