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Revista de Contabilidad Spanish Accounting Review xxx (xx) (2014) xxxxxx
REVISTA DE CONTABILIDAD
SPANISH ACCOUNTING REVIEW
www.elsevier.es/rcsar
a r t i c l e
i n f o
Article history:
Received 31 July 2013
Accepted 25 February 2014
Available online xxx
JEL classication:
M1
M4
Keywords:
Management information systems
ROI
Cluster
PLS
New management techniques
a b s t r a c t
The literature review on the success of management information systems (IS) provides empirical evidence
that mere investment in IS and New Management Tools (NMTs) does not guarantee better business
results. Aiming to contribute to the knowledge of the factors explaining the success of IS implementation,
this paper classies them through cluster analysis, with a sample of Spanish companies according to the
valuation given by their nance directors (CFOs) to the quality of such systems and their use for strategic
purposes. This classication helps to answer three questions: do companies that better rate their IS
improve their performance? How do IS quality and strategy affect results? Is there a positive relationship
between the use of NMTs and improvement in performance?
Through the non-parametric KruskalWallis test and a partial least squares (PLS) model results are
yielded that support the rst question and show the positive effect of the IS quality and strategy on
improving corporate protability. Logistic regression showed an interaction between the use of NMTs
and the IS strategic approach with positive effects on improving protability.
The results of this study have signicant implications for companies, suggesting that investment in
new IS and NMTs must be coupled with a clear sense of strategy.
2013 ASEPUC. Published by Elsevier Espaa, S.L.U. All rights reserved.
La revisin de la literatura sobre el xito de los sistemas de informacin de gestin (IS) aporta evidencia
Corresponding author.
E-mail address: machado@uniovi.es (. Machado-Cabezas).
http://dx.doi.org/10.1016/j.rcsar.2014.02.001
1138-4891/ 2013 ASEPUC. Published by Elsevier Espaa, S.L.U. All rights reserved.
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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Introduction
The objective of management accounting is to provide timely
and value-relevant information to managers to help them take
short and long-term decisions (Gupta & Gunasekaran, 2005).
Nowadays, the environment is extremely competitive and globalised, and technologies are evolving constantly. Firms need more
effective and sophisticated management accounting systems to
successfully face the new conditions and improve their nancial
performance (Al-Omiri & Drury, 2007; Gupta & Gunasekaran, 2005;
Libby & Waterhouse, 1996; Mia & Clarke, 1999).
In recent years, increasing global competition has intensied the
challenges faced by managers, and many experts warn that management accounting needs to adapt to meet managers changing
needs if it is to maintain its relevance (Chenhall & Langeld-Smith,
1998a). Many innovations in management accounting have been
introduced in response, in an attempt to improve its utility.
Traditional techniques in management accounting, such as sections costs, budgets, standard costs, and direct costs have been
combined with more recent techniques over the last three decades.
There is no universal consensus on which techniques constitute New Management Tools (NMTs) (Cadez & Guilding, 2008).
Nevertheless, most authors consider as NMTs or non-traditional
techniques: activity-based costing (ABC), activity-based management (ABM), balanced scorecard (BS), just in time (JIT), total
quality management (TQM), target costing (TC), strategic management accounting (SMA), lifecycle costing (LCC), benchmarking and
theory of constraints (TOC). The prevalence of these techniques
indicates that rms need increasingly accurate and sophisticated
management information systems (IS) that adapt to managers
changing needs.
Researchers assume that managers, as rational agents, are
unlikely to adopt a management IS that does not help them improve
their rms nancial performance (Chenhall, 2003). Thus, management information will conceivably help improve decision-making
and, as a consequence, nancial performance. Likewise, rms that
rate their management IS highly will conceivably adopt NMTs to a
greater extent, with the ultimate objective of maintaining and/or
improving their nancial performance. The current piece of work
follows the approach of the abovementioned contributions to the
accounting literature and considers that a management IS is successful if it enables the rm to take better decisions and improve
its nancial performance.
Internal accounting IS differ between companies, for example, in
terms of quality, level of use and strategic relevance. Studies in the
accounting literature tend to focus on the impact of specic management techniques on nancial performance, while few look at
the evaluation rms make of their own IS and the relation of these
to nancial performance. Empirical evidence shows that investment in NMTs does not guarantee better results. The mechanisms
through which IS affect a rms performance are therefore underexamined. This study aims to contribute to this line of research by
analysing to what extent quality and the strategic approach of IS
improve rms performance, evaluating the effect that the use of
NMTs has on performance.
This study evaluates the management IS of a sample of Spanish
rms on the basis of the scores that their nancial directors (CFOs)
give in two areas: quality of IS (IS quality) and strategic use of the IS
(IS strategy), which are identied in a principal components analysis. We use these elements to accomplish a cluster analysis, which
identies three different types of rms depending on their management IS. This typology of rms is then used to answer the following
questions:
- Do rms whose management IS scores highly improve their performance?
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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Hypotheses
We carried out an empirical study based on a questionnaire sent
to a sample of Spanish rms to try to respond to the questions raised
in the introduction. Based on this information certain hypotheses
may be drawn and are presented below.
It can be said that the main aim of an IS is to improve and
enhance the overall performance of the organisation (Ranganathan
& Kannabiran, 2004); this is the reason why this criterion is used
to evaluate the IS in this study.
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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The measure of IS user satisfaction provides a useful assessment of the systems success (DeLone & McLean, 1992; Escobar
Prez & Vlez Elorza, 1997; Raymond, 1987). The degree of IS utility
perceived by users is similar to the expectations of future benets to be realised by using the system (Rai et al., 2002). Users are
likely to be satised with their rms IS and rate it highly when they
feel the system will help them improve their decisions and consequently improve the rms nancial performance. Thus, a positive
relationship conceivably exists between the score managers give to
their IS and the rms nancial performance. Obviously, the users
of the information obtained with an IS will rate it highly when
they are satised with the system. DeLone and McLeans IS success model (DeLone & McLean, 2003) is the method most widely
used by researchers, both at theoretical and empirical levels (Drr
et al., 2013); this model, as has been previously explained, establishes, among others, the user satisfaction and net benets variables
in order to evaluate the IS. Following this, Halawai, McCarthy,
and Aronson (2007) nd a relation between user satisfaction and
knowledge management systems success. However, IS success does
not always imply a signicant improvement of the rms performance (Lee, 2012).
Bearing all this in mind, in order to clarify whether a relationship
exists between user satisfaction (measured by the users evaluation
of IS quality and strategy) and performance, the rst hypothesis is
as follows:
H1 . Information systems with high scores are positively associated with the rms nancial performance improvement.
The possible effect of rms IS on nancial performance can be
evaluated in two ways: rst, by studying the change in the nancial
performance over a period of time; and second, by examining the
nancial performance observed at a particular moment in time. As
the issues covered in the survey refer to the characteristics and the
implementation of the IS during the last analysed period, we will
be studying the effect the IS has on the improvement of the rms
performance.
Since the valuation given by the CFOs regarding information systems is summarised in two main factors, IS strategy and IS quality,
Hypothesis 1 has been augmented with two additional hypotheses:
H1.1 and H1.2.
IS strategy alignment is assumed to facilitate the performance
of all organisations, regardless of type or business strategy (Chan,
Sabherwal, & Thatcher, 2006: 27). Some empirical studies have
found IS strategy alignment to inuence the rms nancial performance (Chan, Huff, Barclay, & Copeland, 1997; Chan et al., 2006;
Jarvenpaa & Ives, 1993; Teo & Ang, 1999). Thus, we propose the
following hypothesis:
H1.1 . IS strategy is positively associated with performance
improvement
Theoretically, it seems fairly clear that quality information may
improve nancial performance, given that this information should
allow better management decisions to be made, which may in turn
result in improved nancial performance. Some researchers have
found a positive correlation between IS quality and improvement
in performance (Byrd, Thrasher, Lang, & Davidson, 2006; Xingqiang & Ze-jiang, 2009). Byrd et al. (2006) nd that an IS quality
plan is essential for the success of an IS, particularly since the plan
improves the quality of the IT system. Consequently, the following
hypothesis is presented:
IS quality is positively associated with performance
H1.2 .
improvement.
Organizations dissatisfaction with their traditional accounting
techniques is a major motivation for the diffusion of NMTs (Beng,
Schoch, & Yap, 1994; Gosselin, 2006).
The literature review suggests the possibility of a positive relationship between the use of NMTs and nancial performance. The
adoption of recent management accounting changes are growing
due to their contribution to overall performance of organisations
Methodology
Before testing the hypotheses, we ran a principal components
analysis1 and obtained three factors relating to the management IS
in the sample rms (use of cost systems, IS quality and IS strategy).
The variables used to form the factors were obtained from Likerttype questions in a questionnaire sent to the CFOs of the sample
rms.
