Information System and Firms’ Performance: The Case of Malaysian Small Medium Enterprises

Abstract

Information systems are widely use by many corporations to automate existing operations and to improve business activities efficiency. Prior researches have shown that information system adoption did increased firms' performances and operations efficiency. In Malaysia, Small and Medium Enterprises (SMEs) has been targeted as a mechanism in generating domestic-led investment to stimulate economic development, particularly after the economic crisis that hit the country in 1997. Thus, it is crucial for SMEs to adopt information system to enhance their business operations capability and efficiency. Nevertheless, SMEs limited resources to implement information systems have been one of the critical barriers that hindered the adoption of information systems. Malaysian government has allocated special grants and various initiatives to assist Malaysian SMEs to adopt information system software. Therefore, this study is to investigate the impact of accounting information system on firm performance of Malaysian SMEs. Panel data was used to analyse firm's performance. Results revealed that SMEs adopting accounting information system show significant improvement in performance compared to non-adopters.

The Influence of Accounting Information Systems (AIS) on Performance of Small and Medium Enterprises (SMEs) in Iraq

“…The authors explained that AISs have been perceived as a means of providing financial information to organization (Mia, 1993). There has been considerable evidence that within SMEs financial accounting has remained the principle source of information for managers (Saira et al, 2010). These studies have also found out that SMEs are still having ineffective information management, poor system control, and most decision making is on ad hoc basis despite having used AIS.…”

“…They need to plan, control and operate their businessesʼ (Saira et al, 2010). According to Lallo and Selamat (2014) and Saira et al (2010), they define an AIS as 'a system that processes data and transactions to provide users with information. They need to plan, control and operate their businessesʼ.…”

“…Good management of resources and better control of expenditure, budgeting and forecasting enhance the wellbeing of company (Saira et al, 2010). AIS refers to collection, storage and processing of financial and accounting data to help managers to make planning, controlling and evaluating (Emeka-Nwokeji, 2012; Saira et al, 2010). AIS also refers to perceiving of user information satisfaction to decision making and monitoring when company has coordination and control with information that is produced from AIS (Islam, Khan, Obaidullah, & Alam, 2011).…”

“…Prior researches have shown that information system adoption did increase companies' performances and operations efficiency especially in big company (Saira et al, 2010). AIS is a tool which, when incorporated into the field of Information and Technology systems (IT), were designed to help in the management and control of topics related to companies' economic-financial area (Salehi et al, 2010).…”

“…AISs also provide information on both actual and budget data which would help company to establish, plan, and control operation (Grande et al, 2011). Good management of resources and better control of expenditure, budgeting and forecasting enhance the wellbeing of company (Saira et al, 2010). AIS refers to collection, storage and processing of financial and accounting data to help managers to make planning, controlling and evaluating (Emeka-Nwokeji, 2012; Saira et al, 2010).…”