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Determinants of Computerized Accounting Information System

Adoption by Hospitals in Addis Ababa, Ethiopia
Manchilot Tilahun
Raya University, College of Business and Economics, Department of Accounting and Finance

Abstract
The purpose of this study is to investigate factors that affect adoption of computerized accounting information
system by hospitals in Addis Ababa. It examines the effect of cost-benefit perception, perceived ease of use,
human resource, firm size and management commitment on computerized accounting information system
adoption. The study adopts explanatory research design along with census survey of all of 52 hospitals in Addis
Ababa. Primary data was collected from these hospitals. The main findings indicate that adoption of
computerized accounting information system is significantly affected by perceived ease of use, human resource
and management commitment. Furthermore, cost-benefit perception and firm size are not significantly related to
adoption of computerized accounting information system. The study recommends that hospitals should attempt
to employ qualified and competent personnel; accounting information system vendors should provide packages
that are easy to use and management to support accounting information system implementation.
Keywords: Computerized accounting information system, perceived ease of use, Addis Ababa

1. Introduction
It has frequently been said that accounting is the language of business. If that is the case, then an accounting
information system is the intelligence or the information providing vehicle of that language. Accounting
information system is a system that gathers, records, stores, and processes data to produce information for
decision makers. (Romney and Steinbart, 2012)
Accounting information system is defined as a computer-based system that processes financial information and
supports decision tasks in the context of coordination and control of organizational activities (Nicolaou, 2000).
An accounting information system can be either manual system or a computerized system that use
information technology or something in between. The procedure is the same without regarding the approach
taken. Accounting information system must gather, enter, process, store and report financial information. The
manual or computer hardware and software are the tools used to produce the information (Romney and Steinbart,
2012).
Computerized accounting information systems have replaced manual-based accounting system in virtually
all businesses and organizations giving accountants, managers, employees and stakeholders’ access to important
accounting information (Albright 2006).
According to Gwangwava et al (2012), computerized accounting system has three main advantages than
manual accounting system: computerized systems automate and simplify the process of recordkeeping, allowing
all transactions to be recorded in electronic format and posted automatically to ledger; computerized accounting
systems are more accurate, make fewer mistakes than manual accounting systems; and computerized accounting
systems are real time and provide updated information on account balances and the status of accounts.
As we live in the age of technological advancement, the role of computerized accounting information
systems is of greater importance in managing an organization and implementing internal control systems.
Accounting information systems allows a company to manage its business with potential benefits of improved
process flow, reduced inventories, better data analysis and customer service, and increased profit margins
(Gwangwava etal, 2012).
The significance of accounting information system in the economy of a nation has been recognized
universally, particularly in the contribution to the economic management of developing economy, where the
contribution of accounting information system towards growth, creating job opportunity and social progress is
highly important. The role played by accounting firms has been enhanced by the development of accounting
information system, which has contributed to the professional values added to these organizations (Laudon,
1991). Truth to be told, computerized accounting information system employed by software experts to process
accounting information systems with a good support of financial statements have reduced the human error factor,
compared to manual systems (Dalci and Tanis, 2009). Accounting information system also provide information
on actual budgets of the organization that will help the company’s management to plan and control business
operations ,but an appropriate framework that determine the usage and impact of accounting information system
is yet to be determined. According to Ahmed et al (2016), accounting information system is beneficial and
valuable to the all types of business regardless their size, it can provide help during all the process of decision
making and enhance business performance and strategies. Consequently, many organizations should adopt and
practice accounting information system in order to manage, execute and control adequately in all areas and

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Vol.8, No.9, 2018

functions.
According to Yuvaraj and Kibret (2013), accounting information system plays a vital role if it has a
potential for making administrative decision otherwise it misleads user’s idea and also that lead them to make
wrong decisions.
Despite all the advantages associated with the use of computerized accounting information system,
hospitals in Ethiopia are still disinclined to adopt this technology. Ethiopian firms have poor accounting records
for the purpose of avoiding tax and other obligations, which creates twofold problem. Poor records make it
difficult for companies to get reasonably valued credit and then to manage their affairs effectively if they do get
credit. Failing to make efficient decision based on financial information is a feature of firms in Ethiopia due to
multiple books kept by businesses, so that most companies do not have audit-worthy financial records (Yuvaraj
and Kibret, 2013).
Malik and Khan (2009) conducted a study in Pakistan and found that common challenges for implementing
computerized information system include poor electricity supply, lack of computer infrastructure, insufficient
and unsustainable funding and inadequate education. Ismail etal (2010) conducted a study and explore lack of
commitment, inability to provide extensive information technology infrastructure, difficulty of obtaining suitable
hardware and software as well as lack of skilled information technology personnel are factors that hinder
implementation of computerized information system of tertiary hospital in Malaysia.
Business organizations in Ethiopia are characterized by low level of technological adoption and inefficient
accounting system because of poor accounting records and non compliance of their accounting reports with
international accounting standards (Talegeta, 2014; Wegen, 2014).
However, to the best of the researcher’s knowledge studies have not been made to identify the determinants
of adopting computerized accounting information system by hospitals in Ethiopia in general and Addis Ababa in
particular. Therefore the objective of the study is to identify factors that affect adoption of computerized
accounting information system by hospitals in Addis Ababa.

1.1 Objectives of the study

1.1.1 General Objective
The general objective of the study was identifying the determinants of adoption of computerized accounting
information system in hospitals in Addis Ababa region.
1.1.2. Specific Objectives
• To investigate the relationship of computerized accounting information system adoption with
management commitment and human resource.
• To examine the relationship between adoption of computerized accounting information system and
perceived ease of use, cost-benefit perception and firm size.

2. