Ais Success of Thai Foods Businesses: an Empirical Investigation of Its Antecedents And

AIS SUCCESS OF THAI FOODS BUSINESSES: AN EMPIRICAL INVESTIGATION OF ITS ANTECEDENTS AND CONSEQUENCES

Wathana Yeunyong, Mahasarakham University, THAILAND

Phapruke Ussahawanitchakit, Mahasarakham University, THAILAND

ABSTRACT

The purpose of this study is to investigation consequences of AIS success that affects strategic decision making and strategic cost management when managers employ information quality provided by AIS for management functions. Then strategic decision making and strategic cost management are tested how they affect firm performance. After this, antecedents of AIS success will be examined the relationships between key success factors (executive vision, employee knowledge, accounting system competency, and IT capability) and AIS success. Data from 204 Thai foods manufacturing firms were collected. Results find that AIS Success is significantly and positively related to strategic decision making and strategic cost management which, in turn, strongly and positively influence firm performance. Moreover, the relationships between key success factors and AIS success are significant and positive. However, moderating technology policy does not influence on key success factors-AIS success relationship.

Keywords: AIS Success, Strategic decision making, Strategic Cost Management, Executive Vision, Employee Knowledge, Accounting System competency, IT Capability, Firm Performance

1. INTRODUCTION

Over the past fifteen years, many firms around of the world have developed accounting information systems (AIS) underlying computerized systems to provide information for organization users, particularly the managers. AIS is a process which produces information that is essentially employed by information users to managing and increasing potential business competitions. The AIS processes are collecting transactions, processing data, storing data for the future, providing information, and controlling all processes to be accuracy and reliability (Romney et al., 1997). Thus, AIS of firm is designed to be success in various perspectives, such as producing information quality, system quality, and creating information satisfaction (McLean, 2003; Nicolaou, 2000). Using the accounting information affects strategic cost management and strategic decision making which, in turn, improve firm performance. This situation has pressed to the firms to find out new strategies to be competitive advantages.

As a high competitive business environment and development of information technology (IT), the firms blend accounting processes and computer systems to generate the information for planning, controlling, evaluating, and decision making (Dillard, 2008; Hunton, 2002; Stefanou, 2006). Activity-based costing (ABC) is adopted in production process to calculate product costs accuracy (Brimson, 1991; Kaplan and Norton, 1996; Major and Hopper, 2005). This accounting information is elicited to make about pricing strategy, budgeting supported, cost control, performance measures guidance, and decisions. It then influences on managerial quality. This is a technological power which promotes AIS capability to provide information as accuracy, timeliness, and relevance, including motivating system use of information users to improve their job performance (Sutton, 2000). Indeed, it affects user information satisfaction (Ang and Soh, 1997).

AIS should be developed to high information quality (e.g. accuracy, relevance, and speed) to enhance reassessment the objectives, strategies, and organization design (Ittner and Larcker, 2001). Shapman (1998) indicates that AIS is constructed expanding as a tool for organization control and information processing, but traditional accounting system is only emphasized to collecting data. That is, the firms have to design AIS to be simultaneously optimizing task/technology fit and decreasing mental workload (Benford and Hunton, 2000). Accordingly, Goodhue and Thompson (1995) indicate that task/technology is positively related to human performance. Likewise, Davis and Olson (1985) argue that computer-based system is more important in organization that it is automation and a tool of decision making. Indeed, it is used to integrate information to enhance operations, management and decision function of the organization (O'Donnell and David, 2000; Thong and Yab, 1996). Thus, IT capability eliminates the traditional constraints of using accounting information, which uses more times and people to make it, to support complexity practices of activity-based costing (i.e. variety of activities-based product cost) and more number of performance measures such as balanced scorecard (BSC). Usually, AIS is manually system which provides information difficultly to high complexity accounting practices (i.e. ABC, BSC).