From the factors identied, which dene and evaluate the management IS, we ran a cluster analysis. This led to three types of rm
differentiated by the scores given to their management IS.
We tested the rst hypothesis by studying the evolution
of the nancial performance variables in the period analysed
(19962004), using the non-parametric KruskalWallis test, the
non-parametric MannWhitney test and partial least squares (PLS).
The KruskalWallis analysis is a non-parametric method for
testing whether samples originate from the same distribution. It is
used for comparing more than two samples that are independent
or not related. When the KruskalWallis test produces signicant
results, then at least one of the samples is different from the other
samples. The MannWhitney test is useful for analysing the specic
sample pairs for signicant differences.
Through PLS, which is a technique based on structural equations that allows the building of models with complex relationships
between observable and latent variables, a model was constructed to analyse the effects of IS quality and IS strategy in the
improvement of corporate performance. PLS path modelling is recommended in the early stage of theoretical development in order to
test and validate exploratory models, being particularly suitable for
prediction-oriented research (Henseler, Ringle, & Sinkovics, 2009).
Pearsons chi-square (2 ) test is used to determine the association or independence of two qualitative variables, such as those
related to cluster membership and the use or not of a particular
management tool.
To test Hypothesis 2, we use the logistic regression technique,
which allows the identication of characteristics that differentiate
the companies that have improved their nancial results. Among
the variables that explain the improved economic results are the
factors dening the IS and use of NMTs.
SPSS 19.0 and SmartPLS 2.0 were used for the statistical analyses.
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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Table 1
Characteristics of sample.
Dependent variables
Mean
25th
percentile
75th
percentile
44,962
20,602
68,028
41,055
198
8.3
16,226
70
2.7
52,890
284
11.9
Table 2
Use of new management techniques (NMT).
Management technique
ABC cost system
Balanced scorecard (BS)
Value chain analysis (VCA)
Just in time (JIT)
Business process reengineering (BPR)
Total quality management (TQM)
Computer-integrated manufacturing (CIM)
No. rms
10
20
2
6
7
20
7
% sample
17.9
35.7
3.6
10.7
12.5
35.7
12.5
Sample
Using information from the SABI database, from the rm
Informa, which holds accountancy data on Spanish companies, we
chose 450 rms as the object of analysis. The rms complied with
the following requisites:
- Spanish for-prot rms, operating, and founded before 1996.
- Revenues from ordinary activities exceeding D 10 million in 2004.
During 2006, we contacted the CFOs of the rms by phone
to inform them of the objectives of the study and request their
participation.2 The questionnaire was sent by e-mail to those CFOs
who agreed to receive the survey. The questionnaire was sent
again to rms that had not initially responded. Eventually, 56 valid
responses were received, which represent a response rate of 12.4%.
The 56 respondent rms are distributed by sector as follows:
- Industry: 75%
- Commerce: 10.7%
- Services: 14.3%.
Table 1 reports on the mean values and the 25th and 75th percentiles for some of the variables in the sample.
To test for non-response bias, we compared by sectors the
responding and non-responding rms revenue, total assets, number of workers and the ratio of operational prot divided by
total assets in 2004. There were no signicant differences across
these variables (at p = 0.05) with the exception of revenue, that
has a lower value in the case of non-respondents in the industry (D 35,091,900 vs. D 40,994,870). It was then understood that
there were no fundamental differences between respondents and
non-respondents.
Of the 56 rms analysed, 58.9% apply at least one NMT (see
Table 2). The following are the most widely used: BS (35.7%), TQM
(35.7%), and ABC (17.9%).
2
Before elaborating the nal questionnaire, a pilot questionnaire was sent to ve
companies, asking who the most appropriate person to answer it was. In all the
cases, the answer was the CFO. In the SMEs, as with the companies of the sample,
the CFO is the person in charge of the IS as its main user.
3
This procedure has been used earlier, for example in studies predicting rm failure (Izan, 1984; Platt and Platt, 1990), or analysing protability (De Andrs Surez,
2000; Fernndez Snchez, Montes Pen, & Vzquez Ords, 1996).
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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Table 3
Factors obtained in principal components analysis.
Factor
Items
Scale validation
F1
Use of cost system
F2
IS quality
-Q1. Information system for one area (e.g. sales, production, etc.) is integrated with systems
for other areas
-Q2. Information system allows user to get answers easily
-Q3. Detailed sales and operations data from recent years are available
-Q4. Many perspectives on costs and performance are available
-Q5. Cost management system is currently excellent quality
F3
IS strategy
than accuracy has not been taken into consideration in the F3 due
to validation issues.
