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Impact of Accounting Information System on Organizational Performance: A

Study of SMEs in the UAE

Article · September 2017

DOI: 10.21102/graf.2017.09.82.02

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 Impact of Accounting Information System on Organizational
Performance: A Study of SMEs in the UAE

Mohd I M Alnajjar
Prince Mohammad bin Fahd University, KSA

[email protected]

Abstract
The purpose of this study is to investigate the impact of accounting
managers’ knowledge and top management support on accounting
information systems and, moreover, to analyze the impact of accounting
information systems on performance management and organizational
performance. This study analyses the data collected from 74 SMEs
related to the trading, services and manufacturing sectors. SPSS and
AMOS are used for doing regression analysis; specifically structural
equation modeling is applied for data analysis. Based on the results this
study concludes that accounting managers’ knowledge and top
management support significantly impact on the accounting information
systems in an organization and, consequently, accounting information
systems also significantly impact the performance management and
organizational performance of that organization. By using accounting
information systems, decision makers obtain useful information and use
it in decision-making and strategy building to achieve organizational
goals and objectives, which should increase the company’s performance.

1. Introduction
The emerging global economic development that is characterized by rapid changes in
production processes, development in information technology (hereafter IT), fierce
market competition, increased sophistication of consumers and unethical manipulative
activities of businesses in the drive to ensure the complex and unpredictable business
dynamics has brought to the fore the critical role of Accounting Information Systems

Mohd I M Alnajjar Assistant Professor - Prince Mohammad bin Fahd University – KSA

E-mail: [email protected] Tel: +966 569222800

pg. 1
(hereafter AIS) in the economic and business discourse, especially as it relates to
management effectiveness (Curtis 1995).
AIS is a tool that uses the IT component to help in controlling the economic-financial
activity of an organization. However, increased advancements in IT have made it possible
for organizations to use this option for a strategic standpoint (Louadi 1998). Therefore,
several authors argue in favor of the importance of AIS for an organization (Wilkinson et
al. 2000; Wilkinson 1993; Rahman et al. 1988; Curtis 1995; Borthick and Clark 1990) and
hence the need to maintain it in every organization, whether profit-oriented or non-profit
oriented (Wilkinson et al. 2000). AIS are not just a component for recording financial data,
but a whole component which collects raw data and then transforms this common data
into useful financial information for the policymakers (Salehi, Vahab & Abdolkarim 2010).
For a better understanding of the AIS, three words of AIS are elaborated separately. The
first is “accounting,” which is a language of business, which records all the financial or
monetary transactions (Wilkinson 1993). Second is “information,” which is the processed
form of all financial transaction data used by decision makers. Lastly, according to
Thomas and Kleiner (1995) and Bhatt (2001), is “system,” which is an integrated entity
that focuses on the set of objectives.
There is an argument in accounting literature that AIS leads to the strategic success of
an organization (Langfield-Smith 1997). A study conducted by Bouwens and Abernethy
(2000) have analyzed the role of AIS in strategic management decisions, and they have
also examined the attributes of AIS about different strategic priorities. It has also been
observing the impact of AIS on the firm’s performance by considering the various designs
of AIS on the different strategies.
According to Chenhall (2003), different designs of AIS support different organizational
strategies, which increase the organizational performance (hereafter OP). Increasing
investment in the AIS makes the corporate culture more flexible and stronger, which
enables the organization to face changing business environmental conditions. Innovation
brings the ease to organizational processes and makes the performance better by
reducing the obstacles in these processes, which also leads to possible access to capital
markets. AIS is a system which uses the financial data of an organization, but it also
combines the accounting techniques and controls along with different methodologies by
using IT to track the external and internal reporting data, financial statements and trend
analysis, and thus to impact on the performance of an organization (Grande, Estebanez
& Colomina 2010).
Knowledge of managers in developing high-quality information systems (hereafter IS) is
crucial (Abdipour 2011; McLeod & Schell 2007). Moreover, Laudon and Laudon (2005)
argue that the implementation of AIS is significantly related to the knowledge of
managers. Since managers are the personnel who have a better understanding of the
needs of businesses and do consider the needs of the business, they can better decide
on appropriate AIS for the organization (Ismail 2009). Moreover, it is further argued that
knowledge of the manager about the IT is very crucial because managers use this