From prior researches of AIS area, majority of researches are addressed in key success factors to explain quality of AIS when provides information for users, evaluating systems effectiveness when the firms are managed under normal and more uncertainty environment (Choe, 1998; Nicolaou, 2000), such as a high competition, multi-products, and fast consumer behavior change. As a result, the strategic management must be changed to firm survival and sustainable competitive advantage (Barney, 2001; Cummingham, 1992; Porter 1985 ). Generally, AIS research area is still conducted in AIS perspectives that are focused on what and how factors related to AIS effectiveness, such as organizational design, information characteristics, and task uncertainty (Boulianne, 2007). AIS evaluation is also investigated in order to perform system effectiveness when related to factors or its antecedents. The factors have to recognize whenever a firm will design AIS, but consequences of AIS has a little evidence of AIS success which related to firm performance through strategic cost management and strategic decision making surface perspective (Ismail and King, 2005). However, although prior researches find some evidences dealing with its antecedents that affect on AIS effectiveness but conducting research of AIS should make from a radical view to develop conceptual of AIS design so as to succeed in overall of the firm.

At present, IT age is widely applied to various disciplines, particularly involving more information usage to operation and management (Sutton, 2000). This study is motivated from an interesting accounting information quality to be conveyed immediately for managerial functions whenever managers need to use. As a result, mass accounting transactions occurred and various types complicated across organization subunits boundaries everyday. Therefore, accounting information system processes are more complexity in each of operation such as, economic events identifying, recording, classifying, summarizing, and communicating. Today, although majority of the firms invest in IT resources to support AIS, which may not be able to success underlying the same AIS designing in all firms because nature of each firm has a differentiation such as, objective, strategy, organization configuration, resource, organization learning, knowledge skills, and capability. So, the main point of the study addresses how key success factors relate to AIS success and whether impact of AIS success affects strategic cost management and strategic decision making underlying context of Thai foods businesses.

For this reason, AIS of each firm is differently established in order to support missions and functions of the organization. A vital problem to expanding AIS research is to focus on AIS success to provide information to effective management dealing with strategic cost management and strategic decision making. In addition, motivating to conduct confirming and expanding key success factors are comprised four variables as executive vision, employee knowledge, accounting system competency, and IT capability that they influence on AIS success. Hence, presenting problems and motivation can find research gap so that the study states the research questions as follows: How does AIS Success affect to strategic decision making and strategic cost management? How do strategic decision making and strategic cost management influence firm performance? How do key success factors affect AIS Success? And, how does technology policy influence on key success factors-AIS success relationship?

Thus, the purpose of study is to (1) investigate the relationship between AIS success and strategic decision making and strategic cost management (2) test how AIS success influences firm performance (3) examine whether executive vision, employee knowledge, and IT capability affect AIS success and (4) determine whether moderating technology policy influences on key success factors - AIS success relationship.

2. LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK

As depicted figure 1, the framework is constructed to answer how key success factors affect AIS success, and how AIS success influences on firm performance through managerial quality. Indeed, to examine influence of competitive environment whether affect on the relationship between key success factors and AIS success. The conceptual framework is delineated by resource-based view to link variables of the framework logically. Resource-based view (RBV) of the firm describes the issue to use resources in order to add its capability. Barney (1991) explains RBV of the firm that competitive advantage is obtained from resources and capabilities that create to be valuable, rare, inimitable, and non-substitutable. The resources and capability are viewed as tangible and intangible assets, including managerial skills, organizational operation process and routine, and knowledge its controls. RBV are confirmed with various researches in many disciplines, it shows that the resources and capabilities relate to competitive advantage under variety configuration, such as human resource management, e-commerce, economics and finance, marketing, and international business (Jay B. Barney, 2001; Finney et al., 2008).

2.1. AIS Success

AIS success is defined as ability of a system to provide quality accounting information and satisfaction of perceived users to support organization activities and managerial functions to achieve organizational goal (Ismail and King, 2005; McLean, 2003). The information is employed to planning, controlling, evaluating, and decision making. Mclean and Delone (1992) show their IS success framework that is measured by system quality, information quality, user satisfaction, use, individual impact, and organization impact. Moreover, this framework describes information quality that is explained with characteristics of information that the system can provide it; ease of access, flexibility, integration. Besides, response time of the system are obtained from IS success as hallmark of system competency (Delone and Mclean, 1992; Seddon, 1997). A key factor for IS success or effectiveness is found that user information satisfaction, ease of system affect IS effectiveness. Indeed, IS effectiveness also influences on organization performance (Barbara and Peter, 2005; Muylle et al., 2004; Wang and Liao, 2007). Similarly, AIS success can be evaluated by accounting information quality which consists of accuracy, timeliness, relevance, and flexibility.