Results
Typology of rms according to their management information
system
In order to analyse the heterogeneity in the rms management IS, we produced a typology of the sample rms using cluster
analysis. Cluster analysis is a multivariate technique that classies observed cases into homogenous groups with respect to some
predetermined selection criterion. The cases in each cluster can be
considered similar, while the different clusters are assumed to
be distinct from each other (Aldenderfer & Blasheld, 1984; Hair,
Anderson, Tatham, & Black, 1999). Researchers argue that cluster
analysis can be used to show different combinations of variables
that identify the management IS, which is useful for testing the
effect of the system on nancial performance (Chenhall & LangeldSmith, 1998b).
We used the k-means technique to carry out the cluster analysis, taking as classication variables two factors, IS quality and IS
strategy, because they indicate the managers satisfaction with the
use and quality of the management IS. Since there is a strong correlation between the factor F1 (use of cost system) and factor F2 (IS
quality), it was decided not to include the rst one in the production
of cluster groups. The cluster analysis resulted in three groups of
rms distinguished by the values of these two dimensions (Table 4).
We calculated the mean of the two factors that characterise the
management IS for each rm, and then the mean for each cluster. Based on that value, the groups were labelled: high (26 rms),
medium (13), and low (17). The high group contains rms with
a high value in the two dimensions of the management IS; the
low group contains rms with the worst mean value in IS quality; and the medium group contains rms with the lowest value in
IS strategy. The non-parametric KruskalWallis test for k independent samples shows that statistically signicant differences exist
between the three clusters in the two factors.
Table 4
Mean of factors by cluster.
No. rms
IS quality (F2) (p = 0.00)***
IS strategy (F3) (p = 0.00)***
***
Low
Medium
High
17
1.16
0.09
13
0.16
1.10
26
0.67
0.61
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
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Table 5
Change in nancial performance.
MARGIN 1 (p = 0.02)**
MARGIN 2 (p = 0.00)***
ROI 1 (p = 0.00)***
ROI 2 (p = 0.00)***
ROI 3 (p = 0.01)***
ROI HC (p = 0.02)**
COSTS/OI (p = 0.00)***
**
***
Table 6
Relationships between constructs.
Low
Medium
High
Beta
t statistic
0.22
0.16
0.14
0.11
0.32
0.13
0.01
0.57
0.98
0.75
0.89
0.74
0.15
0.06
0.31
0.79
0.83
0.71
0.65
0.30
0.04
IS strategy IS quality
IS strategy ROI change
IS quality ROI change
Firm size IS quality
Firm size IS strategy
Firm size ROI change
0.244
0.419
0.201
0.086
0.179
0.303
1.60
4.05***
1.77*
0.52
0.95
2.27**
Hypothesis tests
Hypothesis 1
This hypothesis postulates that rms that score their management IS highly achieve superior improvements in their nancial
performance than the rest of the rms. Table 5 shows the mean
change in the relative protability indicators over the period
19962004 for the three groups of rms identied.
We used the non-parametric KruskalWallis test for k independent samples to investigate the existence of signicant differences
between the three clusters of rms in the change in the nancial
performance. The results show that signicant differences exist in
all the nancial performance variables in favour of the group of
rms giving the highest score to their management IS. The medium
group achieves the lowest changes. This may be because these rms
have a low score in terms of their IS strategy.
We also ran a non-parametric MannWhitney U test on the clusters taken in pairs. The results show that statistically signicant
differences exist between the high cluster and the low and medium
clusters. When comparing the low and medium clusters, only signicant differences are observed in the change in ROI 1 and ROI 2
against medium group.
*
**
***
0.179
0.419
0.032
0.086
IS strategy
0.306
ROI change
0.201
0.244
0.059
IS quality
Fig. 1. Model estimated using SmartPLS.
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
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Table 7
Percentage use of new management techniques (NMT).
%
Low
Medium
High
ABC
BS (p = 0.00)***
VCA (p = 0.03)**
JIT
BPR
TQM (p = 0.08)*
CIM
At least one new management technique
(p = 0.05)**
No. NMT (p = 0.03)**
Mean years of use of management technique
11.8
17.6
0.0
5.9
5.9
17.6
5.9
35.3
23.1
15.4
15.4
0.0
7.7
30.8
23.1
61.5
19.2
57.7
0.0
19.2
19.2
50.0
11.5
73.1
**
***
0.53
6.8
1.17
6
1.83
6.3
The results indicate that the rms from the high cluster use
NMTs more than the rest. This result holds both for percentage of
rms using at least one technique and for number of techniques
employed per rm. The rms from the low cluster use the least
number of techniques. In particular, the use of BS and TQM is signicantly higher in the high cluster than in the other two clusters.
