Infusion of e-Procurement at Indonesian Local Government

Willy Abdillah

and Desiana Rosman

Lecturer at Faculty of Economics and Business, Universitas Bengkulu, Indonesia

Student of Magister Management Program, Faculty of Economics and Business, Universitas Bengkulu, Indonesia

Keywords: Problem-focus adaptation, emotion-focus adaptation, IS infusion, e-procurement (SPSE), and local government.

Abstract: This study examines information system (IS) Infusion Model of e-Procurement at City Government of

Bengkulu. This study uses 68 e-Procurement's users distributed by self-administered questionnaire. Data

examined using Partial Least Square (PLS) technique. The results show that the opportunity appraisal, threat

appraisal, and secondary appraisal have an important role in improving problem-focused adaptation and

emotional-focused adaptation. However, only opportunity appraisals have an important role in promoting

problem-focused adaptation. Also, only problem-focused adaptation predict IS infusion. Implication for

stakeholder and further research are discussed.

1 INTRODUCTION

E-government system has several advantages in

implementing transparent, efficient and effective public

services. Government-based information technology

(IT) system, can provide affordable services and

expand access information easily for community. One

of the Indonesian government's efforts to create public

transparency is President Instruction (Inpres) No.

3/2003 about Policies and National Strategies

Development of e-Government. The real example of e-

government is e-procurement.

Implementation of e-procurement begins with the

issuance of Presidential Regulation No. 106/2007

about the Establishment of Government Procurement

Policy Institution (LKPP) who develops and

formulates government procurement policies. The

concrete manifestation of such good practice is the

Regulation of LKPP No. 2/2010 about Electronic

Procurement Services which conveys that Local

Government shall establish an e-Procurement system

(LPSE) to facilitate Procurement Officer (ULP) in

implementing electronic procurement.

Moreover, the high corruption cases around goods

and services procurement (PBJ) of government

institutions motivate the importance of e-procurement.

Indonesia Procurement Watch states that 70 percent of

corruption cases are sourced from the PBJ domain,

both at the central and regional levels. The variation

of cases are bribery, procurement of goods and

services in the state administration, misuse of

budgets and levies in public services, and licensing

and money laundering cases (Corruption Eradication

Commission [KPK], 2017) (see Table 1).

Table 1 . Data of Corruption Handling by Type of Case Year 2004-2017 (March 31, 2017)

Cases 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Procurement 2 12 8 14 18 16 16 10 8 9 15 14 14 7

Licensing 0 0 5 1 3 1 0 0 0 3 5 1 1 1

Bribery 0 7 2 4 13 12 19 25 34 50 20 38 79 16

Charges 0 0 7 2 3 0 0 0 0 1 6 1 1 0

Misappropriation

of budget

0 0 5 3 10 8 5 4 3 0 4 2 1 1

Money

Laundering

0 0 0 0 0 0 0 0 2 7 5 1 3 2

Blocking the

KPK Process

0 0 0 0 0 0 0 0 2 0 3 0 0 0

Amount 2 19 27 24 47 37 40 39 49 70 58 57 99 27

Source: Anti Corruption Clearing House (ACCH)-KPK, May 30, 2017

Abdillah, W. and Rosman, D.

Infusion of e-Procurement at Indonesian Local Government.

DOI: 10.5220/0009948431353142

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 3135-3142

ISBN: 978-989-758-458-9

3135

In addition, the results of the Indonesian Corruption

Watch (ICW) study with the Potential Fraud Analysis

(PFA) method, found the highest potential for fraud of

Local Governments are Bengkulu Province (15.4

points), South Sumatera (15.1 points), followed by

Central Kalimantan, North Kalimantan and Lampung

(www.pedomanbengkulu.com, 2017). Thus, it is

important to investigate e-procurement

implementation by Indonesian local government.

2 METHODS

Implementation of reliable e-procurement system must

fulfill six pillars, namely people, process, technology,

strategy, governance and organizational interface.