pg. 2
knowledge for the survival and prosperity of a company (Laudon & Laudon, 2005).
Usually, the knowledge of executives is comprised of computer application programs, the
internet, email, database, spreadsheet, word processing, financial and managerial
accounting. This enhances the effectiveness of AIS. As Ismail and King (2007) state, the
knowledge of the manager about more sophisticated software contributes to the
increased efficiency of AIS.
Jarvenpaa and Ives (1991) and Hussein et al. (2005) argue that top management support
(TMS) is also considered as imperative in determining the quality of AIS and
implementation of AIS in the organization, as top management support increases the
quality of AIS (Lerwongsatien & Wongpinunwatana 2003; Thong & Yap 1995). This
support could be in different forms, e.g., it could be in the form of commitment to align
organizational strategies (Jarvenpaa & Ives 1991). Moreover, it can also be in the form of
participation in supporting the employees for building a constructive attitude towards the
usefulness of IS. Furthermore, it could be the administrative authority’s surety on the
availability and the appropriateness of the resources for implementation of AIS (Guinea
et al. 2005).
The above discussion shows that the role of AIS is imperative in managing an
organization. Thus, it is vital to set up an internal control system in the organization.
Nicolaou (2000) says that the fit of AIS regarding information control and information
communication as per the organization’s requirement is very much related to accounting
and management decision-making. Sajady, Dastgir, and Hashem (2008) argue about the
benefits of AIS by studying its impact on facilitating the company’s transactions, internal
controls, performance evaluation, quality of accounting information and improvement in
the decision-making process. Considering these five dimensions, AIS gains importance
in increasing OP since performance management (hereafter PM) is a maturing business
discipline (Downes & Barclay 2008). Therefore, it is also vital in improving OP. Yang, Lin,
and Koo (2011) also conclude from their study that control efficacy of financial information
reliability has an effect on the operating performance of companies.
Previously, many research studies conducted in Iran, Pakistan, Finland, Malaysia and
Spain have shown that increased firm profitability and increased operations efficiency are
the results of AIS adoption (Sajady, Dastgir & Nejad 2008; Kouser, Awan, Rana &
Shahzad 2011; Gullkvist 2002; Grande, Estebanez & Colomina 2010; Kharuddin, Ashhari
& Nassir 2010). In the UAE, new computer tools and information society have made it
possible for the firms to make better use of AIS concerning their dealings with customers
and suppliers. Moreover, electronic banking and the development of AIS have also helped
the companies in saving time while making transactions.
Accounting information is a crucial ingredient for most of the managerial and financial
decisions. Each year, these decisions are worth billions of dollars in developed
economies. Sometimes, these decisions are deficient in quality. It is necessary to conduct
studies that could incite managers about the importance of the quality of information
available in the organization, which could lead to better decision-making in the
organization of a developing country. If research studies could influence the managers by
giving them insights into the use of AIS for making their decision process better,
stakeholders will benefit.

pg. 3
Several authors, e.g., Jarvenpaa and Ives (1991), Hussein et al. (2005), Lerwongsatien
and Wongpinunwatana (2003), Thong and Yap (1995) analyzed the impact of top
management support and accounting manager’s knowledge on the AIS in developed
countries about two decades before. Ang et al. (2001) conducted a study on SMEs but
compared the role of accounting managers’ knowledge of the alignment and non-
alignment of AIS. There is a lack of research studying the impact of accounting managers’
knowledge and top management support on AIS implementation in the developing
country context, where SMEs started adopting technology recently. Thus, it is important
to analyze the impact of top management support and accounting managers’ knowledge
on the AIS in a developing country along with the further impact of AIS on the OP and PM
of SMEs. Based on the above discussion, it is observed that top management support
and accounting managers’ knowledge have a relation with AIS, and AIS leads to OP and
PM. This study attempts to provide clarification of the relationship between top
management support, accounting managers’ knowledge, AIS, OP and PM in a developing
country. The study contributes to the literature by analyzing the impact of top
management support and accounting managers’ knowledge on the AIS and the further
impact of AIS on the OP and PM of SMEs of a developing country. Therefore, the study
contributes to the literature by analyzing the impact of top management support and
accounting manager knowledge on the AIS and the further impact of AIS on the OP and
PM of SMEs of a developing country. Previous studies also did not use the structural
equation modeling to test the study variables. Therefore, this study further contributes to
the literature by using the structural equation modeling through AMOS and analyzed the
data of 74 companies gathered from different industrial sectors namely manufacturing,
trading, and services.
This article is organized as follows. After discussing the literature, this study develops the
hypotheses. Subsequently, the method is explained and then based on statistical analysis
this article presents the results. Afterword, this study concludes the key findings and
provides the limitation .