In order to consider the rms experience in using NMTs, we calculated the mean number of years each technique had been used in
each rm, and then the mean for each cluster. But the results show
no statistically signicant differences among the three clusters in
this variable.
Hypothesis 2
Hypothesis 2 tests whether a positive relationship exists
between use of NMTs and nancial performance change. In view of
the previous results, if the NMTs form part of a management system
in which the information has strategic relevance, these techniques
can contribute to improved nancial performance. This is the case
of the high cluster.
Using NMTs on their own, without a strategic perspective, may
not have a positive effect on nancial performance. This is what
seems to be happening with the medium cluster, which uses NMTs
more than the low cluster but has the worst nancial performance.
Most rms in the high cluster use BS, which seems to be an effective technique for implementing and controlling a strategy that
improves nancial performance. The effect of the IT on nancial
performance is not the same for all rms. It depends on the strategy
chosen, perhaps due to the fact that IT and strategy are complementary in their effect on rms nancial performance (Shin, 2006). In
this line, Chan et al. (2006) nd empirical evidence that use of IS for
strategic purposes has a positive effect on a rms nancial performance, and Teo and Ang (1999) conclude that using IT for strategic
purposes is one of the key success factors in management.
The results of the logistic regression that are presented below
provide additional empirical evidence concerning Hypothesis 2.
Application of logistic regression
Having found that the margins and protabilities differ depending on the characteristics of the management IS that rms use, the
task now is to determine if the different dimensions identied for
the IS and the use of NMTs help explain the different margins and
protability change obtained by the rms. For this analysis, we used
logistic regression.
The sample is ranked for each nancial performance-change
variable in increasing order, and the 28 cases with the lowest value
are given 0, and the 28 cases with the highest value, 1 (except
for operational costs over operational income, where the criterion
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
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Table 8
Logistic regression of protability change variables.
Constant
MARGIN 1
MARGIN 2
ROI 1
ROI 2
ROI 3
COSTS/OI
ROI HC
0.51
P = 0.21
0.55
P = 0.20
0.74
P = 0.09
0.53
P = 0.20
0.64
P = 0.12
0.51
P = 0.21
0.88
P = 0.04
1.63
P = 0.00
2.44
P = 0.00
78.6
NMT
F2: IS quality
F3: IS strategy
F2 NMT
F3 NMT
Size (1: large, 0: small)
Sector (1: industrial, 0: non-industrial)
% cases classied correctly
0.94
P = 0.01
1.42
P = 0.00
1.54
P = 0.02
2.03
P = 0.00
1.85
P = 0.00
2.10
P = 0.00
2.31
P = 0.00
1.72
P = 0.00
1.69
P = 0.01
1.42
P = 0.02
1.40
P = 0.00
1.54
P = 0.02
71.4
75
78.6
75
66
71.4
4
In various studies that examine rms based on their level of protability the
authors remove the middle 50% of the sample, and run their analysis on the two
extreme protability quartiles in an attempt to dene the characteristics of high
and low protability (De Andrs Surez, 2000). In other studies the researchers take
as high- and low-protability groups the areas outside an interval of plus/minus
various percentage points around the mean sector protability (Fernndez Snchez
et al., 1996). The current authors are working with a relatively small sample (56
cases), so chose to not omit any cases.
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Table A.2
Factorial loadings matrix.
Acknowledgement
The authors wish to thank anonymous reviewers for their comments and suggestions.
ANNEX. Measurement model internal consistency
The measurement model includes the relationships between
each construct and its indicators and is based on the calculation
of the principal components. The constructs must full certain
internal consistency properties: unidimensionality, reliability, convergent validity and discriminant validity.
Unidimensionality. A principal component analysis is carried out
for each construct, subsequently applying Kaisers criterion (Kaiser,
1960), such that the eigenvalue is greater than 1 only for the rst
principal component. A different principal component analysis was
carried out for each construct. Another important factor is the percentage of variance explained: the rst component being required
to explain most of the variance. Table A.1 shows that the requirement of unidimensionality is met for all the constructs analysed.