Unfortunately, the development of human resource

competencies at Indonesia Local Government is not as

extensive as technology and rules (KPK, 2017). Then,

the digital divide issues becomes main challenge in the

infusion of e-procurement (Nightisabha, 2010), such as

unwished IS usage (Jogiyanto and Abdillah, 2011).

Therefore, it needs guidance in using IS, such as

ability to adapt an IT events (Tyre and Orlikowski,

1994; Orlikowski, 1996; Beaudry and Pinsonneault,

2005; Fadel, 2012). Coping Theory is a relevant

concept to explain user behavior and adaptation

outcomes. The conceptual model called coping models

of user adaptation or CMUA (Beaudry and

Pinsonneault, 2005; Lazarus and Folkman, 1984).

Previous empirical studies have examined the

CMUA model (Fadel, 2012; Sigalotang et al., 2014;

Astriana et al. study, 2015). However, there are limited

studies to examine CMUA model in context of local

government institution. Thus, CMUA model are

relevant to re-examined in the context of the use of

similar mandatory systems, such as in e-procurement

systems. This study examines the CMUA model in the

context of e-procurement system at Indonesian local

government institution.

The fundamental premise of CMUA is the

introduction of a technology or a modification of an

existing technology that can bring perceived new

changes (Louis and Sutton, 1991) and improve

disturbances in organizations (Lyytinen and Rose,

2003). By defining user adaptation as a coping

problem, it can be learned various kinds of user

responses including how users can restore emotional

stability, modify tasks, reinvest, and adapt technology,

or even reject it.

The process of coping can be done through two

processes that constantly affects each others (Lazarus

and Folkman, 1984). Both processes include process of

assessing the consequences of an event that will result

in a primary appraisal. Furthermore, individuals will

take different actions to address the situation based on

the results of the appraisal, called coping efforts.

Individuals will combine cognitive and behavioral

efforts, both of which are also categorized as problem-

focused or emotion-focused (Folkman, 1992; Lazarus

and Folkman, 1984; Stone, et al., 1992).

Opportunity appraisal is an appraisal of perceived

IT events to have positive consequences. While

problem-focused adaptation is directed to handle

issues related to IT activities directly by adapting

themselves, adapting their work, and adapting the

technology. Furthermore, emotional-focused

adaptations are oriented towards oneself and lead to

a change in one's perceptions resulting from the

consequences of an IT event or to reduce emotional

tension.

The CMUA model concludes that an IT event

assessed as an opportunity tends to effect on

problem-focused adaptation and emotional-focused

adaptation behavior (Beaudry and Pinsonneault,

2005). Primary appraisal is a situation where the

consequences perceived from technological event

information rated as an opportunity, effects on

benefits satisficing, which is the less adaptation

problem-focused efforts were minimal and limited

(Lazarus and Folkman, 1984). Challenge appraisal

which is also a characteristic of positive judgment

has a significant effect on problem-focused and

emotion-focused adaptation (Fadel, 2012). Thus,

hypothesis 1 and hypothesis 2 are as follows:

H1 : Opportunity appraisal has a positive effect

on problem-focused adaptation.

H2 : Opportunity appraisal has a positive effect

on emotional-focused adaptation.

Threat appraisal is an appraisal of IT events

that are perceived to have negative consequences.

Based on the CMUA model, Beaudry and

Pinsonneault (2005) also concluded that when

individuals assess the event of IT as a threat, their

efforts will be largely oriented to reduce emotional

distress and reduce the perceived negative

consequences associated with the event. Thus, this

research formulates hypothesis 3 and hypothesis 4 as

follows:

H3 : Threat appraisal has negative effect on

problem-focused adaptation.

H4 : Threat appraisal has positive effect on

emotional-focused adaptation.

Secondary Appraisal is user appraisal on how

much control they have on IT event options for their

adaptation to the specific resources available to

them. In Coping's study, it shows that problem-

focused adaptation attempts to effect when an

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individual feels that he or she can do something to

change his or her situation, while emotionally-

focused adaptation has shown an effect when

individual feel he or she has little or no control

(Beaudry and Pinsonneault, 2005). This is what

underlies hypothesis 5 and hypothesis 6 proposed as

follows:

H5 : Secondary appraisal has positive effect on

problem-focused adaptation.