2. Literature

Grande, Estebanez and Colomina (2010) state that improving the external relationship of
the company (specifically with the foreign customers), new business opportunities and
better flow of financial information between the different hierarchy levels, have
dramatically changed the nature of the business. Hence, it is necessary to change the
traditional business functions or processes to encounter the changing nature of
operations. This study focuses on the AIS as it is very beneficial for an organization: it
provides a high level of competitiveness, improved management of business
transactions, and a better acceptance of changing business environmental conditions.
According to the AICPA (American Institute of Certified Public Accountants), accounting
is an IS and, more precisely, it practices the general theories of information in the area of
effective economic activities and presents the foremost portion of information in the

pg. 4
quantitative form. According to the definition mentioned above, accounting is a part of IS.
According to Boochholdt (1999), AIS consisted of various operating functions which
gather financial data, process it, categorize it and report financial events. This study
considers the AIS as used for keeping records, directing attention and decision-making
by considering all the relevant financial information.
Borthick and Clark (1990) state that the need for information is the reason for the
existence of accounting. To keep it relevant in the business, accounting data should
respond quickly to the needs of users and more particularly to the needs of investors.
Usually, investors do not assess the performance of a target firm where they invest or
intend to invest. Financial reports are the source of information for the investors, which
are usually prepared by the management of companies. The prime objective of the
financial reports is to provide information about the financial condition of the company,
cash flows, changes in control of the firm and its operational results.
The financial report gives the economic information of the organization to the investors
so that the stakeholders could ascertain the investment opportunities in the market. AIS
plays a vital role in making these financial reports by processing the financial and non-
financial data more accurately. Therefore, this study places significant emphases on the
AIS. The research studies of Gerdin and Greve (2004) and Chenhall (2003) state that the
role of AIS is proactive in strategic management. AIS serves as a mechanism for enabling
the organizational strategy. Various typologies (see, e.g., Miles & Snow 1978; Porter
1985) have been used for examining the strategy, but Miles and Snow’s typology have
been used extensively in management literature. This study considers that OP is a
function of AIS.
Chang (2001) states that AIS plays a significant role in increasing the effectiveness of
organizations in the global competitive environment. Financial statements are still an
important source of financial information to external stakeholders (Doms, Jarmin and
Klimek 2004). Despite the continuous advancements and extensive usage, accounting
practices have not kept pace with tremendous technological advancements and rapid
economic development, which consistently impact the significance of accounting
information. Onaolapo and Odetayo (2012) argue that massive accounting frauds
reported in the developed countries and rapidly changing economic conditions, as well as
some empirical studies, show the declined significance of accounting information.
However, Onaolapo and Odetayo (2012) conclude in their research that accounting
information still has value relevance.

2.1 Accounting Managers’ Knowledge

Top management has been recognized as a critical factor in numerous types of

development. Managers’ beliefs and practices have been identified as crucial for adopting
sustainable practices (Jabbour & Jabbour 2016). However, there is a scarcity in recent
literature discussing the influence of manager’s knowledge on the implementation of AIS
in SMEs’ newly adapting technology.

pg. 5
Accounting managers’ knowledge (Hereafter AMK), related to AIS, includes the
knowledge of computer application programs, accounting, the internet, e-mail, database,
spreadsheet and word processing (Ismail 2009). Ang et al. (2001) and Jarvepaa and Ives
(1991) state that AMK is comprised of specialized knowledge of IT and IS along with the
experience in accounting and IT. Likewise, they also argue that managers’ knowledge is
observed through their experience, their level of awareness of IT, their background of IS,
their acknowledgment of the potential of IT, and their ability to use IS for developing
strategies.
AIS plays a critical role in SMEs decision-making. Thus, AMK about AIS is a crucial factor
in the success or failure of AIS implementation in SMEs (Hussin et al. 2002; Thong 2001;
Seyal, Rahim & Rahim 2000). The manager is the only person who knows the goals of
the company; thus, managers who are aware of new technology would select the correct
software for the business (Hussin et al. 2002). Managers with accounting and IT
knowledge are in a better position to deploy the IT system as per the requirements of the
organization that best matches the organization needs.