Reliability. This measures the consistency of the indicators that
make up the construct; i.e., the indicators should be measuring the
same concept. Cronbachs alpha (Cronbach, 1970) and the composite reliability (Werts, Linn, & Jreskog, 1974) are calculated, ranging
from 0 (absence of homogeneity) to 1 (maximum homogeneity).
Cronbachs alpha assumes a priori that each indicator of a construct
contributes in the same way, while the composite reliability uses
the loadings of items as they exist in the causal model. When speaking of reliability, the usual requirement is that the values of both
indices should be above 0.7. It can be seen in Table A.1 that these
indices exceed this minimum threshold in all cases.
Convergent validity. This is the degree to which the indicators
reect the construct. The Average Variance Extracted (AVE) was
calculated, which indicates the extent to which the construct variance can be explained by the chosen indicators (Fornell & Larcker,
1981). The minimum recommended value is 0.5 (Baggozi & Yi,
1988), which means that over 50% of the variance of the construct
is due to its indicators. Table A.1 shows that the AVE of all the latent
variables exceeds the value of 0.5.
A second approach to analysing the fullment of convergent
validity is to check that the factorial loadings of the principal
component matrix are greater than 0.5 for each of the indicators
Q1
Q2
Q3
Q4
Q5
S1
S2
S3
ROI 1 change
ROI 2 change
ROI 3 change
FS1
FS2
FS3
IS quality
IS strategy
ROI change
0.845
0.893
0.799
0.714
0.797
0.136
0.250
0.160
0.317
0.280
0.319
0.157
0.025
0.055
0.244
0.214
0.208
0.089
0.110
0.874
0.844
0.689
0.417
0.447
0.346
0.096
0.040
0.266
0.252
0.296
0.260
0.099
0.279
0.353
0.373
0.251
0.992
0.988
0.983
0.254
0.173
0.154
Firm size
0.008
0.025
0.138
0.079
0.057
0.209
0.106
0.117
0.246
0.216
0.240
0.885
0.795
0.807
(Jreskog & Srbom, 1993) or that they are above 0.7 according to
some authors (Chin, 1998). The last column of Table A.1 shows that
the aforementioned criterion is met in all cases.
Discriminant validity. This means that each construct should be
signicantly different from the other constructs. A factorial loadings matrix was obtained to analyse the discriminant validity, as
well as the cross-factor loadings. The factorial loadings are Pearson
correlation coefcients between the indicators and their own construct. The cross-factor loadings are Pearson correlation coefcients
between the indicators and the other constructs. The factorial loadings should be greater than the cross-factor loadings. Therefore, the
indicators should be more closely correlated with their own construct than with the other constructs. This criterion is met in the
proposed model, as shown in Table A.2.
A second criterion for verifying the discriminant validity is to
check that the square root of the AVE of the construct is greater
than the correlation between that construct and all the others (Chin,
1998). Table A.3 shows the correlation coefcients between the
constructs. The square root of the AVE is shown on the diagonal.
The condition of discriminant validity is also met following this
criterion.
Furthermore, for Bagozzi (1994) the correlations between the
different factors that make up the model should not be higher than
0.8, as occurs in this case.
Table A.1
Unidimensionality, reliability and convergent validity.
Constructs and indicators
Unidimensionality
Reliability
Convergent validity
Cronbachs
alpha
Composite
reliability
AVE
IS strategy
S1
S2
S3
1.95
65.16%
0.73
0.85
0.65
IS quality
Q1
Q2
Q3
Q4
Q5
3.32
Firm size
FS1
FS2
FS3
2.09
ROI change
ROI 1 change
ROI 2 change
ROI 3 change
2.96
0.68
22.65%
Loadings
0.874
0.844
0.689
0.58
66.47%
11.69%
0.87
0.91
0.66
0.846
0.893
0.799
0.714
0.797
0.61
69.69%
20.42%
0.78
0.87
0.69
0.885
0.796
0.807
0.05
97.53%
1.70%
0.97
0.99
0.97
0.992
0.988
0.983
Please cite this article in press as: Prez-Mndez, J. A., & Machado-Cabezas, . Relationship between management information systems
and corporate performance. Revista de Contabilidad Spanish Accounting Review (2014). http://dx.doi.org/10.1016/j.rcsar.2014.02.001
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Table A.3
Correlations between constructs and the square root of the AVE (on the diagonal).
IS quality
IS strategy
ROI change
Firm size
IS quality
IS strategy
ROI change
Firm size
0.812
0.228
0.309
0.042
0.806
0.410
0.179
0.985
0.237
0.831
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