The effects of employing accounting software on business performance

Vinz Patrick E. Perocho

Jeselle B. Bagsican

Jenerbie M. Donggo

Abstract

The target of this paper is to inspect and investigate the effect of Accounting Software
on business performance. The study examines and investigates the effects of utilizing AIS on
the company's performance. The aftereffect of this study is relied upon to help the firm's
owners and manager in understanding the significance of utilizing Accounting Information
System (AIS) got from Accounting Software to accomplish performance. Several attributes
like efficiency, reliability, ease of use, data quality, and accuracy impacted the utilization of
AIS, accordingly influencing the presentation of firms. Modern literature and the result of
this study show that these AIS attributes controlled by the accounting data like efficiency,
reliability, ease of use, data quality, and accuracy effects affect the utilization of AIS and the
company's performance. Past researches have shown that it is essential for firms to utilize
AIS to guarantee the survival and sustainability of business in the increasingly competitive
environment other than improving their business activities competency and effectiveness.
This study is one of not many that could reveal insight on how the use of AIS affects the
performance of firms. In this study, the researchers suggest that dimensions of utilizing AIS
are significant for improving the performance of business organizations.

Background of the study

Today, accounting has come to hold onto a significant situation in its capacities in the
business world. Accounting assumes a fundamental part in the activity of a business
organization. For each business, it is substantial that the financial data of the business
activities are being stayed up with the latest and checked by the organization. Accounting
includes different cycles, going from easy to mind-boggling and surprisingly troublesome.
Organizations need to stay up with steady changes in information technology to keep up
exceptionally precise and up-to-date accounting, legal records, and inventory (Igbaria et al.,
1997). Because of the complexity of the accounting framework expanding susceptibility to
errors and the growing volume of accounting transactions, a framework that could cycle and
store accounting information with sped up, huge capacity, and handling limit was required.
To fulfill the increment interest for up-to-date and precise data, accounting programming,
coordination of accounting, and data innovation was acquainted with the world
(Wickramsainghe et al., 2017).

Numerous previous researches have appeared that accounting information system

adoption does increase a firm’s performance, profitability, and operations efficiency in
Malaysia, Finland, Spain, Iran, and Pakistan (Saira et al., 2010; Gullkvist, 2002; Sajady et
al.,2008; Kouser et al., 2011). New computer instruments and data society empowered the
companies in Turkey to effectively use their accounting system in dealing with customers and
suppliers (Esmeray, 2016). Cragg et al. (2002) and Chan et al. (1997) found that alignment of
IT strategy with business strategy increased a firm’s performance. In an earlier study,
Raymond et al.(1995) found that firms perform better with the alignment of organizational
structure and IT structure.

Research Aim and Objectives

The major purpose of this study is to assess the impact of using accounting software
system on business performance. The specific objectives therefore are:

(1) To examine the effect of Software Efficiency on the Performance of Business

(2) To examine the effect of Software Reliability on the Performance of Business

(3) To examine the effect of Software Ease of Use on the Performance of Business

(4) To examine the effect of Software Data Quality on the Performance of Business

(5) To examine the effect of Software Accuracy on the Performance of Business

Research Questions

(1) What is the effect of Software Efficiency on the Performance of Business?

(2) What is the effect of Software Reliability on the Performance of Business?

(3) What is the effect of Software Ease of Use on the Performance of Business?

(4) What is the effect of Software Data Quality on the Performance of Business?

(5) What is the effect of Software Accuracy on the Performance of Business?