Managers with the relevant knowledge and skills are likely to be more participative,
proactive and productive to IS and IT, and they tend to have a positive attitude towards
IS and IT (Jarvenpaa & Ives 1991). The study of Ang et al. (2001) was limited to testing
the AIS alignment and compared the AMK in AIS aligned companies and AIS non-aligned
companies. Therefore, it is necessary to investigate the impact of AMK on AIS
implementation in SMEs.

2.2 Top Management Support

In addition to knowledge, TMS is a critical factor in the effective implementation of AIS in

SMEs (Seyal & Abdul Rahman 2003; Lertwongsatien & Wongpinunwatana 2003; Igbaria
et al. 1997; Thong & Yap 1995). Top management has a dominant role in bringing into
line the IT with firm’s strategies and objectives (Jarvenpaa & Ives 1991). Top
management support would also bring about a positive attitude in users of AIS in the
organization which most likely results in the successful implementation of AIS in SMEs.
Furthermore, top management has the authority to ensure the distribution of adequate
resources for the IT projects (de Guinea et al. 2005).
As stated by the Sheth (2010), top management support decides on the tipping point
between the possible failure and success of the management projects, while developing
and implementing these projects. Top management support includes the guidance about
the project, political support for the project and commitment to delivering the necessary
resources. Commitment, participation, and authority are different dimensions of TMS
(Ismail 2009; Jarvenpaa & Ives 1991; Guinea et al. 2005).

pg. 6
According to Jarvenpaa and Ives (1991) and Igbaria et al. (1996), TMS is the participation
and involvement of top-level management or executives of the firm in the IS or IT
activities. It is also the participation of managers in developing strategies for the
implementation of IS. Considering the relevant arguments of Jarvenpaa and Ives (1991)
and Igbaria et al. (1996), this study uses the commitment, participation and authority
dimensions to calculate the TMS. There is a lack of literature studying the role of TMS in
AIS implementation in SMEs of a developing country; hence, this study investigates the
impact of TMS on AIS implementation in SMEs.

2.3 AIS, Performance Management and Organisational Performance

AIS processes the non-financial and financial transactions which have a direct impact on
the financial transaction processing. Wilkilson et al. (2000) state that AIS not only
processes the financial information and accounting data but also transforms the non-
financial data into accounting information. Eventually, non-financial and financial data is
transmuted into the accounting information for decision-making. Collecting, processing,
storing and distributing information to support the controlling and decision-making
process within an organization is the core units and interconnected components of AIS
(Laudon & Laudon 2005).
AIS is the integration of physical and non-physical components, which are interconnected.
These components collaborate with each other to process the financial transaction data
to solve financial problems (Susanto 2007). According to Laudon and Laudon (2005),
various types of IS are required to support the decision-making and work activity at
different functional levels in an organization. Most of the IS are needed to integrate the
various functional levels information and business processes for producing useful
information for decision-making. Hence, the integration of systems is necessary.
According to Hall (2008), AIS consists of different subsystems, one subsystem of AIS
covers the managerial reporting, transaction reporting system, and financial reporting
system. AIS includes various components, including technology, network communication,
database, procedures, brain-ware, software, and hardware.
Existing research provides limited evidence of a correlation between PM and AIS. AIS is
a critical organizational mechanism for better control and efficient decision-making in the
organization (Sajady, Dastgir & Nejad 2008). The presence of AIS in the organization has
changed the way of distributing information, storing, processing and capturing the data.
Nowadays, organizations are using online and digital information in their AIS for better
decision-making (Huang, Lee & Wang 1999).
Conway (2009) states that PM in an activity that guarantees the goals are being reliably
met in an efficient way. PM focuses on the OP. AIS affects the PM and have an impact
on the whole organization by affecting various departments (Conway 2009). Management
engages in different activities for acquiring reliable information so that the PM could
increase.