H6 : Secondary appraisal has negative effect on

emotional-focused adaptation.

Problem-focused adaptation is directed to address

issues related to IT events by adapting themselves,

their work, and IT. CMUA model predicts users

with problem-focused adaptations will more easily

achieve effective and efficient results in IS

utilization. The empirical results by Fadel (2012)

support the model and find problem-focused

adaptation behavior to be a single strong predictor of

IS infusion. This is in line with the empirical results

by Sigalotang, et al. (2014) which found a

significant positive effect problem-focused

adaptation on IS infusion. Thus, this research

proposes hypothesis 7 as follows.

H7 : Problem-Focused adaptation effects IS

infusion.

Emotionally-focused adaptation orients toward

individual itself and leads to changes in one's

perception as a result of the consequences of the IT

event to reduce emotional tension. Emotion-focused

adaptations minimize consequences of IT events,

selective attention, positive comparisons (Lazarus

and Folkman, 1984), and passive acceptance (Tyre

and Orlikowski, 1994). Empirical results of

Sigalotang, et al. (2014) found positive effect of

emotional-focused adaptation on IS infusion. Thus,

hypothesis 8 is formulated as follows.

H8 : Emotionally-focused adaptation has

positive effect on IS infusion.

Figure 1 presents the proposed model tested in this

study.

Figure 1 . Research model (Source:Adapted from Beaudry

and Pinsonneault (2005), Fadel (2011), Fadel (2012) and

Astriana, et al. (2015))

3 METHODS

This research is quantitative with survey

questionnaire as the instrument of data collection.

All constructs measured using 5 Likert scales from

strongly disagree to strongly agree. The population is e-

procurement users of City Government of Bengkulu

Province, which are The Committee Procurement and

Vendors. All of vendors were selected as sample.

Primary data collected by self-administered

questionnaires during January-May 2018. All data were

tested using the Partial Least Square (PLS) method.

Testing phase consists of evaluation of measurement

model for construct validity and reliability, and

evaluation of structural model for hypothesis testing.

4 RESULTS AND DISCUSSION

68 Respondents in this study are individuals who are

active users of SPSE or who use the e-procurement

application of LPSE Bengkulu City Government

who served as a procurement committee of goods

and services or members of the working group

Procurement Unit (ULP) and winner vendor in e-

tendering of Bengkulu City Government Year

Budget 2017.

Table 2. The Characteristics of Respondents

Category Number of

Respondents

Percentage

(%)

Gender

Male

Female

Number of Respondents 68 100

Last education

High Education

Diploma

Undergraduate

Postgraduate

Number of Respondents 68 100

Age

25-30 Years

31-35 Years

36-40 Years

> 40 Years

Number of Respondents 68 100

Position

The working group of the

procurement services unit

(ULP)

Vendor of goods/services

Number of Respondents 68 100

Period of using SPSE

< 1 Year

1-3 Years

4-6 Years

> 6 Years

Infusion of e-Procurement at Indonesian Local Government

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Number of Respondents 68 100

Conduct SPSE Socialization

Yes

Never

Number of Respondents 68 100

Frequency of SPSE

Socialization

> 1x

Number of Respondents 68 100

Source: Own elaboration, 2018

Based on Table 2, it can be seen that the

respondents are mostly male. This indicates that the

heavy workload and pressure of various parties in the

scope of work of the procurement process of

government goods and services require the respondents

to have a high intensity that causes women often feel

reluctant for a career in the procurement of government

goods and services. Also, this condition is caused by

the characteristics of work are more technical that

requires more technical capabilities owned by men.

Respondent's education indicates that the

respondent who is responsible for the operation of

SPSE application has adequate formal education.

Education is closely related to the abilities and skills

possessed by the respondent as a stock to be able to run

the job well. While the age of respondents shows the

majority of respondents in the productive age category

so that the respondents tendency more familiar and

responsive to new technology.

The use of SPSE shows that most of the

respondents have long worked as procurement

committee or vendor so that there is enough experience

level in SPSE context. This is also supported by the

majority of respondents (84%) have followed the

socialization, although the majority only one time.