Conceptual Framework Model

Effects of Employing
Accounting Software

 Efficiency
 Reliability
Business Performance
 Ease of Use Data
 Quality
 Accuracy

INDEPENDENT VARIABLES DEPENDENT VARIABLES

Hypothesis

H1 – There is a significant relationship between the effects of employing accounting software

and the business performance.
REVIEW RELATED LITERATURE

Urquía Grande, E., Pérez Estébanez, R. and Muñoz Colomina, C., (2011) researched
on the relationship between the use of the Accounting Information Systems (AIS) by the
Small and Medium Sized Enterprises (SMEs) in Spain on variables Economic Returns,
Financial Profitability and Productivity based on empirical evidence. The study conducted
using survey carried out among small and medium-sized firms to determine the extent that
development and implementation of accounting information systems had taken place, and
subsequently analysed using ANOVA analysis to ascertain the impact of introduction of AIS
on firm’s performance and productivity. The findings provided evidence that there is a
positive relationship among the SMEs that use AIS for fiscal and bank management and
better performance measures and subsequently provides value added in accounting literature
given the scarcity of works dealing with the relationship between the application and use of
AIS and performance and productivity indicators in SMEs in Spain.

Ali, Omar and Bakar (2016) investigated the effect of Accounting Information System
(AIS) on organizational performance and the moderating effect of organizational culture in
the relationship between AIS success factors and organizational performance in Jordanian
banking sector. The study used four types of AIS success factors as the determinants
performance namely service quality; information quality, data quality and system quality.
Data were collected with a structured questionnaire survey and analysed with PLS SEM
technique. The findings revealed that service quality, information quality and system quality
are the significant AIS success factors for increasing organizational performance. This study
also evidenced that organizational culture helps increase performance by interacting with
information quality, data quality and system quality. It can be inferred from this study that
organizations involved in banking sectors can increase their performance by adopting and
implementing AIS success factors along with practicing favourable organizational culture.
Therefore, firms should cultivate a favourable environment so that employees feel happy
which motivates them to work more devotedly with the organizations.

The study by Ismail and King (2005) focused on measuring the alignment of
accounting information systems (AIS) requirements with AIS capacity and then investigating
whether this AIS alignment is linked to firm performance. The study was conducted using a
mail questionnaire on nineteen accounting information ISSN: 22897615 Page 5
characteristics, data from 310 Small and Medium Sized Enterprises (SMEs) firms in
Malaysia was collected and analysed using principal component analysis and varimax
rotation with Kaiser normalization. The results indicated that a significant proportion of
Malaysian SMEs had achieved high AIS alignment.

Furthermore, the group of SMEs with high AIS alignment had achieved better
organisational performance than firms with low AIS alignment. The findings provided
evidence of the importance of AIS alignment and deepened current understanding of the
requirements for accounting information and te use of IT as an important information
processing mechanism. More importantly, it opens up possibilities for further study of AIS
alignment in SMEs, both in Malaysia and on a global basis.

Ismail and King (2014) researched on the factors that affect the use of accounting
information systems in factories, small and medium-sized Malaysian manufacturing firms
with sample consisted of 214 companies that have accounting systems. The study also found
out that the information systems of accounting work smoothly as they connect information
from the top and bottom that help workers in companies to achieve their goals, in addition
using these systems will enable companies to give accurate information to the relevant
government agencies.

RESEARCH METHODOLOGY

This section discussed about the research design and methodology employed to
conduct this research.

Research Paradigm

This study will be guided by the positivism paradigm. Positivism is based on values
of reason and validity and focuses on facts garnered from theories and which can be
measured empirically using quantitative methods. The positivist research approach assumes
that only knowledge that is based on observations of the external reality is valid (Phillips &
Burbules, 2000). Positivism also assumes that theories can explicate the relationship between
dependent and independent variables and developed hypothesis to be tested and forecast the
outcomes of the study. Therefore, the effects of accounting software characteristics have on
the business performance will be able to explore by using positivism paradigm.

Research Design

Explanatory research is concerned with determining the causal relationship between

variables (Zikmund & Babin, 2010). The purpose of this research is more on seek new
insights and determining the causal relationship between variables based on exploratory and
explanatory. It is exploratory because researcher is exploring the relationship of independent
and dependent variables in an unstructured and informal manner collection of information
and explanatory because researcher explained the impact of dependent and independent
variables (Hair, Rabin, Money and Samouel, 2003).