pg. 7
The quality of information provides a comparative advantage to the organization. AIS
offers an option of acquiring quality information which serves as a comparative advantage
(Xu 2010). Therefore, organizations are investing in AIS so that timely flows of quality
information could be increased for better management decisions. Essex and Magal
(1998) argue that quality information obtained through AIS is essential for management.
Therefore, organizations often use AIS to back-up their management decisions. Usually,
financial analysis of accounting information is used in decision-making and often the
analysis is done by using AIS. Using business technology, AIS can process an ample
amount of data for managers and owners of the firms (Vitezand Baligh 2011).
The performance of management is assessed through the achieved goals and objectives.
Usually, management measures the performance by using the forecasts and budgets to
compare them with the current performance and then identify the unusual results which
need follow-up (Soudani 2012). The primary responsibility of the managers is to
determine the financial risk of the processes, and they are also responsible for
developing, executing and monitoring the internal control systems. Usually, internal
controls deal with AIS, where the primary function of the internal control is to move the
financial information in the organization. Therefore, managers can use internal control to
measure and monitor the accounting operations’ effectiveness for firm performance
(Vitezand Baligh 2011).
PM is crucial for increasing the overall value of the company (Armstrong & Baron 2005).
AIS is the most regular source of getting information in an organization. AIS is designed
to provide the reasonably accurate and timely information to all levels of management to
help them in making a decision and increasing the PM, which ultimately results in
achieving high OP. OP is a main construct in the management studies (Richard, Timothy
& George 2008). Therefore, this study aims to analyze the contingency fit between AIS,
PM, and OP.
Based upon the above discussion, the following hypotheses are formulated:
H1: There should be a positive impact of accounting managers’ knowledge of accounting
information system implementation.
H2: There should be a positive impact of top management support on accounting
information system implementation.
H3: There should be a positive impact of accounting information system implementation
on performance management.
H4: There should be a positive impact of accounting information system implementation
on organizational performance

pg. 8
3. Methodology

The Ministry of Finance and Industry of the United Arab Emirates took the initiative to
modernize the public resources so that the efficiency and effectiveness of government
agencies could be increased (Shamsi 2007). This initiative improves cash management
efficiency and modernizes the accounting system. IS used by government agencies for a
financial management purpose introduces the performance-based budgeting and
strengthens the strategic budgeting process across the federal government
organizations. This study focused on the Small and Mid-sized Enterprises (hereafter
SMEs) and analyzed whether these changes inspired the SMEs and SMEs are
incorporating changes for better financial management, thereby increasing the efficiency
and effectiveness of the firm.
This study collects data for SMEs working in a major industrial sector like Trading,
Services, and Manufacturing as classified by the UAE government. A hundred and fifty
companies from sectors mentioned above were selected, and questionnaires were
distributed equally to each sector. Out of the 150 questionnaires distributed, the
researcher received 115 responses, and out of these 115, only 74 questionnaires were
error-free. Therefore, based on all the collected questionnaires, the rate of reply is almost
76%, but if only considering the useful data, the response rate for this study is around
50%.
Items for analyzing the constructs used in the questionnaire are taken from several
different studies. Accounting Managers’ Knowledge (AMK) constructs are measured by
the six-item scale employed by Ismail (2009), Laudon and Laudon (2005) and McLeod
and Schell (2007). Top Management Support (TMS) construct is measured by taking the
five-item scale used by Ismail (2009), Jarvenpaa and Ives (1991) and Guinea et al.
(2005). Accounting Information Systems (AIS) constructs measured by taking the 19-item
scale used by Ismail (2009), O’Brien and Maraks (2005), Laudon and Laudon (2005),
Susanto (2007) and Romney and Steinbart (2006). Performance Management (PM)
constructs are measured by taking the five-item scale used by Kellen (2008).
Organizational Performance (OP) constructs are measured by taking the five-item scale
employed by Friedman (1970) and Fretwell and MSW (2002). All the questionnaire items
are presented in Appendix 1.
All the elements of the questionnaire are rated on 5-point Likert scales, ranging from
strongly disagree to agree strongly. Self-administered survey method and emails are
used for gathering responses from the managerial personnel of the firms. This study uses
SPSS for producing the frequency distribution, Cronbach Alfa values and descriptive
statistics of data. Previously conducted studies, e.g., Jarvenpaa and Ives (1991), Hussein
et al. (2005), Lerwongsatien and Wongpinunwatana (2003), Thong and Yap (1995) did
not use the structural equation modeling (SEM). This study used the AMOS software for
analyzing the data for SEM.

