Accounting information systems and firm performance of small and medium enterprises in Nakawa division

Abstract

This study was set to investigate the relationship between accounting information systems and firm performance of SMEs in Nakawa division of Uganda. Specifically, the study examined the relationship between system quality and firm performance, assessed the relationship between information quality and firm performance, and analyzed the relationship between system threats and firm performance of SMEs in Uganda. A survey design was adopted and a sample of 144 SMEs was selected from all 240 SMEs that are established in Nakawa division. The findings of the study were based on correlation analysis. The findings of the study unveiled the following key insights. First, accounting information systems had a statistically significant relationship with firm performance. Further the study established that system quality had a statistically positive relationship with firm performance. The study also revealed that information quality had a statistically significant relationship with firm performance. Finally, the study revealed that system threats have a statistically negative relationship with firm performance. The study concluded that accounting information systems are critical to the production of quality accounting information on a timely basis and ensures that all levels of management get sufficient, adequate, relevant and true information for planning and increases the control and enhances the performance of a firm. The study recommends that SMEs need a well-designed and operating accounting information system to enable them manage its most valuable resource which is information. Further research should include intervening and moderating variables and study this effect, and further research may conduct longitudinal studies that may study the relationship over a long period of time.