Measurement Model Results

Measurement model is used to test the validity of the

construct and the reliability of the research instrument

(Abdillah and Jogiyanto, 2015).

Table 3. Output of Measurement Model

Variables AVE Composite

Reliability

R-Square

Emotional-

Focused

Adaptation

0,614 0,889 0,461

Problem-Focused

Adaptation

0,700 0,845 0,362

IS Infusion 0,702 0,823 0,217

Threat Appraisal 0,525 0,921

Opportunity

Appraisal

0,582 0,864

Secondary

Appraisal

0,618 0,874

Source: SmartPLS Output, own elaboration, 2018

After elimination of the PK1, PS4, AM6, AM7,

AE1, AE3, AE4, AE5, AE7, AE3, AE4, AE5, AE5,

AE7, AE3, and IS3 indicators, all variables have

sufficient convergent validity (see Table 3).

Table 4. Cross Value Indicators with Constructions in Model

Indicator Emotional-

Focused

Adaptation

Problem-

Focused

Adaptation

Infusion

Threat

Appraisal

Opportunity

Appraisal

Secondary

Appraisal

AE10 0.914 0.049 -0.124 0.586 -0,227 -0.352

AE12 0.690 0.006 -0.096 0.537 -0.155 -0,019

AE2 0.572 0.248 0.029 0.407 -0,095 -0.153

AE6

0.538 0.124 0.084 0.221 0.055 -0.164

AE8 0.864 0.037 0.078 0.427 -0,053 -0.154

AE9

0.903 0.211 0.124 0.511 0.004 -0,251

AM1 -0.038 0.614 0.185 0.059 0.404 -0.024

AM2 0.049

0.799 0.353 0.061 0.486 0.237

AM3 0.202 0.760 0.371 0.063 0.309 0.096

AM4 0.185

0.774 0.295 0.042 0.301 0.029

AM5 0.125 0.657 0.431 -0,055 0.438 0.060

IS1 0.016 0,500

0.910 -0,170 0.570 0.208

IS2 -0,026 0.319 0.851 -0.179 0.583 0.309

IS4 0.063 0.141

0.549 0.024 0.345 0.339

PA1 0.591 0.095 -0,040 0.843 -0.260 0.082

PA2 0.340 0.075 -0.069

0.705 -0.291 0.150

PA3 0.465 0.028 -0.177 0.870 -0,230 -0.002

PA4 0.555 0.162 -0.105

0.897 -0.192 -0.109

PA5 0.537 -0.184 -0.338 0.856 -0.370 -0.123

PK2 -0.039 0.449 0.558 -0.261

0.804 0.263

PK3 -0.152 0.460 0.493 -0.207 0.804 0.317

PK4 0.003 0.424 0.587 -0,300

0.805 0.338

PK5 -0.177 0.381 0.387 -0,227 0.718 0.131

PS1 -0.148 0.105 0.482 -0,057 0.425

0.699

PS2 -0.298 0.116 0.137 -0.006 0.207 0.938

PS3 -0.097 0.068 0.283 0.048 0.299

0.858

Source: SmartPLS Output , own elaboration, 2018

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Table 4 shows that all values of cross-loading

indicators are higher in constructs than cross loading in

other constructs. It can be concluded that the model has

sufficient discriminant validity. Additionally to

construct validity test, validation of measurement

model, reliability testing is done by Composite

reliability method. The results in Table 3 show that all

constructs are reliable with the criterion of reliability

test value> 0.7.

Structural Model Results

Hypothesis testing in this study using inner model with

95% confidence level and error analysis (α) = 5%. The

test was performed using bootstrapping method in

SmartPLS 3.2.7 software to obtain path coefficients

(β). Based on the coefficient value of each path in

Table 5, four hypotheses are accepted.