pg. 9
4. Results
Table 1 Industry

Cumulative
Frequency Percent Percent
Valid Trading 27 36.5 36.5
Services 29 39.2 75.7
Manufacturing 18 24.3 100.0
Total 74 100.0

Table 1 shows the distribution frequency of the questionnaire used for the analysis of the
industry. The largest number of respondents of 39.2% is from the services industry with
the value of 29, followed by the trading sector with 36.5% and a value of 27, and the
lowest number of respondents are from the manufacturing sector with the percentage
value of 24.3. This frequency shows that the results could be generalized in all three
sectors as the number of contributory respondents is adequate regarding percentage
contribution to the analysis of this study.
Table 2 Age

Cumulative
Frequency Percent Percent
Valid 18-23 3 4.1 4.1
24-28 7 9.5 13.5
29-33 13 17.6 31.1
34-38 26 35.1 66.2
39/Above 25 33.8 100.0
Total 74 100.0

Table 2 shows the contribution of respondents from different age groups. It can be seen
that most respondents are from the senior age group, contributing to the overall survey
with 82.4%, i.e., all respondents above 29 years old. The high response rate from senior
age employees from the majority of firms shows that most of the firms have experienced
persons working in managerial positions.
Table 3 Gender

Cumulative
Frequency Percent Percent
Valid Male 70 94.6 94.6
Female 4 5.4 100.0
Total 74 100.0

Table 3 shows the contribution of respondents from different genders. The high response
rate with a value of 94.6% comes from male respondents who are working in managerial
positions.

pg. 10
 Table 4 Education

Cumulative
Frequency Percent Percent
Valid Bachelor 59 79.7 79.7
Masters 12 16.2 95.9
PhD 3 4.1 100.0
Total 74 100.0

Table 4 shows the contribution of respondents with different educational backgrounds.

The highest rate of respondents has a bachelor's qualification with a 79.7% contribution
in the present study. Then, there are 12 respondents having Masters level qualification
and only three persons are having Ph.D. qualification. Based upon the level of education
and age, it is concluded that respondents have an understanding of the AIS.
Descriptive Stats
Table 5
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Accounting Managers’
74 1.83 5.00 3.7095 .83085
Knowledge
Top Management Support 74 2.40 5.00 3.7486 .68411
Accounting Information
74 1.87 4.73 3.6640 .59067
Systems
Performance Management 74 3.00 5.00 4.1514 .44391
Organizational Performance 74 3.00 5.00 4.1919 .43471
Valid N (listwise) 74

Descriptive statistics are the inferential statistics used for explaining the characteristics of
data used for analysis. Table 5 explains the values of descriptive statistics for all the
variables of this study. Mean value shows the central tendency of responses. Since all
the items of the questionnaire are rated as 1 for strongly disagree to 5 for strongly agree,
the mean value explains the central tendency of obtained responses at the stated scale,
and standard deviation value shows the dispersion of replies from the mean value.
The mean value for AMK (Accounting Managers’ Knowledge) is 3.7095, which express a
mild agreement of respondents about the impact of AMK on the AIS, with 0.83085
standard deviation value, which explains the dispersion of responses from the mean. The
mean value for TMS (Top Management Support) is 3.7486 with a dispersion value of
0.68411. Moreover, the mean value of 3.6640 for AIS (Accounting Information Systems)
is the lowest mean value of any variable in this study with a standard deviation value of
0.59067. Furthermore, the mean value for PM (Performance Management) is 4.1514,
with the lowest dispersion value of 0.44391. Lastly, the mean value of 4.1919 for OP
(Organizational Performance) is the highest mean value of other variables with the
standard deviation value 0.43471. All these values are explaining the central tendency of
response rate and the dispersion of replies from the central tendency.

pg. 11
Reliability
Reliability of the data is tested through Cronbach’s Alpha.
Table 6
Reliability Statistics
Cronbach's
Alpha N of Items
.897 5

The reliability of a study is always a big concern. Therefore, Cronbach’s Alpha test is used
to verify the reliability of the data. Perfect fit value for reliability is 1 and the least
acceptable value of Cronbach’s Alpha is 0.6. This study’s Cronbach’s Alpha value is
0.897 which is highly reliable. Therefore, the results of this study are reliable and can be
generalized.

