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Information & Management 51 (2014) 497510

Contents lists available at ScienceDirect

Information & Management


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

Assessing the determinants of cloud computing adoption: An analysis


of the manufacturing and services sectors
Tiago Oliveira a,*, Manoj Thomas b, Mariana Espadanal a
a
b

ISEGI, Universidade Nova de Lisboa, 1070-312 Lisbon, Portugal


School of Business, Virginia Commonwealth University, 301 W. Main Street, Richmond, VA 23284-4000, USA

A R T I C L E I N F O

A B S T R A C T

Article history:
Received 29 January 2013
Received in revised form 26 March 2014
Accepted 29 March 2014
Available online 6 April 2014

Many factors inuence the adoption of cloud computing. Organizations must systematically evaluate
these factors before deciding to adopt cloud-based solutions. To assess the determinants that inuence
the adoption of cloud computing, we develop a research model based on the innovation characteristics
from the diffusion of innovation (DOI) theory and the technology-organization-environment (TOE)
framework. Data collected from 369 rms in Portugal are used to test the related hypotheses. The study
also investigates the determinants of cloud-computing adoption in the manufacturing and services
sectors.
2014 Elsevier B.V. All rights reserved.

Keywords:
Cloud computing
IT adoption
Diffusion of innovation (DOI)
Technology-organization-environment
(TOE)

1. Introduction
Large and small enterprises are rapidly reorienting their overall
information technology (IT) strategies to include cloud computing.
As the strategic emphasis on exibility, innovation, and economic
gains increases, organizations can no longer overlook the
advantages of the computational agility and scalability provided
by a distributed cloud-computing environment [5,36,16]. With the
potential to transform business processes, lower IT expenditures,
deliver real-time applications, offer access to ubiquitous storage,
unlimited computing power, and market information mobilization, organizations look to cloud-based solutions to achieve
business efciencies [16,65,100,6,37]. Thus, companies are seriously considering increasing IT expenditures on cloud computing
[30].
Despite the touted advantages of this new technology, evidence
suggests that not all companies are rushing to adopt cloud-based
solutions [1,105]. Among the reasons are that it is a disruptive
technology that has not reached a level of maturity; the lack of
industry-specic conformity to standards; and a high level of
related risk and costs [9,12,70]. In addition, rms in certain sectors
may have only a modest investment in technology. Examples

* Corresponding author. Tel.: +351 914 934 438.


E-mail addresses: toliveira@isegi.unl.pt (T. Oliveira), mthomas@vcu.edu
(M. Thomas), mariana.espadanal@gmail.com (M. Espadanal).
http://dx.doi.org/10.1016/j.im.2014.03.006
0378-7206/ 2014 Elsevier B.V. All rights reserved.

include small and medium enterprises (SME) in supply chaincentric industries such as manufacturing, agriculture, and construction [1]. They have limited technical capabilities and often
rely on smaller groups of IT professionals or contract IT staff for
their IT needs. The reluctance to adopt cloud computing solutions,
a disruptive technology in the technology trigger or the inated
expectations phase of the hype-cycle [30,38], are therefore real
and noteworthy.
Clearly, the cloud phenomenon is not a panacea for all
organizations. The purpose of this study is to understand the
determinants of the adoption of cloud computing and its relative
advantage to organizations. Most earlier studies on cloud
computing have focused on technical and operational issues
[119]. A few studies have addressed the adoption of cloud
computing from an organizational perspective (see Table 1),
mostly assessing the direct effects of the innovation characteristics
or the contextual factors. No study has conducted a holistic
evaluation of the direct effects and the indirect effects of the
determinants on cloud-computing adoption. Motivated by these
issues, this study seeks to develop a research model that integrates
the innovation characteristics [91] of cloud computing and the
technology-organization-environment (TOE) perspectives [104]
that underlie its adoption. The contribution of the article is
twofold. First, to investigate the direct and indirect effects of the
innovation characteristics and the TOE contexts on the adoption of
cloud computing, data from 369 rms in Portugal are used to
evaluate the research model. This study therefore presents a more

T. Oliveira et al. / Information & Management 51 (2014) 497510

498

Table 1
Cloud computing studies published in peer reviewed journals.
IT adoption
(dependent
variable)

Adoption theory

Constructs/factors (independent variables)

Methods

Data and context

Author

Cloud computing

TOE and DOI

Factor analysis
(FA), logistic
regression

E-mail survey of 111 rms


belonging to the high-tech
industry

[65]

Cloud computing

TOE

Conceptual

Conceptual model

[1]

Cloud computing

IPV and DOI

[117]

TOE

Conrmatory factor
analysis, multiple
regression analysis
Partial least
squares (PLS)

E-mail survey of 289 rms in


manufacturing and retail

Intention to adopt
cloud computing

Using secondary data

[82]

Cloud computing

DOI

Technology (relative advantage, complexity,


compatibility), organization (top
management support, rm size, technology
readiness) and environment (competitive
pressure, trading partner pressure)
Technology (relative advantage, complexity,
compatibility), organization (top
management support, rm size, technology
readiness), and environment (competitive
pressure, trading partner pressure)
Business process complexity,
entrepreneurial culture, compatibility,
application functionality
Adopters style as moderator of: perceived
technology barriers, perceived environment
barriers, perceived benets
Relative advantage, compatibility,
complexity, trialability, observability

19 IT professionals, Taiwan

[60]

Cloud adoption

Barriers and benets

Survey of 94 SMEs in Spain

[106]

Institutional theory

Regulative, normative, cognitive

Semi-structured
qualitative
interview
Qualitative and
quantitative
methodology
Conceptual

[54]

Note: Diffusion of innovation (DOI); technology-organization-environment (TOE); information processing view (IPV).

holistic assessment of the determinants of cloud-computing


adoption than earlier studies. Second, by investigating the
determinants of cloud adoption in two sectors (manufacturing
and services), we contribute to the wider body of scientic
knowledge that has so far not studied the adoption of cloud
computing in these two sectors. Our study highlights the
importance of systematically evaluating the determinants of cloud
computing at the industry level.
Through a review of the literature, we provide background on
cloud computing and related research. We then describe the
theoretical foundations for the research model and propose the
hypotheses. The research methodology and the results are
presented, followed by a discussion of the major ndings. We
conclude by highlighting the implications of the ndings and
summarizing options for future study.
2. Background
2.1. Cloud computing
There is no universal or standard denition of cloud computing
[100,35,40,120,71], even though it is not a completely new
concept. Cloud computing evolved through the recent advancements in hardware, virtualization technology, distributed computing, and service delivery over the Internet. The cloud
metaphor is a reference to the ubiquitous availability and
accessibility of computing resources via Internet technologies
[100,109]. Cloud-based solutions give businesses and users easy
access to massive computing power at negligible costs [116]. By
moving IT functions such as storage, business applications, and
services to the cloud, organizations can potentially reduce the
overall cost of IT [71,41,98]. Cloud computing thus offers monetary
benets that businesses can no longer ignore.
Generally speaking, services offered by cloud computing can be
classied into three types [18]. In Infrastructure as a Service (IaaS),
the basic units of computing power and storage are cloud-based
and available on demand (e.g., Amazon Elastic Compute Cloud
(EC2), Rackspace, Amazon Simple Storage Service (S3), and

GoGrid). The benets of this model include pay-per-use and


resource elasticity to match the computing demands [103]. In
Platform as a Service (PaaS), the service provider offers an
integrated solution stack for creating and deploying applications
from the cloud (e.g., Salesforce, Google AppEngine, and Microsoft
Azure). An advantage of this model is the ability to provide all
aspects of software development (design, testing, version control,
maintenance, and hosting) over the Internet [98]. In Software as a
Service (SaaS), users access the applications centrally hosted in the
cloud using a thin client (such as a web browser or a mobile
application) instead of installing software on their own computers
(e.g., Joyent and SalesForce CRM). The benets of this model of
cloud service include centralized conguration and hosting,
software release updates without requiring reinstallation, and
accelerated feature delivery [31].
Cloud computing represents the convergence of IT efciency
and business agility [51]. IT efciency results from the use of
scalable hardware and software resources [71], improvement in
work efciency and coordination among rms [65], and highly
available services [6]. The business agility of cloud computing is
the ability to deploy computational tools rapidly, reduce upfront
capital expenditures [71,59], and respond more quickly to
changing market needs [6,71]. Cloud computing eliminates
traditional boundaries between businesses. The capacity to
seamlessly deliver IT functions as cloud-based solutions has
proven viable and cost-effective as evidenced by its growing
adoption.
2.2. Adoption models
Two theories are commonly used in innovation diffusion and
adoption studies in organizations. They are the diffusion of
innovation (DOI) theory [91] and the TOE Framework [104]. Other
popular theories such as the technology acceptance model (TAM)
[27,28], the theory of planned behavior (TPB) [2], and the unied
theory of acceptance and use of technology (UTAUT) [108] are not
considered in this research because they pertain to an individuals
choice.

