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The demand for more productivity, cost efficiency and the competition has forced the knitwear garments cluster to adopt technologies such as ERP. The knitwear garment industry acts as a cluster and possesses unique characteristics. The industrial clusters experience an institutional isomorphic pressure that forces them to be homogeneous and adopt similar technologies. The study is proposed to answer the question that with the external pressure on them, how absorptive capacity does play a role in ERP adoption. A conceptual model was developed for the study and a survey was conducted among the knitwear garment firms. The data was analysed using structural equation modelling technique. To test the mediation effect, direct, indirect and total effects of the variables were calculated using the AMOS software. The results show that there is a direct influence of isomorphic pressure on ERP adoption and the absorptive capacity mediates in such a way that it complements the institutional forces in ERP adoption. The implication of the study is discussed and finally the paper concludes with the limitations of the study and the future direction for further research.

Isomorphic pressures of Cluster Institutions on ERP adoption: A study in SME cluster of Indian knitwear industry