4.1 Regression Analysis and Discussion

Results of the structural equation modeling are shown below in Figure 1.

Figure 1

Figure 1 shows the relations between the study variables. Arrows are used to point the
hypothesized relations between variables. Results of structural equation modeling are
indicating the impact of accounting manager’s knowledge and top management support
on the accounting information systems and, hence, the impact of accounting information
systems on the performance management and organizational performance. Figure 1

pg. 12
shows the coefficient estimate values for study variables which are further explained in
Table 7.
Table 7 describes the statistical results of structural equation modeling analyzed by using
the AMOS software. Arrows in the table show the impact of one variable on the other
variable. Estimated number is the estimate of the coefficient which shows the values of
the impact of one variable on the other variable. Usually, the estimated value is multiplied
by 100 to come up with a percentage value showing percentage change, e.g., accounting
managers’ knowledge have 26.2% impact on the accounting information system.
S.E. means Standard Error which represents the average distance from which the
observed values fall from the regression line. Smaller values are better because it
indicates that the observations are closer to the fitted line. The larger the standard error
of the coefficient estimate, the less precise is the measurement of the coefficient. In Table
7, S.E. values for all the relationships are quite lower which shows that observations are
much closer to the regression line or the average distance of the observed value from the
regression is smaller compared to others.

Table 7 Regression Weights

Estimate S.E. C.R. P

Accounting Information Accounting Managers’
<--- .262 .058 4.533 ***
Systems Knowledge
Accounting Information Top Management
<--- .445 .069 6.436 ***
Systems Support
Organizational Accounting Information
<--- .444 .102 4.347 ***
Performance Systems
Performance Accounting Information
<--- .480 .095 5.075 ***
Management Systems

C.R. means critical ratio which is measured with t-value or z-value based upon the sample
size. C.R. value is used to determine the significance of the results. Moreover, Probability
value or P-value is also used for determining the significance of the results. C.R. value
and P-value are used to explain the level of significance and to reject the null hypothesis
or to accept the alternate hypothesis. For statistical significance, the absolute value of the
C.R is expected to be greater than 2 and the P-value to be less than 0.05 for rejecting the
null hypothesis. Usually, the researcher explains the level of significance based on
choosing one value between C.R. and P-value. In Table 7, all the C.R. values are greater
than 2 and P-values are less than 0.01. Therefore, by considering the P-value as a
parameter, all the relationships are considered significant as P-value is below 0.01.
To conclude, all the relations are significant with P-value below 0.01. Based on these
estimates, all the relationships are positive and significantly impacting as per
hypothesized relations. Depending on the results of Table 7, this study accepts all the
alternate hypotheses.