T. Oliveira et al. / Information & Management 51 (2014) 497510

2.2.1. Diffusion of innovation (DOI)


DOI [91] is a prominent adoption model used in Information
Systems (IS) research [3,7,29,48,123,58]. It proposes ve attributes
that explain the adoption of innovation in an organization. They
are: (1) relative advantage, the extent to which an innovation is
better than the previous generation; (2) compatibility, the degree
to which an innovation can be assimilated into the existing
business processes, practices, and value systems; (3) complexity,
how difcult it is to use the innovation; (4) observability, the
extent to which the innovation is visible to others; and (5)
trialability, the ease of experimenting with the innovation. DOI is
predominantly based on the characteristics of the technology and
the users perceptions of the innovation. An organization is a more
complex entity than an individual. Rogers [91] suggests that
innovation is a communication process using the various channels
within the social system. Three factors inuence the adoption of
innovation in organizations. They are individual (leadership
attitude toward change), internal organizational structure (centralization, complexity, interconnectedness, the number of
employees, and organizational slack), and external characteristics
(system openness) of the organization.
2.2.2. Technology-organization-environment (TOE) framework
Tornatzky and Fleischer [104] proposed the TOE framework to
explain the process of innovation in the context of an enterprise. It
considers three features of an enterprise that inuence the
adoption of innovation: the contexts of technology, organization,
and environment. The technology context refers to the internal and
external technology relevant to the organization and the technologies that are available for possible adoption. The organization
context refers to the descriptive characteristics of the rm (i.e.,
organizational structure, rm size, managerial structure, the
degree of centralization), resources (human and slack resources),
and the process of communication (formal and informal) among
employees. The environment context comprises market elements,
competitors, and the regulatory environment [104,83,85,121].
2.3. Related literature on cloud computing adoption
Many studies have addressed the technical and operational
issues related to cloud computing, including topics such as the
selection of cloud computing services based on costs and risks [72],
audit protocol for secure storage and computation in the cloud
[114,76], analytical models for determining the cost of ownership
of cloud computing [73,110], and issues of security, privacy risks,
and information loss [126,111,32].
Our search of scholarly databases identied only a few
published journal articles that evaluate cloud computing adoption
from an organizational perspective (see Table 1). Low et al. [65]
used the DOI and TOE framework to investigate the adoption of
cloud computing in the Taiwanese high-tech industry. Their
research model was not expansive, as it did not consider key
factors such as cost savings and security concerns that are critical
to the rms adoption of cloud computing. Furthermore, they
evaluated the adoption of cloud computing as a dichotomous
dependent variable and not as a continuous process. Lin and Chen
[59] conducted a semi-structured interview among 19 IT professionals in Taiwan. Their qualitative assessment indicated that IT
companies are reluctant to adopt cloud computing until the
uncertainties associated with cloud computing (e.g., security and
standardization) are reduced and successful business models have
emerged. Trigueros-Preciado et al. [105] used a qualitative and
quantitative analysis methodology to identify the barriers to cloud
adoption. They surveyed 94 SMEs in Spain and concluded that
knowledge about cloud computing was low among the rms, and a
companys ignorance was the main barrier to cloud computing

499

adoption. Nkhoma and Dang [82] used secondary data from the
survey of a large services company to study the drivers and barriers
to cloud computing adoption. Wu et al. [117] investigated whether
the information processing requirements and capacity affect the
rms intention to adopt cloud computing; they used the DOI
theory and information processing view (IPV) to conduct their
study in the supply chain domain. Abdollahzadehgan et al. [1]
proposed using the TOE framework to evaluate the barriers to
cloud computing adoption in SMEs; their study did not include
hypothesis testing or empirical validation. Kshetri [53] used the
institutional theory to investigate the perception and security
issues based on the context provided by formal and informal
institutions; no empirical assessment was provided.
The review of published journal articles indicates that most
studies empirically evaluate the direct effects of innovation or
contextual factors or conduct analysis using qualitative methods or
secondary data on the adoption of cloud computing. No study has
taken a holistic approach to empirically validate the direct and
indirect effects of the innovation characteristics and the underlying technology, organization, and environment contexts. Yang and
Tate [119] voice similar concerns by classifying the published
journal articles on cloud computing into four research themes:
technological, business issues, domains and applications, and
conceptualization. Based on a descriptive literature review of 205
refereed journal articles, their study indicates that research on
cloud computing is skewed mostly toward technological issues.
They highlight the paucity of cumulative research to address the
social, organizational, and environmental perspectives of cloud
computing. In this study we address this crucial research gap by
developing an integrative research model that combines the
theoretical perspectives of the diffusion of innovation and the
technology, organization, and environment contexts. We use the
model to holistically evaluate the determinants of cloud computing adoption in an organization.
2.4. Combining DOI and TOE
Many researchers have called for approaches that combine
more than one theoretical perspective to understand the IT
adoption of innovative new technologies [85,117,33,67]. To better
understand the organizational decisions related to the adoption of
technological innovation, the context of the study should be
comprehensive and the variables tailored to the specicity of the
innovation [19]. DOI and TOE have been used extensively in IT
adoption studies, and have enjoyed consistent empirical support.
In many ways, the TOE perspectives overlap with the
innovation characteristics identied by Rogers. Therefore, the
value of incorporating the TOE contexts to strengthen the DOI
theory is well-recognized [85,117,19,47]. The technology context
is implicitly the same idea as that of Rogers [91]. DOIs internal and
external organizational characteristics include the same measures
as TOEs organization context [47]. There are also important
differences between the two theories. TOE does not specify the role
of individual characteristics (e.g., top management support). Here,
the DOI theory suggests the inclusion of top management support
in the organization context. Similarly, DOI does not consider the
impact of the environmental context. Because of DOIs shortcomings, the TOE framework helps to provide a more comprehensive perspective for understanding IT adoption by including the
technology, organization, and environment contexts [123]. The
theories thus meaningfully complement each other [85].
To identify the constructs of the integrative research model, we
used the DOI theory and the TOE framework as the basis to conduct
an elaborate search of scholarly databases, including EBSCOHosts
Academic Search Complete and Business Source Complete, all
databases within Proquest (e.g., ABI/INFORM Complete), databases

T. Oliveira et al. / Information & Management 51 (2014) 497510

500

Table 2
Model constructs from DOI theory and/or TOE framework in peer reviewed journals.
Model/theory

Technology/
dependent variable

Source Constructs
Security Comp.
Reg.
Firm Cost
Top
Rel.
Compatibility Complexity Tech.
concerns pressure support
readiness size savings mgmt.
advantage
support

TOE
DOI and TOE
and others
DOI and TOE
TOE and DOI
and others
DOI and TOE
DOI
DOI
TOE
TOE
TOE
TOE
TOE
TOE
TOE and others
TOE
DOI and TOE
TOE
TOE
DOI and TOE
TOE
DOI and others
DOI

Adoption of open systems


Internet (adoption and
utilization of the internet)
Benchmarking adoption
Green IT adoption

[19]
[3]
[7]
[13]

Collaborative commerce
adoption
RFID adoption
Internet-based purchasing
application assimilation
E-commerce adoption
Internet/E-business adoption
Electronic data interchange
(EDI) adoption
Knowledge management and
enterprise systems adoption
RFID adoption
E-business adoption
E-business adoption
E-business use
E-business use
E-business initiation,
adoption, routinization
Intention to adoption
cloud computing
Cloud computing adoption
Cloud computing adoption
Cloud computing adoption
Cloud computing adoption

[23]

[107]
[52]

[39]
[48]
[55]

X
X

[89]

[102]
[61]
[83]
[121]
[123]
[124]

X
X

X
X

X
X
X

X
X

X
X
X

X
X

[82]
[65]
[1]
[117]
[59]

X
X

X
X
X
X

X
X
X
X

X
X

X
X

X
X
X

X
X
X
X
X
X

X
X
X
X

X
X
X
X

X
X

X
X
X

X
X

X
X

Note: Diffusion of innovation (DOI); technology-organization-environment (TOE).

within PsycNet, and Google Scholar. We then grouped the wellcited studies to determine the most representative factors
evaluated in the published literature on adoption studies. Finally,
we examined each construct to determine its applicability to cloud
computing adoption. Table 2 summarizes the factors identied by
this systematic approach and the dependent variable they
measure.
Among the ve attributes of DOI, three innovation characteristics are applicable to cloud-computing adoption: relative
advantage, complexity, and compatibility. Trialability and observability are not widely used in IT innovation studies [23]. Thus,
following the general guidance of IS research, we disregard those
two attributes because they are not relevant to cloud-computing
technology. Rogers [91] states that the nature of the innovation
determines the type of relative advantage that is important to the
adopter and that the relative advantage of the innovation can be
expressed as economic protability, as conveying social prestige,
or in other ways. [91] In the context of our study, we posit that
cloud computing may lead to the economic advantage of cost
savings [65,49]. Similarly, security concerns may diminish the
relative advantage of cloud computing. We therefore include two
additional variables, namely, cost savings and security concerns as
antecedents to the relative advantage of cloud computing. They
determine whether cloud computing will be relatively advantageous if it provides cost savings and less advantageous if there are
security concerns.
From the TOE framework, the technology context determines
whether the technological readiness of the rm will constrain or
facilitate the adoption of cloud computing. Factors specic to the
organization context are top management support and rm size.

The extent to which the environmental context may inuence the


rms decision to adopt cloud computing are identied by two
variables, competitive pressure and regulatory support.

3. Research model and hypotheses


The integrative research model is shown in Fig. 1. By combining
the innovation characteristics of cloud computing with the
technology, organization, and environment contexts of the TOE
framework, we address the call by scholars for a more holistic
model to understand the diffusion of IT innovation [85,117,33,68].
3.1. Hypotheses of innovation characteristics
A security breach is an incident in which a company or a
government agency loses information, personal records, or other
sensitive data [11]. Cloud computing is the convergence of storage
and computing in a shared multi-user environment, which
heightens security concerns [95,96] because it leaves companies
unaware and uncertain of potential security risks [8]. In addition,
identity management still remains a challenge in the cloud
environment. The lack of mature security protocols and identity
management standards implies that organizations will be reluctant to adopt a cloud solution. Moving to the cloud adds new layers
of complexity for securing data and thus inuences a rms
decision to adopt the innovation. Hence,
H1a. Security and privacy concerns will negatively inuence the
relative advantage of cloud computing.

T. Oliveira et al. / Information & Management 51 (2014) 497510

501

Fig. 1. The research model.

Cloud computing creates an opportunity for innovation, lowers IT


expenditures, and reduces the total cost of computing [17]. Clout
computing enables innovation by allowing companies to focus on
the core business rather than be stied by changes in technology. By
adopting cloud computing, a rm can reduce the time devoted to
system maintenance and routine upgrades. Cloud computing also
reduces infrastructure costs, decreases energy consumption, and
lowers maintenance expenditures [71]. Vendor specialization
enables cloud service providers to offer IT functions at lower costs
and pass the cost savings from economies of scale to the end user [8].
As an enabler of the swift adoption of changing technologies, cloud
computing offers cost-effective ways to transform businesses by
reinventing how goods and services are sold and consumed. Hence,

Rogers [91] denes compatibility as the degree to which the


innovation ts with the potential adopters existing values,
previous practices, and current needs. Compatibility is an
important determinant of innovation adoption [7,29,63,69,97].
For example, if the purpose of adopting cloud computing is to take
advantage of the scalability benets for applications with low
security concerns, then ofoading the capability to the cloud
infrastructure makes economic sense. Therefore, business capability and compatibility are factors that will determine whether cloud
computing will be adopted by an organization. Thus,

H1b. Cost savings will positively inuence the relative advantage


of cloud computing.

3.2. Hypotheses of the TOE context

Relative advantage is the degree to which an innovation is


perceived as being better than the idea it supersedes [91].
Innovations that have a clear, unambiguous advantage in creating
strategic effectiveness (e.g., increasing sales) and operational
effectiveness (e.g., reducing operational costs) have a greater
impetus for adoption [43]. If the benets of the technology (in this
case, cloud computing) exceed existing practices and processes
[49], the merits will positively inuence its adoption. Therefore,
H1. Relative advantage will positively inuence cloud-computing
adoption.
Complexity is the degree to which an innovation is perceived to
be relatively difcult to understand and use [91]. The easier it is to
integrate the technology into business operations, the greater the
chance of its adoption. The cloud environment offers the ability to
pool resources instantaneously to match the workload. However,
adopting a cloud-based solution can be challenging to companies that
lack technological expertise and IT specialists. For example, the
integration of existing applications to a specialized cloud infrastructure (e.g., Oracles Elastic Cloud or HPs Cloud System) may require a
level of expertise that is not readily available within the rm.
Challenges also arise in the use of cloud-based solutions when welldened boundaries to secure the business processes and data privacy
in a shared, multi-tenant environment are not fully rened [26]. Thus,
H2. Complexity will negatively inuence cloud-computing adoption.

H3. Compatibility will positively inuence cloud-computing


adoption.

3.2.1. The technology context


The technology context refers to the technological characteristics available in the organization for the adoption of technology.
It includes both the structural aspects and the specialized human
resources. The structural aspects refer to the platform or the
technological infrastructure (e.g., installed network technologies
and enterprise systems) within the rm that the cloud-computing
services can complement or replace (e.g., implementing a
collaborative document sharing solution using cloud-based
storage). The specialized human resources are the people within
the organization who have the knowledge and skill to implement
the cloud-computing services (e.g., employees with computer
skills, IT specialists) [112]. Together they enhance the technological readiness of an organization. Therefore, rms with a higher
degree of technological readiness are better positioned for the
adoption of cloud computing. Hence,
H4. Technological readiness will positively inuence cloud-computing adoption.
3.2.2. The organization context
The organization context is dened in terms of the resources
available to support the adoption of an innovation [64]; it refers to
the characteristics of the rm that facilitate or constrain the
adoption and implementation of the innovation. Multiple factors
inuence the relationship between organizational structure and
the adoption of innovation, including the level of centralization,
the distribution of power and control, information links, the

502

T. Oliveira et al. / Information & Management 51 (2014) 497510

availability of slack resources, lateral communication, rm size,


and top management support [65,104,118]. Of these, top
management support and rm size are the most important factors
for assessing the adoption of cloud computing [65].
Top management support plays an important role in cloudcomputing adoption because it guides the allocation of resources,
the integration of services, and the re-engineering of processes
[65]. Top management that recognizes the benets of cloud
computing will likely allocate the necessary resources for its
adoption and inuence the organizations members to implement
the change. When top management fails to recognize the benets
of cloud computing to the business, the management will be
opposed to its adoption. Thus,

computing. For example, legislators in the United States and the


European Union member states have specic mandates to protect
organizational data. When a government requires businesses to
comply with cloud-specic standards and protocols, rms will be
more willing to adopt cloud computing. Thus,

H5. Top management support will positively inuence cloudcomputing adoption.