Table 5. Structural Model Results

Path Original

Sample

T-

Statistics

Value

Conclusion

PK AM 0,661 6,209 0,000 Accepted

PK AE 0,198 1,043 0,298 Rejected

PA AM 0,251 1,656 0,098 Rejected

PA AE 0,667 2,605 0,009 Accepted

PS AM -0,099 0,657 0,511 Rejected

PS AE -0,312 2,302 0,022 Accepted

AM IS 0,471 4,611 0,000 Accepted

AE IS -0,057 0,346 0,729 Rejected

Source: SmartPLS Output , Data Processing, 2017

This study found that opportunity appraisal

positively affects the problem-focused adaptation. This

finding indicates that the ability of the SPSE system to

provide positive consequences, such as supporting user

tasks. Internet-based SPSE system causes faster process

and delivery of information in the form of aanwijzing

media and online clarification can be accelerating

response to questions and clarification

of auctions.

SPSE placement also reduces user and vendor fees for

goods or services because the auction requirement of

hard copy is only requested to the winner at the end of

the auction process.

According to CMUA, users are first involved in a

primary appraisal when users assess whether an IT

event is an opportunity or a threat. IS becomes an

opportunity appraisal arising from belief that the IS will

bring positive consequences (Beaudry and

Pinsonneault, 2005). If users view the IS positively,

then the users will conduct an adaptive behavior

attempt to deal with the situation, by anticipating the

need to learn new skills, overcoming difficulties, and

adapt to working procedures.

Adaptive users behavior to face situation due to the

implementation of this SPSE system is a problem-

focused adaptation effort. The problem-focused

adaptation behavior aims to manage disturbing events

by altering the external aspects of situations such as

environmental stress, constraints, resources, or

procedures (Lazarus and Folkman, 1984). Efforts made

procurement committee and vendor transform external

aspects of situation due to SPSE implementation to

realize user’s expected benefits of IS, for example,

attempts to change work adapted habits to the

procedures that must be done in following e-

procurement. Thus this problem-focused adaptation

behavior can lead actions to improve efficiency and

effectiveness in using IS, which tend to affect the user's

performance positively.

The result also show that no positive effect of

opportunity appraisal on emotion-focused adaptation.

This result indicates that users who evaluate a positive

SPSE will not require drastic adaptive responses, such

as less engagement either restoring emotional stability

or altering the environment. Emotion-focused

adaptation behavior is carried out through positive

reappraisal by means of users having to accept the

SPSE system as an opportunity to gain a better profit

when compared to the manual system. User adaptation

efforts are directed at restoring to emotional stability

and reducing the tensions caused by IT events, tending

to ask for social support from spouses or family

members. This situation indicates that users have

limited control of SPSE as mandatory system, with less

choice and necessity to understand procedures in

operating SPSE electronically. Otherwise, users are

less likely to agree with the consequences of

implementing the SPSE system and reduce their

involvement in work.

This result does not support Coping Theory

(Lazarus and Folkman, 1984; Fadel, 2012).

Combination of problems and effort to cope with user’s

emotions depends on the appraisal of the situation due

to the implementation of the SPSE. Logically,

positively assessed events are more likely to require

problem-focused adaptation rather than emotional-

focused adaptations because there is no threat to

emotional stability. These results indicate that SPSE’s

rating system does not affect emotional-focused

adaptations, which mean that if the system are

qualified, then users will use the system continuously

(Seddon and Kiew, 1996). Referring to that opinion, it

is very important to maintain and improve the quality

of SPSE so that users are not reluctant to interact with

SPSE. Thus it is expected that improvements made to

the quality of the SPSE will be able to improve

emotionally focused adaptation users of SPSE System.

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This research also found threat opportunity has

no effect on problem-focus adaptation. It indicates

that average users are productive, experienced and

have participated in SPSE socialization. This means

that the capabilities of the SPSE users will be able to

overcome the perceived negative consequences

associated with IT events. However, a problem-

focused adaptation can address issues related to IT

activities directly, such as developing new standards

of behavior, increasing interest in using IT, and

seeking training for self-improvement.

