Intellectual capital and business performance. An exploratory study of the impact of cloud-based accounting and finance infrastructure
| Date | 11 April 2016 |
| Pages | 255-278 |
| DOI | https://doi.org/10.1108/JIC-06-2015-0058 |
| Published date | 11 April 2016 |
| Author | Peter Cleary,Martin Quinn |
| Subject Matter | Information & knowledge management,Knowledge management |
Intellectual capital and
business performance
An exploratory study of the impact of
cloud-based accounting and
finance infrastructure
Peter Cleary
Department of Accounting, Finance and Information Systems,
University College Cork, Cork, Ireland, and
Martin Quinn
Dublin City University Business School, Dublin, Ireland
Abstract
Purpose –The purpose of this paper, building on previous studies of intellectual capital (IC) and
business performance, is an exploratory study of how the use of cloud-based accounting/finance
infrastructure affects the business performance of small and medium-sized enterprises (SMEs). The
paper aims to discuss these issues.
Design/methodology/approach –A survey method is used to capture perceptions of how
cloud-based accounting/finance infrastructure affects business performance in SMEs. The study
assumes that although accounting/finance systems are generally regarded as one element of a firm’s
structural capital; the introduction of a cloud-based infrastructure in the accounting/finance area has
the potential to positively impact on all three elements of a firm’s IC. Based on the survey data
collected, a conceptual model was formulated to test the relationship between cloud-based accounting/
finance infrastructure and business performance through the prism of firms’IC.
Findings –The results indicate that cloud-based accounting/finance infrastructure has a positive and
statistically significant impact on human capital and relational capital. On structural capital, although
positive, the relationship is not statistically significant. On the relationship between the three
components of IC and business performance, all three elements are both positive and statistically
significant. Furthermore, the R
2
value generated for the ultimate endogenous construct in the
hypothesised conceptual model, i.e. “Business Performance”is 71.3 per cent, indicating significant
model explanatory power.
Research limitations/implications –The findings suggest further more in-depth research is
needed to explore in detail the effects of cloud-based accounting/finance infrastructure on both the IC
and subsequent business performance of SMEs.
Originality/value –Studies on the effects of cloud computing on accounting are scarce. This
exploratory research suggests that cloud-based accounting/finance infrastructure can potentially
improve the business performance of SMEs. While a valuable finding in itself, more research in this
area is to be encouraged.
Keywords Cloud computing, SMEs, Intellectual capital, Business performance, Accounting/finance
Paper type Research paper
1. Introduction
The success of modern firms partially depends upon their ability to invest in new
technologies that facilitate the exploitation of new commercial opportunities and/or
improved incumbent business processes –in other words, allows a firm to adapt. This
paper focuses on adaptions to firms accounting/finance systems infrastructure.
According to the accounting literature, drivers of accounting change can be identified
Journal of Intellectual Capital
Vol. 17 No. 2, 2016
pp. 255-278
©Emerald Group Publis hing Limited
1469-1930
DOI 10.1108/JIC-06-2015-0058
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
255
Intellectual
capital and
business
performance
in three broad categories, namely: increasing globalisation; improved information
technologies; and improved methods of production (Burns et al., 1999; Russel and
Siegel, 1999; Scapens et al., 2003). Here, the focus of this paper is on improved
information technologies and specifically on cloud computing.
Recently, it has been claimed that the technological development that is cloud
computing, has the capability to transform how firms and society as a whole
operates –as noted by Edvinsson (2013, p. 167) “cloud computing and social media will
play a growing power role for the new societal fabric”. It could therefore be postulated
that the adoption of cloud-based accounting/finance infrastructure is one element of
this transformation. As such, it is worthy of research in a similar way the effects of
enterprise systems were in the past decade (see e.g. Davenport, 2000; Granlund and
Malmi, 2002; Murphy and Simon, 2002; Shang and Seddon, 2002).
The advent of cloud computing has allowed firms of varying sizes to avail of
enhanced processing power, storage, hardware and networking capacity, without a
corresponding capital investment requirement (Marston et al., 2011). Alongside such
potential operational benefits, it has been suggested that the use of cloud comp uting
from a human resources perspective can potentially improve organisational
performance, innovativeness and ultimately a firm’s intellectual capital (IC) (Afshari,
2014; Bhadani, 2014). IC is defined here as a firm’s collection of human capital
(e.g. employee knowledge and experience), structural capital (e.g. organisational
systems and databases) and relational capital (e.g. internal and external relationships)
(Edvinsson and Malone, 1997; Roos et al., 1997; Stewart, 1997; Bontis, 1998; Sveiby,
1998), which through their continual interaction can create value, leading to a
potentially positive impact on subsequent business performance (see e.g. Sharabati
et al., 2010; Novas et al., 2012; Mention and Bontis, 2013). According to Edvinsson (2013,
p. 166), “for more than five centuries, accounting has been an instrument for assessing
knowledge, directly or indirectly”. However, despite the fact that the use of cloud
computing may potentially transform the accounting function to become front-office
focused and hence, strategic, it has been suggested that accounting within firms
remains predominantly back-office orientated (Young, 2010). However, some recent
evidence suggests that small and medium-sized enterprises (SMEs), which collectively
generate the vast majority of economic activity within most European countries, are
beginning to adopt cloud technologies for their accounting/finance infrastructure and
gaining advantages, but less so than other functions such as sales and customer service
(see e.g. Quinn et al., 2014).
Prior research has regarded firms’accounting/finance infrastructure as part of their
structural capital (Booth, 1998; Lynn, 1999; Roberts, 2003; Novas et al., 2012). The
authors argue that if a cloud-based accounting/finance infrastructure is adopted by
firms’(i.e. their incumbent accounting/finance systems are based on cloud computing
technologies), it has the potential to strengthen all three elements of their IC, which
in-turn can positively impact on their subsequent business performance. This currently
unfounded proposition is what this paper explores by proposing and testing a model on
the effects of cloud-based accounting/finance infrastructure on the IC and business
performance of SMEs (see Section 4, later).
The remainder of the paper is organised as follows. Section 2 contains a
comprehensive literature review, culminating with an argument for the present study.
Section 3 describes the research methodology used, Section 4 outlines the research
findings and model, and finally, Section 5 outlines some concluding comments and
suggests avenues for future research.
256
JIC
17,2
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