To evaluate the theoretical constructs, a survey was conducted


in Portugal covering the manufacturing and service industries. A
questionnaire was developed by an expert panel composed of
experienced researchers in the eld of Information Systems. The
questionnaire items were based on published literature (see
Appendix A). To be consistent with the sources, the constructs
(security concerns, cost savings, relative advantage, complexity,
compatibility, technological readiness, top management support,
competitive pressure, and regulatory support) were measured
using a ve-point Likert scale on an interval level ranging from
strongly disagree to strongly agree. The number of employees
and the turnover volume (micro, small, medium, and large) are
used as measures of the rm size [123,24,88]. Because the
questionnaire was administered in Portugal, the English version of
the instrument was translated into Portuguese and reviewed by a
group of ve established academic IS researchers and two language
experts. To test the instrument, a pilot study was conducted among
30 rms. These rms were not included in the main survey. The
results provided evidence that the scales are reliable, valid, and
have translation equivalence [14].

Firm size is the other organizational factor that can inuence


the adoption of cloud computing. Large rms have an advantage
over small ones because they have more resources and can take
greater risks associated with innovation adoption [102,124].
Studies have shown that small rms, although more versatile,
do not readily adopt newer technologies [64]. Thus, rm size is a
determinant in the adoption of cloud computing [65]. Hence,
H6. Firm size will positively inuence cloud-computing adoption.

3.2.3. The environment context


The environment context is the setting in which a rm conducts
its business and is inuenced by the nature of the industry, the
rms competitors, access to resources supplied by others, and
interactions with the government [64]. Of these, the determinants
that have an impact on cloud adoption are the rms competition
and the regulatory environment [124].
Competitive pressure has long been recognized in the innovation diffusion literature as an important driver for technology
diffusion. It refers to the pressure felt by the rm from industry
competitors [65,83,122]. Adopting new technology is often a
strategic necessity to compete in the market place. By adopting
cloud computing, rms can benet from greater operational
efciency, better market visibility, and more accurate access to
real-time data [75]. Hence,
H7. Competitive pressure will positively inuence cloud-computing adoption.
Regulatory support refers to the support given by a government
authority to encourage the assimilation of IT innovation by rms
[124]. The impact of existing laws and regulations can be critical in
the adoption of new technologies. Government regulations
can encourage or discourage businesses from adopting cloud

H8. Regulatory support will positively inuence cloud-computing


adoption.

4. Research methodology
4.1. Measurement

4.2. Data
An online version of the questionnaire was emailed to qualied
individuals (CIOs, directors, and senior IS managers) at 2000
manufacturing and service companies in Portugal. The company
and contact data were provided by Dun & Bradstreet, one of the
worlds leading sources for commercial information and insight on
businesses. Data were collected using an online questionnaire
administered in two stages from mid-2012 to early 2013. The
study utilized the key informants approach for data collection
[8,4] to identify the respondents in the organization who are most
involved in and knowledgeable about cloud computing. To target
respondents who assume the role of key informant, we provided a
clear description of cloud computing and gave examples. To
increase content validity, we indicated that the survey should be
lled out by the individual in the organization who is most familiar

Table 3
Sample characteristics (N = 369).
By industry
Manufacturing
Construction
Production industry
Services sector
Services (hotel, recreation, banking, real estate)
Health
Commerce
Information and communication
By rm size
Micro
Small
Medium
Large

By respondents position
33
107

8.94%
29.00%

173
16
32
8

46.88%
4.34%
8.67%
2.17%

32
100
170
67

8.67%
27.10%
46.07%
18.16%

CIO, CTO, VP of IS or E-Business


IS Manager, Director, Planner
Other managers in IS Department
CEO, President, Director
Business Operations Manager, COO
Administration/Finance Manager, CFO
Others (Marketing VP, Other Managers)

8
108
32
81
30
44
66

2.17%
29.27%
8.67%
21.95%
8.13%
11.92%
17.89%

T. Oliveira et al. / Information & Management 51 (2014) 497510


Table 4
Mean and standard deviation of full and subsamples.
Constructs

Security concerns
Cost savings
Relative Advantage
Complexity
Compatibility
Technology readiness
Top management support
Firm size
Competitive pressure
Regulatory support
Cloud computing adoption

503

Table 5
Reliability indicators for full sample and sub-samples.

Full sample
(n = 369)

Manufacturing (n = 140)

Service
(n = 229)

Mean

SD

Mean

SD

Mean

SD

3.76
3.14
3.33
2.26
2.90
4.27
2.89
2.54
2.30
2.58
2.40

1.11
0.79
0.87
0.80
0.80
1.19
0.96
0.86
0.86
0.85
1.61

3.65
2.93
3.13
2.41
2.77
3.88
2.80
2.55
2.22
2.55
2.14

1.17
0.82
0.85
0.83
0.80
1.24
0.95
0.77
0.78
0.86
1.49

3.83
3.27
3.44
2.17
2.98
4.54
2.94
2.54
2.36
2.60
2.56

1.06
0.75
0.86
0.77
0.80
1.10
0.97
0.91
0.90
0.85
1.66

Full sample

Constructs

Security concerns
Cost savings
Relative advantage
Complexity
Compatibility
Technology readiness
Top management support
Firm size
Competitive pressure
Regulatory support
Cloud computing adoption

Sub-sample
manufacturing

Sub-samserple
vices

AVE

CR

AVE

CR

AVE

CR

0.90
0.71
0.77
0.72
0.67
0.59
0.74
0.80
0.72
0.88
0.92

0.96
0.88
0.94
0.91
0.91
0.81
0.89
0.89
0.88
0.93
0.96

0.93
0.74
0.79
0.75
0.70
0.63
0.72
0.82
0.68
0.91
0.89

0.98
0.90
0.95
0.92
0.92
0.84
0.88
0.90
0.87
0.95
0.94

0.87
0.68
0.75
0.68
0.66
0.53
0.75
0.79
0.73
0.85
0.93

0.95
0.87
0.94
0.89
0.90
0.77
0.90
0.88
0.89
0.92
0.96

Note: Average variance extracted (AVE) and composite reliability (CR).

with the organizations direction with cloud computing. To


encourage participation and reduce self-reporting bias, we gave
all participants the opportunity to receive the ndings of the study
and a report on how their rms compare to other rms of similar
prole. In the rst stage, 249 valid responses were received. A
follow-up email was sent in the second stage to those who did not
respond in the rst stage. In this second stage, 120 valid responses
were obtained, for a combined total of 369 usable responses. The
overall response rate was 18.5%, which is comparable to other
studies of similar scale [121,8]. Of the valid responses, 62% (229
rms) were received from the services sector, and 38% (140 rms)
were received from the manufacturing sector. The prole of the
sample is shown in Table 3.
To test for nonresponse bias, the sample distribution of the
early and late respondent groups was compared using the
KolmogorovSmirnov (KS) test [93]. The sample distributions
of the two groups did not differ statistically, indicating an absence
of nonresponse bias [93]. The respondents were qualied
individuals (see Table 3), indicating a good quality of data. The
common method bias was examined using Harmans one-factor
test [87]. No signicant common method bias was found in the
data set. The mean and standard deviation of all the constructs
from the full and sub-samples (service and manufacturing) are
shown in Table 4.
5. Results
Structural equation modeling (SEM) was used to empirically
assess the research model. The KolmogorovSmirnov test conrmed that none of the measurement items was distributed
normally (p < 0.001). This allows for the safe use of partial least
squares (PLS) for the analysis, as it does not require a normal
distribution [21]. For PLS estimation, the minimum sample size

