The influence of firm size, stakeholder involvement, and internal environmental management on decision of small-medium sized accounting firms to adopt computerised accounting systems in KwaZulu-Natal, South Africa

Abstract

Financial statements are an important tool for making informed decisions in a company. In the modern business world, many companies rely on information technology, such as computerised accounting systems, to streamline the preparation of these financial statements. Despite the numerous benefits these systems offer, some organisations still choose to prepare their financial statements manually, exposing themselves to risks such as errors, inefficiencies, a lack of scalability, and limited real-time visibility. These challenges can hinder effective financial management and decision-making processes. This study examines the factors influencing the decision of small and medium-sized accounting firms (SMAs) in KwaZulu-Natal, South Africa, to adopt computerised accounting systems. In particular, this study examines the influence of firm size, stakeholder involvement, and internal environmental management on these decisions. The study uses agency theory to explain the dynamics between the SMAs, who act as agents, and their clients, the principals, who rely on their services to prepare financial statements. Based on the questionnaire survey, the results show that all three factors— firm size, stakeholder involvement, and internal environmental management— significantly and positively influence the decision to adopt computerised accounting systems. Stakeholder involvement proves to be the most influential predictor. This study offers practical implications for SMAs and emphasise the crucial role of computerised accounting systems in improving communication and networking with stakeholders, including customers, bankers, and government agencies. The introduction of these systems ensures the fast and accurate production of financial information, thus meeting the needs of all stakeholders. Furthermore, this study contributes to the existing literature on the factors driving the adoption of computerised accounting systems, with particular focus on the context of KwaZulu-Natal, South Africa.