Accounting information quality (AIQ) refers to value of information produced by AIS to have attributes as reliability which is composed of accuracy, relevance, and timeliness (Parssian, 2006). Moreover, one of elements of AIQ is information integration to help information users to improve strategic cost management and strategic decision making. Reliability means that perceived users elicit value of information that has attributions as accuracy, relevance, timeliness, and completeness. It is used to dealing with a useful in management functions (Schwartz and Mayne, 2005). Information is low reliability influencing management functions, especially to decision making errors leading to organization performance. Reliability of accounting information is important to both internal and external users to decision in economic events. Therefore, reliability of information is evaluated to improve efficiency and effectiveness from assessment approach (Krishnan et al., 2005).

Relevance of information is a content of reports or documents that serve purpose. Besides, it can support decision making of users in all level of organization. Timeliness means information which is up-to-date content, and has capacity to reporting fast under IT supporting. For example, we have to know inventory balances to production planning and raw material purchasing in time for using production line. Certainly, information can be retrieved its report quickly to decisions to be managerial quality. Accuracy refers to information which contains no material error. However, it is a difficult to complete information absolutely. Materiality of error may be led to incorrect decisions when managers use it, decreasing risk, and increasing competitive advantage (Parssian, 2006). Furthermore, Integration is linking information provided by AIS integrating information from various organization subunits for managing organization to achieve goals.

2.2 Consequences of AIS Success

2.2.1 Strategic Decision making

Strategic decision making is defined as a process of decision relates to strategic choices which are evaluated to be various alternatives clearly. Then one of the alternatives is selected to make decision underlying comprehensiveness and decision speed leading to improve competitive advantage and achieving goal (Dean and Sharfman, 1996; Talaulicar et al., 2005). Role of AIS success supports accounting information quality as accuracy, responsiveness, flexibility, and relevance that they can be used in problem analysis to clarify the problem. The alternatives, then, are divided and evaluated by accounting information in each alternative for selecting decision. Next the best choice is selected to optimize organizational performance.

This decision making process employs accounting information and decision maker’s knowledge and skills to be decision success (O'Donnell and David, 2000). In other words, decision making process associates with decision effectiveness which is outcome of the decision process (Dean and Sharfman, 1996; O'Donnell and David, 2000). Main point of decision is problem comprehensiveness and decision speed to be able to modify objective and strategy rapidly to create competitive advantage over competitors (Borut, 2005) from information responded by AIS. Hence, hypothesis 1 is proposed

Hypothesis 1: an organization is high AIS success; it will achieve greater strategic decision making

2.2.2 Strategic Cost Management

Strategic cost management (SCM) is to apply of cost management technique to provide cost information which is supported by IT to add competitive advantage for implemented firm. The cost information can be used to enhance strategic position of the firm and reduced costs (Archie, 2003; Robin and Regine, 1998). From value chain analysis, the manufacturing firm has information of customer needs, qualities and descriptions, and raw materials of suppliers to production planning and control including delivery to customers. The information interchanged among firms in value chain, vendors, manufacturers, and customers, is to be competitive advantage of the manufacturing firm due to reducing production cycle time, decreasing inventory levels, and response customers needs on time. Moreover, cost diver analysis is elicited to know causal factors that drive product costs, and next non-value added activities that do not increase value for customers are separated and eliminated, costs reduced. Thus, this process can be value creation to customers (Riccardo and Suresh, 2006).

Certainly, SCM perspective has to employ accounting information to value chain analysis in order to product planning from customer needs and supporting raw materials ability-suppliers to produce smoothly, cost diver analysis to be able to reduce costs and creating value creation for customers. AIS success provides this information as accuracy, timeliness, and relevance to support SCM and improving competitive advantage, cost leadership due to low cost from economics of scale in production, learning curve effects, emphasizing cost control, and using information to product design cost according to customer needs. Moreover, a firm is a differentiation which the firm can produce the products as unique from customers perceived, creating brand royalty, and good customer services (Porter 1980 ; Shank, 1996). Hence, AIS success is an important to efficiency and effectiveness of SCM. Hypothesis 2 is formulated