should satisfy one of the two following conditions: (1) ten times
the largest number of formative indicators used to measure one
construct; or (2) ten times the largest number of structural paths
directed at a particular latent construct in the structural model
[116,90]. Our sample consists of 369 rms, thus meeting the
necessary conditions for using PLS. Smart-PLS software [90] was
used to assess the reliability and validity of the measurement
model before testing the various structural models. A two-fold
analysis approach was taken to evaluate the research model. To
understand the key determinants of cloud adoption, we conducted
a quantitative assessment of the full sample. To investigate how
the determinants vary across different industries, we analyzed the
sub-samples of the data for the manufacturing and services
sectors.
5.1. Measurement model
The measurement model results (reliability, validity, correlations, and factor loading) are shown in Tables 5 and 6 and
Appendix B. The reliability of the scales was tested using composite
reliability (CR) (Table 5). For the full sample and the industryspecic samples, the results are higher than 0.7, suggesting that
scales are reliable [45]. To ensure a sufcient degree of convergent
validity, it is desired that the average variance extracted (AVE) value
be greater than 0.50 [34]. Measurement models for both industries
demonstrate convergent validity (Table 5). All items for both the full
sample and the industry-specic sub-samples have loadings greater
than 0.7 and are statistically signicant at the 0.01 level (see
Appendix B). Therefore, all items are retained. Finally, the
discriminant validity of the constructs was assessed using two
measures, FornellLarcker criteria and cross-loadings. The rst

Table 6
Correlations and AVEs.
Constructs

1. Security concerns
2. Cost savings
3. Relative advantage
4. Complexity
5. Compatibility
6. Technology readiness
7. Top management support
8. Firm size
9. Competitive pressure
10. Regulatory support
11. Cloud computing adoption

0.95
0.33
0.28
0.02
0.17
0.36
0.22
0.24
0.07
0.01
0.26

3
0.85
0.67
0.20
0.64
0.38
0.46
0.14
0.37
0.35
0.40

0.88
0.17
0.67
0.35
0.44
0.15
0.45
0.41
0.42

0.85
0.24
0.19
0.17
0.15
0.01
0.01
0.23

0.82
0.35
0.48
0.04
0.51
0.44
0.40

0.77
0.46
0.31
0.28
0.15
0.44

0.86
0.18
0.43
0.25
0.50

0.89
0.12
0.03
0.29

10

11

0.85
0.34
0.34

0.94
0.13

0.96

Note: The diagonal in bold is the square root of the average variance extracted (AVE). These results are for the full sample only. The results for sub-samples are identical and
available from the author on request.

T. Oliveira et al. / Information & Management 51 (2014) 497510

504
Table 7
Relevant constructs for the structure model.
Constructs

Full sample (n = 369)


Path coeff.

Factors of relative advantage of cloud computing (direct effects)


Security concerns
0.069
0.644
Cost savings
R2 = 0.449
Cloud computing adoption factors (direct effects)
Relative advantage
0.154
Complexity
0.085
Compatibility
0.076
Technology readiness
0.169
Top management support
0.265
Firm size
0.135
Competitive pressure
0.084
Regulatory support
0.078
Cloud computing adoption factors (indirect effects)
Security concerns
0.011
0.099
Cost savings

Manufacturing
(n = 140)

sub-sample

Services sub-sample (n = 229)

T-Value

Path coeff.

T-Value

Path coeff.

T-Value

1.540
15.773***

0.059
0.645

0.770
10.739***

0.079
0.627

1.480
11.097***

R2 = 0.446
2.358**
1.970*
1.173
3.569***
4.918***
3.071***
1.606
1.618

0.351
0.031
0.071
0.197
0.157
0.152
0.098
0.084

1.232
2.420**

0.021
0.227

R = 0.381

R = 0.361

R2 = 0.429
3.060***
0.420
0.509
2.178**
1.587
1.694*
1.021
0.884

0.085
0.114
0.123
0.157
0.325
0.119
0.081
0.075

0.712
3.012***

0.007
0.053

1.087
2.004**
1.655*
2.795***
5.121***
2.394**
1.193
1.216

0.678
1.056
2

R = 0.408

Signicance at p < 0.10.


**
Signicance at p < 0.05.
***
Signicance at p < 0.01.

criterion postulates that the square root of AVE should be greater


than the correlations between the construct [34]. Because the square
root of AVE is greater than the correlation between each of the pair
factors (Table 6), the rst criterion is satised. The second criterion
requires that the loading of each indicator should be greater than all
cross-loadings [20]. The loading and cross-loading tables (available
from the authors on request) show that the patterns of loadings are
greater than cross-loadings. Thus, both measures are satised for the
full sample and the industry-specic samples.
5.2. Structural model
Examining the correlation table for evidence of multicollinearity among exogenous constructs (Table 6) shows that the highest
correlation between exogenous constructs is 0.67. Variance
ination factors (VIF) are lower than 3, which is less than the
conservative threshold of 5. This suggests that there are no
concerns of multicollinearity.
The analysis of hypotheses was based on the examination of the
standardized paths. The path signicance levels were estimated
using the bootstrapping method (500 re-samples). The results of
the analysis are summarized in Table 7. For the full sample, an
examination of R2 as a descriptive measure shows that security
concerns and cost savings explain 44.9% of the relative advantage
of cloud computing. For the full sample, the hypothesis of cost
savings as a predictor of the relative advantage of cloud computing
(H1a) is conrmed (p < 0.01), and the hypothesis of security
concerns (H1b) (p > 0.10) is not conrmed. The hypotheses for
relative advantage (H1) (p < 0.05), complexity (H2) (p < 0.10),
technology readiness (H4) (p < 0.01), top management support
(H5) (p < 0.01), and rm size (H6) (p < 0.01) are also conrmed for
the full sample. Compatibility (H3), competitive pressure (H7), and
regulatory support (H8) are not statistically signicant for the full
sample. In our model, the indirect effect of cost savings in cloudcomputing adoption is the path coefcient of cost savings to
explain relative advantage multiplied by the path coefcient of
relative advantage to explain cloud-computing adoption. For the
full sample, this equates to 0.099 (0.644*0.154), and the results of
our analysis indicate that the indirect effect of cost savings is
statistically signicant (p < 0.05). Based on a similar analysis, our
ndings indicate that the indirect effect of security concerns is not

statistically signicant (p > 0.10) for the full sample. The research
model explains 38.1% of cloud-computing adoption. The ndings
indicate that the research model is signicant in explaining the
adoption of cloud computing by rms.
The examination of R2 as a descriptive measure for the industryspecic sub-samples shows that security concerns and cost savings
explain 44.6% and 42.9% of the relative advantage of cloud
computing for the manufacturing and services sectors, respectively. For both the sub-samples, the hypothesis of cost savings as a
predictor of the relative advantage of cloud computing (H1a) is
conrmed (p < 0.01). The hypothesis of security concerns (H1b)
(p > 0.10) is not conrmed for either of the sub-samples.
For the manufacturing sector sub-sample, the following ndings
are noteworthy. Hypotheses for relative advantage (H1) (p < 0.01),
technology readiness (H4) (p < 0.05), and rm size (H6) (p < 0.01)
are conrmed. Complexity (H2), compatibility (H3), top management support (H5), competitive pressure (H7), and regulatory
support (H8) are not statistically signicant. The indirect effect of
cost savings for the manufacturing sub-sample is 0.227
(0.645*0.351), and is statistically signicant (p < 0.01), whereas
the indirect effect of security concerns is found to be not statistically
signicant. This indicates that cost savings not only explains relative
advantage but also that it indirectly inuences cloud-computing
adoption. The research model explains 36.1% of cloud-computing
adoption among rms in the manufacturing sector.
For the services sector sub-sample, complexity (H2) (p < 0.05),
compatibility (H3) (p < 0.10), technology readiness (H4)
(p < 0.01), top management support (H5) (p < 0.01), and rm size
(H6) (p < 0.05) are conrmed. The relative advantage (H6),
competitive pressure (H7) and regulatory support are not
statistically signicant. For the services sector, the indirect effect
of cost savings is 0.053 (0.627*0.085) and 0.007 (0.079*0.085) for
security concerns. The results indicate that cost savings and
security concerns are not statistically signicant (p > 0.10) for the
services sector. The research model explains 40.8% of cloudcomputing adoption among rms in the services sector.
6. Discussion
Understanding the determinants of cloud computing is paramount as organizations consider the adoption of cloud computing