pg. 13
All the results are in line with the analyzed literature. The relation of AMK with AIS is
positively impacting with the value of 0.262 and supports the argument that AMK has a
significant impact on the AIS in a UAE SME. The results are in line with the previously
conducted studies. Ismail (2009), Ang et al. (2001), Boynton et al. (1994), Jarvepaa and
Ives (1991), Seyal et al. (2000), Thong (1999) (2001) and Hussin et al. (2002) showed
that knowledge of manager/owner or executives influence the IT implementation in an
organization. This study confirms these results by demonstrating that accounting
managers’ knowledge is positively affecting the implementation of AIS in the SMEs of the
UAE.
Similarly, TMS also has a positive and stronger impact on the AIS in the SMEs with the
value of 0.445. Previous studies conducted by Jarvenpaa and Ives (1991), Igbaria et al.
(1996), Ismail (2009) and Guinea et al. (2005) also showed that managers’ commitment,
support, involvement, and participation are positively related to IT alignment and IT
implementation in an organization. This study result also supports the relationship of TMS
with the AIS implementation in the SMEs of the UAE. Moreover, the use of AIS in the
SMEs has a significant and positive impact on the PM and OP with the value of 0.48 and
0.44. Results of PM and OP are also in line with the studies of Soudani (2012), Vitez
(2010), Friedman (1970), Vazirani (2008) and Fretwell (2002).
Moreover, studies conducted in different countries confirm that the adoption of AIS
increases the firm’s performance. This study further confirms the results of previously
conducted studies by Sajady, Dastgir, and Nejad (2008) in Iran; Kouser, Awan, Rana and
Shahzad (2011) in Pakistan; Gullkvist (2002) in Finland; Grande, Estebanez and
Colomina (2010) in Spain; and Kharuddin, Ashhari and Nassir (2010) in Malaysia. Our
study contributes to the body of literature by investigating the phenomenon in the UAE
where SMEs are recently implementing the AIS and confirms the results of previously
conducted studies. This study confirms the role of AMK and TMS in the AIS
implementation in an organization resulting in an increase of OP and PM of the
organization.

5. Conclusion
The objective of this research is to study the impact of AMK and TMS on the AIS.
Moreover, a second objective was to explore the impact of AIS on the PM and OP of the
SMEs working in the Trading, Services and Manufacturing sectors of the UAE.
Based on the statistical results, this study concludes that AIS significantly impacts on the
PM and OP of the organization. This study found that AIS enhances performance
management in an organization. Through AIS, management obtains useful information
and uses it in decision-making and strategy building for achieving the organizational goals
and objectives. Moreover, this study also found that AMK and TMS significantly impact
the AIS implementation in an organization. TMS and the existence of knowledgeable and
experienced AMK play a vital role and affect the AIS in an organization.
While this research has achieved its goals, there was an unavoidable limitation. The
research was conducted only on 74 companies because of the resistant to participate
from many companies and lack of transparency.

pg. 14
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Appendix 1

Variable Authors Questionnaire Items

Accounting Manager McLeod & Knowledge of Accounting
Knowledge Schell(2007),Laudon &
Laudon(2005),Ismail Knowledge of Accounting Information System
(2009)
Knowledge of managerial

Experience on accounting

Experience on accounting information system

Experience on managerial

Top Management Support Guinea et al. Definition of needs (information requirement)

(2005),Jarvenpaa &
Ives (1999), Ismail Choice of hardware & software
(2009)
Implementation of system

System maintenance and problems solving

Planning of further developments

Accounting Information Laudon & Laudon Availability & function of operating system
Systems (2005),O’Brien&Maraks
(2005),Romney Availability & function of software
&Steinbart
(2006),Susanto (2007), Information system manager
Ismail (2009)
Database Administrator

pg. 19
 Network Administrator

Operator

System documentation

Activity documentation

Function documentation

Having the function of data recovery

Integrated

Having a data security system

Characteristically multi-access

Have a system of authorization data

Availability of communication technology

network

The function of communication technology

network

Performance Management Kellen (2008), Fretwell Labor is the largest controllable expense item
& MSW (2002) in your organization. Successful practices to
improve performance can lower your labor
cost

An effective measurement and reporting

process can improve performance and lower
costs

Employee engagement is critical to any

organization that seeks to retain valued
employees

Employee engagement emphasizes the

importance of employee communication on
the success of a business. An organization
should thus recognize employees, more than
any other variable, as powerful contributors to
a company's competitive position

Interactive control systems help managers

integrate new data and learning into the
decision-making process

Organizational Performance Friedman (1970) Effective inventory management is the single

most important tool to improve customer
service

Successful organizations show respect for

each employee’s qualities and contribution –
regardless of their job level

pg. 20
 Social responsibility of business refers to all
such duties and obligations of business
directed towards the welfare of society. These
duties can be a part of the routine functions of
carrying on business activity, or they may be
an additional function of carrying out welfare
activity

Social responsibility is a voluntary effort on the

part of business to take various steps to
satisfy the expectation of the different interest
groups

Employee stewardship is an opportunity

exists for ensuring high employee morale and
customer satisfaction, an increase in
employee and customer retention rates, and a
positive long-term outlook for the company's
successful performance

pg. 21

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