Research Method

In this study, quantitative research approach will be adopted as it allows collecting

more data to investigate the facts, testing theories and hypotheses. As a result, quantitative is
more suitable to represent tested theories comparing qualitative method since researcher was
unaware of essential variables to analyse and the sensitivity of data collection relating to the
social settings. Using this method allows researcher to streamline research problem to
restricted variables and supports to understand the result of analyst (Creswell, 2003). This
type of research is more objective and reliable as the researcher cannot interpret the facts of
the research based on biased opinion.

Research Instrument

The research will use close-ended questions in order to source information from
responses. The questionnaire will structure in a five-point Likert format to extract the data or
information. A questionnaire is a set of questions that are usually sent to the selected
respondents to answer at their own convenient time and return back the filled questionnaire to
the researcher. In this study, questionnaires will use to collect information from respondents.
The reason for using questionnaires is because they cover a large sample at a low cost and
give respondents adequate time to give well-thought-out answers.
References

Ali, B.J., Omar, W.A.W. and Bakar, R. (2016). Accounting information system (AIS) and
organizational performance; moderating effect of organizational culture.
Chan YE, Huff SL, Barclay DW, Copeland DG. (1997). Business strategic orientation,
information systems strategic orientation and strategic alignment. Inf Syst Res 1997;8
(2):125-50.
Cragg PB, King M. Hussin H. (2002). IT alignment and firm performance in small
manufacturing firms. Journal of Strategic Information System, 11:109 – 32.
Creswell, J.W. (2009). Research design: Qualitative and quantitative approaches (33rd ed.),
London: SAGE Publication.
Esmeray, A. (2016). The Impact of Accounting Information System (AIS) on Firm
Performance: Empirical Evidence in Turkish Small and Medium Sized Enterprises.
International Review of Management and Marketing, 6(12).
Gullkvist, B. (2002). Towards paperless accounting and auditing, Finland: E-Business
Research Center, pp. 1 -12.
Hair, J. F., Black, Babin., Money, A. H., & Samouel, P. (2003). Essential of business
research methods. United States of America: John Willey & Sons.
Igbaria, M. Tan, M. (2007). The consequence of information technology acceptance of
subsequent individual performance. Information and management, 32(3). pp 113 –
121.
Kouser, R., Awan. A., Rana, g and Shahzad, F. (2011). Firm Size., Leverage and
Profitability: Overriding Impact of Accounting Information System. Journal of
Management and Business Review, 1(10), pp.58 – 64.
Perez Estebanez., R., Urquia Grande, E.. and Muñoz Colomina, C. (2010). Information
technology implementation; evidence in Spanish SMEs. International Journal of
Accounting & Information Management, 18 (1), pp.39-57.
Phillips, D.C., & Burbules, N. C. (2000). Postpositivism and educational research. Lanham,
MD: Rowman & Littlefield.
Raymond I., Pare G, Bergeron F. (2013) Matching information technology and organisational
structure: An empirical study with implications for performance. Eur J Inf Syst
1995;4:3-16.
Saira, K., Zariyawati, M.A and Annuar, M.N. (2010). Information System and Firms’
Performance: The Case of Malaysian Small Medium enterprise. International
Business Research, 3(4), p. 28.
Sajady H. Dastgir M. Nejad HH (2008). Evaluation of the effectiveness of accounting
information system. International journal of Informational Journal and management
6:45 – 59.
Wickramsainghe, D.M.J., Pemarathna, R.M.M.D.., Cooray, N.H.K and Disannayake,
T.D.S.H. (2017). Impact of Accounting software for Business performance. Imperial
Journal of Interdesciplinary Research, 3(5).
Zikmund, W. G., Babin, B.J. and Carr, J. C., dan Friffin, M. (2010). Business research
methods.