T. Oliveira et al. / Information & Management 51 (2014) 497510

for collaboration, content management, mobility, business process


transformation, and rapid application development. The goal of
this study is to assess the determinants of cloud-computing
adoption by using an integrative lens that combines the innovation
characteristics of cloud computing and the technology, organization, and environment perspectives of the organization. The results
show that ve factors inuence the adoption of cloud computing:
relative advantage, complexity, technological readiness, top
management support, and rm size (see Table 7). The results also
indicate that the facilitators and inhibitors of cloud-computing
adoption are different in the manufacturing and services sectors
(see Table 7).
Innovation characteristics: Of the three innovation characteristics, relative advantage (H1) is found to have a positive inuence
on cloud-computing adoption. This nding is consistent with
similar studies reported in the literature [49,101,113]. The study
conrms that organizations recognize the relative advantage of
cloud computing. Advantages identied by the study include
improving the quality of business operations, performing tasks
more quickly, increasing productivity, and providing new business
opportunities. In investigating the role of the innovation characteristics of cloud computing across the manufacturing and
services sectors, it is found that relative advantage is more
important for rms in manufacturing than for rms in the service
industry. On a comparative note, Borgman et al. [12] found relative
advantage to be signicant among global enterprises, whereas Low
et al. [65] and Lin and Chen [59] found it to be an inhibitor of cloudcomputing adoption by rms in the high-tech industry.
To determine whether cloud computing will be relatively
advantageous if it provides cost savings and less advantageous if
there are security concerns, we estimated the full and the
manufacturing and services sub-samples with both constructs
as predictors of relative advantage. Of the two variables, cost
savings (H1b) is conrmed as the important driver to explain the
relative advantage of cloud computing. This result is consistent
with studies that have found cost savings to be a strong driver of
the adoption of cloud-based solutions in industries such as
technology, manufacturing, nance, logistics, services, and education [37,8,62].
In contrast, security concerns (H1a) are not found to inhibit the
adoption of cloud computing in either the full sample or the industryspecic sub-samples. A possible explanation is the recent advances in
privacy-enhancing techniques, monitoring mechanisms, and encryption schemes to ensure condentiality, integrity, and the security of
data in the cloud environment [111,80,99]. In addition, newly
established standards and federal regulations such as the FedRamp
[78], and the Federal Information Security Management Act help
establish organizational trust and control over data when adopting
cloud-based solutions. This may explain the lack of concern regarding
security and privacy when considering a cloud strategy.
Complexity (H2) is an inhibitor to the adoption of cloudcomputing in the services sector. The notion of complexity
associated with cloud computing is no different than other
disruptive technologies and appears to be a signicant determinant for cloud adoption. It may be that complexity is associated
with the perception of change, which is known to cause discomfort
and frustration [50]. Our ndings indicate that complexity is not an
inhibitor among rms in the manufacturing sector. Complexity
was found to be insignicant by Low et al. [65] and determined to
be inconclusive by Borgman et al. [12]. Thus, in relation to earlier
studies, the results for complexity are mixed, and additional
research is needed before reaching more denite conclusions.
Similarly, compatibility (H3) is found to be a facilitator for
cloud-computing adoption in the services sector but not signicant
in the manufacturing sector. Its importance in the service industry
may be explained by the work style preferences and internet based

505

business operations that prevail among rms in this sector [56].


For manufacturing, the non-signicance of compatibility may be
attributable to the nature of applications (e.g., the prominence of
internal software solutions such as resource planning software and
computer-controlled machining), and limited requirements for
Internet-based solutions in the line of business [42,89]. Compatibility is a facilitator of innovation in some studies [113,15,39] but
was found to be non-signicant in other studies [65,12]. Thus,
compared to earlier research, the results for compatibility are also
mixed, and more investigation is needed to reach a denitive
conclusion.
Technology context: Technological readiness (H4) is a facilitator
of cloud-computing adoption. The study nds that rms with an
established technology infrastructure and workforce with the
necessary skills and technical competence are better suited for
cloud integration. However, earlier studies have suggested that
technology readiness may not necessarily inuence cloud-computing adoption. For example, Low et al. [65] found technological
readiness to be irrelevant for companies in the technology sector.
Wu et al. [117] found that rms with greater informationprocessing capacity are less likely to adopt cloud computing. The
results of our study indicate otherwise. The implementation of
cloud computing can possibly disrupt services and create
management challenges in IT- and non-IT-centric businesses.
The nding indicates that organizations must ensure that the
technology infrastructure and the availability of IT specialists are
adequate for the integration of cloud-based solutions in the
business operations with minimal interruption.
Organization context: Our study provides empirical evidence
that top management support (H5) is signicant in explaining the
adoption of cloud computing. Evidence from the study indicates
that top management can inuence cloud-computing adoption by
demonstrating support in the form of committing nancial and
organizational resources and engaging in the process. This nding
is consistent with results from earlier studies on the adoption and
use of innovative technologies [49,89,66]. However, our ndings
also indicate that top management support is not signicant to
rms in the manufacturing sector. Plausible explanations include
the unrecognized value of cloud computing in the manufacturing
industry, a lack of industry-specic standards for cloud computing,
and the manufacturing sector viewing cloud services as incurring
high costs and risks [113,66].
Firm size (H6) is a predictor of cloud-computing adoption. This
nding is consistent with literature suggesting that larger
companies have resources to cover the cost and investment risk
of an emerging technology [113,22,25]. Conversely, smaller rms
generally lack the resources needed for the construction of
knowledge, and the implementation and testing of cloud
computing [102]. In related studies, Low et al. [65] found rm
size to be a facilitator of cloud computing, whereas Borgman et al.
[12] determined it to be inconclusive.
Environment context: Cloud computing is a relatively recent area
of research in the IS discipline, and only a few empirical studies
have addressed the importance of the environment context. Low
et al. [65] found that competitive pressure pushed rms in the
high-tech industry to adopt cloud computing more quickly [65].
Borgman et al. [12], in a study of 24 global enterprises, found
contradictory results, suggesting that the legislative environment
is not statistically signicant in explaining cloud-computing
adoption. Based on a survey of 214 SMEs, Inedo [48] determined
that competitive pressure positively impacts the adoption of
technologies that support online commerce. He also determined
that pressure from customers, business partners, and government
support did not play signicant roles.
The results of our study indicate that both variables in the
environment context (i.e., competitive pressure and regulatory