According to Fadel and Brown (2010), threat

perceptions are strongly influenced by the extent to

which users perceive IS to be difficult to use. This

means that LPSE can reduce threat perception by

ensuring support to help users to cope with IS

problems. In addition, it should periodically monitor

system and coordinate with developers in Central

LKPP to anticipate the existence of anomalies and

various threats. It is thus expected that efforts to

overcome difficulties in the use of the SPSE system

will affect problem-focused adaptation efforts.

The study also found a threat appraisal has a

positive effect on emotion-focused adaptation. User’s

perceived SPSE has several advantages in the process

of procurement such as ease of use, save the cost of

procurement administration and cost of use of

consumables (e.g. stationery), and speed up the

procurement process. However, users also feel the

application of the SPSE system as a threat when certain

parties want to take advantage of the SPSE system for a

particular interest. Therefore, LPSE should fostere

employees’s responsibilities for managing the SPSE

through clear procedures of recruitment, transfer and

dismissal, training, and paying attention to unsatisfied

employees with the organization which may lead to

negative actions.

This study also found that secondary appraisal had

no positive effect on the problem-focused adaptation.

It indicates that users generally had sufficient IT

capabilities but insufficient ability to perform tasks

related to electronic auctions, starting from registration,

procurement documents, and uploading bidding

documents. This finding also indicates users have job

autonomy in but less control on technology features

and functions of e-procurement as mandatory

system.

Furthermore, this study found a negative effect of

secondary appraisal on emotional-focused adaptation.

Procurement committees and vendor are not able to

deny the existence of a dilemma in the procurement

process that will affect their emotions. Thus, bidding in

the auction must be ensured in accordance with

requirements as outlined in the auction document as a

specification or technical requirement. In order to

achieve these objectives, it must be ensured that the

vendor will be able to complete the work according to

the contract, such as vendors should have appropriate

experience, financial and personnel capabilities

adequate, so that work can be done according to the

contract. Both technical requirements and qualification

requirements must be equally fulfilled.

Furthermore, this study found that problem-focused

adaptation has positive effect on IS infusion. It

indicates that users maturity level (e.g. experience) are

considered as capability in managing disturbing events

due to SPSE implementation by changing the external

aspects, such as environmental stresses, obstacles,

resources, or procedures. This finding supports

Coping Theory which shows the form of user

adaptation as a problem-solving in response to

disturbing events occurring in the environment

(Lazarus and Folkman, 1984). The CMUA model

predicts users who have problem-focused adaptations

will more easily achieve effective and efficient results

on deep system utilization.

Finally, this study found that emotion-focused

adaptation has no effect on IS infusion. It indicates that

even though users perceive dissatisfied regarding to

technically disadvantage of e-procurement as

mandatory system, users are quite capable to adapt the

IT events consequences by attempting to reduce

emotional tensions. User initiates efforts by soliciting

moral support from colleagues, family members and

superiors, further motivating oneself with positive

thinking towards e-procurement (Davis, 1989). Thus, it

is important to improve user’s perceived benefits of e-

procurement by increasing user’s emotion-focused

adaptation.

5 CONCLUSION

This study found that opportunity appraisal, threat

appraisal, and secondary appraisal have an important

role in improving problem-focused adaptation and

emotional-focused adaptation. However, only

opportunity appraisal has an important role in

improving problem-focused adaptation. Furthermore,

both problems-focused and emotion-focused adaptation

play important role in increasing IS infusion. Problem-

focused adaptation is the most dominant variable in

influencing IS infusion. These findings are meaningful

when problem-focused adaptation and emotion-focused

adaptation improved, it will increase e-procurement

infusion. Theoretically, this study confirms the role of

the CMUA model and Coping Theory in explaining the

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IS infusion process in the context of local government

organizations.

Practically, these findings underscore the need

for stakeholders to continuously develop user

capabilities (problem-focus adaptation) for handling

technical disturbances and optimize organizational

control through separation of duties and

responsibilities. Also, regarding to security issues,

Local governments should involve users in IS

development process due to improve users’s ownership

and provide sufficient job autonomy.

Methodologically, further researches need to be

expand generalization in the context of other

Government agencies, such as ministries and

Institutions. Also, nonprobabilistic sampling need to be

deepen the research context by exploring the research

subjects better.

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