Determinants and Performance Impact of Cloud Accounting Information Systems: The Mediating Role of Accounting Information Quality in Saudi Arabian MSMEs

Abstract

Micro, Small, and Medium Enterprises (MSMEs) constitute 95% of all businesses worldwide and are fundamental to global economic development, contributing significantly to GDP and employment. However, they face a pronounced productivity gap compared to larger firms, often exacerbated by limited access to finance and inadequate accounting practices. These challenges restrict their growth and economic impact, especially in developing economies. The adoption of cloud-AIS offers a promising solution by providing MSMEs with sophisticated yet accessible financial management tools. These systems are poised to improve financial transparency and access to credit, thereby boosting productivity and benefiting the wider economy. Despite these advantages, adoption rates for cloud-AIS among MSMEs remain low. Given the paucity of empirical studies exploring the integration of cloud computing with AIS by MSMEs, especially in Saudi Arabia, there is a substantial gap in our understanding of the dynamics influencing cloud-AIS adoption and its effect on business performance. This research seeks to fill this gap by identifying the determinants of cloud-AIS adoption among MSMEs in Saudi Arabia and explaining the relationship between adoption and business performance through the quality of accounting information. This research aims to comprehensively examine the adoption of cloud accounting information systems (cloud-AIS) within the context of MSMEs in Saudi Arabia at the firm-level. The research is driven by four primary objectives: (1) To develop a conceptual framework that integrates factors influencing cloud-AIS adoption and assesses its effect on business performance; (2) To identify and analyse the internal and external factors affecting cloud-AIS adoption; (3) To evaluate the direct impact of cloud-AIS adoption on the performance of MSMEs using both financial and non-financial metrics; and (4) To examine the mediating role of accounting information quality in the relationship between cloud-AIS adoption and business performance. This study conducts a systematic literature review synthesising insights from 60 studies on electronic-AIS adoption and integrating multiple theoretical frameworks. It proposes the Customer-Organisation-Technology-Environment (COTE) framework which was empirically tested using a quantitative research methodology. Primary data were collected from 336 online survey responses from MSMEs across Saudi Arabia and analysed using the advanced Partial Least Squares - Structural Equation Modelling (PLS-SEM) technique, providing insight into adoption dynamics. Technological and environmental factors were found to significantly influence cloud-AIS adoption, whereas organisational factors were insignificant. Notably, customer factors significantly negatively affect adoption, indicating potential resistance. Furthermore, the adoption of cloud-AIS was found to enhance the quality of accounting information among Saudi MSMEs. These results emphasise the importance of high-quality accounting information for strategic decision-making and operational efficiency. However, the direct impact of cloud-AIS on business performance was found to be insignificant, thereby supporting the IT productivity paradox. Thus, the quality of accounting information fully mediates the relationship between cloud-AIS adoption and business performance, emphasising the importance of high-quality, reliable and timely financial data in leveraging the benefits of cloud-AIS. This research makes a significant contribution to the existing body of knowledge and offering theoretical and methodological insights. Furthermore, the findings have practical and theoretical implications for MSME owners, policymakers, technology providers and scholars.