506

T. Oliveira et al. / Information & Management 51 (2014) 497510

support) are not determinants of cloud-computing adoption. It is


likely that rms are aware of the benets of cloud computing, but
specic factors of the technology and organization contexts
prevent the benets of cloud computing from translating into a
competitive advantage. Regulatory support was also found not to
be signicant to the adoption of cloud computing. This does not
necessarily mean that rms disregard prevailing standards and
regulations, but rather that existing legislation protecting the use
of cloud computing has not been earnestly embraced by the
organizational decision makers. Regulatory processes are essential
to instill the sense of trust necessary for rms to convert
innovation into business opportunities. Without economic incentives that make good business sense, advances in technology,
evolving cloud-computing standards, and federal regulations may
not be sufcient to overcome the barriers to the adoption of cloud
computing. The implications of the study to practice and theory are
summarized below.
6.1. Managerial and practical implications
Our study results suggest that relative advantage, complexity,
technological readiness, top management support, and rm size
inuence a rms adoption of cloud computing. For decision
makers in the organization considering cloud-based initiatives, the
ndings provide a sound basis for gauging the direct and indirect
effects of the innovation characteristics of cloud computing as well
as the literature related to its adoption in varying industries.
We hypothesized that cloud computing offers a relative
advantage when there is compatibility with current business
operations and that complexity is an inhibitor to its adoption.
However, it appears that the relative advantage of cloud
computing is not conclusive across industries. Other studies have
identied concerns of hidden costs, human resource requirements
for upgrades and maintenance, the potential for the loss of overall
control of resources, and the poor quality of operation as factors
that impact the relative advantage of cloud computing [65,59,57].
Our ndings indicate that cloud computing offers the relative
advantages of achieving economic benets as well as environmental responsibility benets. Economic benets include cost
savings from decreased capital expenditures on IT, lower negotiation costs, and reduced maintenance and energy costs [37,72]. The
benets of environmental responsibility include reducing environmental impacts and generating brand recognition from the
adoption of cloud computing, a type of Green IT solution [81,86].
With regard to security, privacy and user behavior in a cloud
environment, recent technological advances in the cloud-computing domain [92,77] are promising developments that address these
organizational concerns and help move a rms computing
infrastructure to the cloud.
The concerns about complexity are attributable to a lack of
knowledge about the new technology and resistance to changes in
established business processes [46]. However, cloud computing
has the potential to reduce the complexity of IT services by
introducing commonality across business functions and automation in the management process [9]. As cloud computing matures,
the compatibility of cloud computing with other IT solutions will
be no more difcult than the routine IT management challenges
[12]. To summarize, the innovation characteristics of cloud
computing that inuence its adoption are the relative advantage
from cost savings and concerns of complexity. For the manufacturing sector, complexity is not as much of a concern as it is for the
services sector. Compatibility is a greater consideration in the
adoption of cloud computing for rms in the services sector.
With regard to the technology context, the study nds the
technological readiness of the rm to be crucial to cloudcomputing adoption. For the successful adoption of cloud

solutions, managers need to factor in realistic expectations of


the integration challenges and convene a team of experts whose
skill sets cross the conventional IT environment and the cloud
platform. With regard to the organization context, top management support and rm size are found to be facilitators of cloudcomputing adoption. The adoption of cloud computing is not
limited to large organizations. However, the results of our study
are similar to earlier studies [65,44] that suggest that larger rms
tend to invest more readily in cloud-based solutions. With regard
to the environmental context, the results suggest that competitive
pressure and regulatory support are not signicant drivers of
cloud-computing adoption. Thus, compared with high-tech
industries [65], gauging the competitors cloud strategy and
changes in government regulations are not as signicant to the
adoption of cloud computing in the manufacturing and services
sectors.
The ndings of this study provide valuable insights for managers
to make informed cloud-adoption decisions. In evaluating this
relatively recent technology, our study highlights the importance of
assessing the innovation characteristics against the technology,
organization, and environment context of the organization before
adopting cloud-computing solutions. Even in the presence of
competitive pressure and supportive regulation, without weighing
the technological readiness and top management support within the
rm, the relative advantage of cloud computing may fail to translate
into economic value for the organization.
6.2. Implications for theory
The study makes important contributions to the body of
research on the adoption of new technologies and cloud
computing. In recent years, researchers have called for more
holistic approaches that combine more than one theoretical
perspective to understand the IT adoption phenomenon involving
innovative new technologies [85,117,33,67]. In this research, we
integrate two theoretical perspectives (the DOI theory and the TOE
framework) to develop the research model. The model combines
the innovation characteristics of cloud computing and the
technology, organization, and environment contexts of the
organization that underlie the adoption of cloud computing. It is
different from most other studies on cloud computing that fall
short of holistically evaluating the combined effects of the
innovation characteristics and the contextual factors (see
Table 1). No study has empirically validated the indirect effects
of the antecedents on the determinants of cloud-computing
adoption. The instrument used in this study has been veried
for reliability, validity, and discriminant tests. It is therefore fair to
conclude that the research model and the instrument provide a
sound basis for understanding the determinants of cloudcomputing adoption. The model and the instrument can thus be
adopted for use in other innovation studies.
Based on a large sample (n = 369), we evaluate the adoption of
cloud computing as a continuous process, unlike Low et al. [65]
who use a dichotomous dependent variable. In addition, we use
SEM, which is a statistically powerful technique that requires a
sample of considerable size to attain good rates of adhesion. Our
study thus addresses the research gap between the advancements
in cloud computing and its adoption by organizations that have
been identied by other researchers as requiring further investigation [100,119,106,10]. Our study also found that the
manufacturing and services sectors have different drivers of
cloud-computing adoption. This demonstrates that industry
variance cannot be modeled as control variable in cloudcomputing adoption. Our study thus highlights the need for a
systematic evaluation of the determinants of cloud computing at
the industry level in future research.

T. Oliveira et al. / Information & Management 51 (2014) 497510

Developing an integrative research model and evaluating it


using a large data set represents an important step toward
addressing the paucity of research in the comprehensive assessment of the social, organizational, and environmental perspectives
of cloud adoption [119]. Our study not only lls this important
research gap but also serves to improve the awareness of rms to
the direct and indirect effects of the constructs that inuence the
adoption of cloud computing in the manufacturing and service
industries.
6.3. Limitations and future directions
The study is not without limitations. One limitation is that the
sample is limited to the country of Portugal, which implies that the
study reects only the situation in that nation. Another limitation
is the possibility of including variables that are not considered in
our research model. For example, our analysis revealed different
determinants of cloud-computing adoption in the two distinct
industries that we studied. Thus, our study suggests the need to
formulate a model for each industry rather than a comprehensive
model that combines the characteristics of innovation as a single
control. Strictly speaking, this will involve additional research to
develop model estimates similar to those developed for the
manufacturing and services sectors. Only then can a fair judgment
regarding the determinants of cloud-computing adoption be made.

507

Nonetheless, the model proposed in this research should provide a


sound basis for future endeavors in this direction. Another
limitation is that our denition of the adoption of cloud computing
may be too narrow. We therefore suggest extending the research
model to include additional variables to account for factors such as
an organizations information processing requirements and
information processing capacity. Information processing view
(IPV) is a good candidate [74] to further enrich the model. The
study thus opens possibilities for additional research and a
renement of the constructs to further elucidate organizational
cloud-computing adoption. Finally, an interesting direction would
be to apply the proposed model to other countries and industries.
7. Conclusion
Cloud computing is an important evolution of IS technology. It
boasts attractive properties such as agility, scalability, pay-per-use,
and cost efciency. This study sought to identify the determinants
of cloud-computing adoption based on innovation characteristics
and the technology, organization, and environment contexts of
organizations. A research model was developed that integrates the
DOI theory and the TOE framework. The model was empirically
evaluated based on a sample of 369 rms from Portugal. It was
used to compare the adoption of cloud computing in two distinct
sectors, namely manufacturing and services. The results indicated

Table 8
Measurement items.
Constructs

Items

Adapted source

Security concerns

SC1 Degree of companys concern with data security on the cloud computing
SC2 Degree of concern for customers with data security in cloud computing
SC3 Degree of concern about privacy in cloud computing
CS1 The benets of cloud computing are greater than the costs of this adoption
CS2 With cloud computing there is a reduction of energy costs and environmental costs
CS3 Maintenance costs of cloud computing are very low
RA1 Cloud computing allows you to manage business operations in an efcient way.
RA2 The use of cloud computing services improves the quality of operations.
RA3 Using cloud computing allows you to perform specic tasks more quickly.
RA4 The use of cloud computing offers new opportunities.
RA5 Using cloud computing allows you to increase business productivity.
CX1 The use of cloud computing requires a lot of mental effort.
CX2 The use of cloud computing is frustrating.
CX3 The use of cloud computing is too complex for business operations.
CX4 The skills needed to adopt cloud computing are too complex for employees of the rm.
C1 The use of cloud computing ts the work style of the company.
C2 The use of cloud computing is fully compatible with current business operations
C3 Using cloud computing is compatible with your companys corporate culture and value system.
C4 The use of cloud computing will be compatible with existing hardware and software in the company.
TR1 The percentage of employees who have Internet access.
TR2 The company knows how IT can be used to support operations.
TR3 Within the company there are the necessary skills to implement cloud computing.
TMS1 The companys management supports the implementation of cloud computing.
TMS2 The companys top management provides strong leadership and engages in the process when it
comes to information systems.
TMS3 The companys management is willing to take risks (nancial and organizational) involved in the
adoption of cloud computing.
FS1 The number of company employees.
FS2 Annual business volume.
CP1 Firm thinks that cloud computing has an inuence on competition in their industry.
CP2 Our rm is under pressure from competitors to adopt cloud computing.
CP3 Some of our competitors have already started using cloud computing.
RS1 There is legal protection in the use of cloud computing
RS2 The laws and regulations that exist nowadays are sufcient to protect the use of cloud computing.
CCA1 At what stage of cloud computing adoption is your organization currently engaged? Not
considering; Currently evaluating (e.g., in a pilot study); Have evaluated, but do not plan to adopt this
technology; Have evaluated and plan to adopt this technology; Have already adopted services,
infrastructure or platforms of cloud computing.
CCA2 If youre anticipating that your company will adopt cloud computing in the future. How do you
think it will happen? Not considering; More than 5 years; Between 2 and 5 years; Between 1 and 2 years;
Less that 1year; Have already adopted services, infrastructure or platforms of Cloud Computing.

[123,66,115]

Cost savings

Relative advantage

Complexity

Compatibility

Technology readiness

Top management
support

Firm size
Competitive pressure

Regulatory support
Cloud computing
adoption

Note: All items are based on 5-point scale except those noted otherwise.

[102,94]

[48,39,79]

[49,102,79]

[123,49,102]

[48,83]

[24,4,125]

[123,24,88]
[48,83,84]

[121,4]
[102]

T. Oliveira et al. / Information & Management 51 (2014) 497510

508

that relative advantage, complexity, technological readiness, top


management support, and rm size have a direct effect on a rms
adoption of cloud computing. The analysis of results validated the
direct effect of cost savings on the relative advantage of cloud
computing as well as its indirect effect on cloud-computing
adoption. Our study also found that the manufacturing and
services sectors have different drivers of cloud-computing
adoption, which underscores the importance of considering the
distinct characteristics of cloud computing across different
industries. The ndings supplement the literature that evaluates
cloud-computing adoption in areas such as high-tech, nance,
supply chain, logistics, and education. The research shows that in
assessing the adoption of new technologies such as cloud
computing, a scientic approach that takes into consideration
the technology, organization, and environment contexts of the
organization along with the innovation characteristics is more
holistic and meaningful in providing valuable insights to practitioners and researchers.

Appendix A. Measurement items


Table 8.

Appendix B. PLS loadings


Table 9.
References
Table 9
PLS loadings.
Item

Full sample
Loading

SC1
SC2
SC3
CS1
CS2
CS3
RA1
RA2
RA3
RA4
RA5
CX1
CX2
CX3
CX4
C1
C2
C3
C4
C5
TR1
TR2
TR3
TMS1
TMS2
TMS3
FS1
FS2
CP1
CP2
CP3
RS1
RS2
CCA1
CCA2

0.95
0.93
0.96
0.87
0.86
0.80
0.89
0.90
0.88
0.82
0.89
0.73
0.83
0.92
0.89
0.79
0.90
0.88
0.84
0.68
0.71
0.74
0.86
0.92
0.74
0.90
0.93
0.85
0.83
0.85
0.86
0.97
0.90
0.96
0.96

Manufacturing

Services

T-statistic

Loading

T-Statistic

Loading

T-Statistic

68.54
58.14
144.21
49.70
38.01
23.75
65.65
61.18
52.24
34.79
55.66
10.32
20.46
58.55
45.99
24.90
73.59
53.02
29.83
15.14
16.50
17.98
39.28
89.35
17.77
71.93
53.70
25.28
29.37
30.75
39.59
13.75
8.98
173.34
166.69

0.96
0.96
0.98
0.89
0.86
0.84
0.90
0.90
0.90
0.83
0.91
0.77
0.86
0.94
0.89
0.83
0.92
0.89
0.87
0.65
0.71
0.81
0.86
0.93
0.70
0.89
0.91
0.91
0.81
0.80
0.88
0.95
0.96
0.94
0.94

32.74
24.06
21.93
42.28
26.10
14.50
45.54
36.34
41.19
24.76
54.23
4.91
8.99
10.82
9.23
16.35
44.95
32.71
33.09
6.91
10.06
16.65
24.01
49.00
8.14
28.01
28.39
28.21
7.87
5.73
12.08
10.56
13.75
66.37
79.21

0.94
0.91
0.95
0.86
0.85
0.77
0.88
0.90
0.86
0.81
0.88
0.67
0.79
0.91
0.89
0.77
0.88
0.88
0.81
0.69
0.67
0.65
0.86
0.92
0.76
0.91
0.95
0.82
0.83
0.87
0.86
0.98
0.86
0.97
0.96

27.39
17.29
35.61
30.31
26.29
20.10
46.48
46.71
40.25
25.56
36.99
4.63
8.63
19.54
21.49
17.90
51.35
39.94
19.59
12.81
10.19
7.96
25.11
68.85
15.93
63.96
40.50
12.67
24.52
32.68
32.90
6.80
4.41
191.26
158.60

Note: All items are based on 5-point scale except those noted otherwise.

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Tiago Oliveira is an Assistant Professor at the NOVA


School of Statistics and Information Management. He
was academic visitor at the Information Systems
Department, Virginia Commonwealth University, USA.
He holds a Ph.D. from the Universidade Nova de Lisboa in
Information Management. His research interests include
technology adoption, digital divide and privacy. He has
published papers in several academic journals and
conferences, including the Information & Management,
Decision Support Systems, Journal of Global Information
Management, International Journal of Information Management, Industrial Management & Data Systems, International Journal of Accounting Information Systems, Applied
Economics Letters, Communications in Statistics - Simulation and Computation, and
American Journal of Mathematical and Management Sciences among others. Additional
detail can be found inhttp://www.isegi.unl.pt/toliveira/.
Manoj Abraham Thomas is an assistant professor in the
Department of Information Systems at Virginia Commonwealth University. His research interests include
emerging technologies, semantic web, knowledge engineering, and business analytics. He conducts research in
diverse settings involving uncertain environments, nontraditional users, and unconventional application of
technological solutions, and has been involved in
Information and Communication Technology (ICT) studies in the United States, Brazil, Botswana, India, Portugal
and Haiti. His research has been published and presented
internationally. He rides and works on motorcycles when
he wants to get away from the digital realm.
Mariana Espadanal has a masters degree in Information Management, with specialization in Business
Intelligence and Knowledge Management from the
NOVA School of Statistics and Information Management, Universidade Nova de Lisboa. Her current
research interests are in the areas of technology
adoption and cloud computing. In the professional
sector, she has over 5 years of work experience in the
management information area in banking, telecom and
utilities. Currently she works for one of the major
European operators in the energy sector.

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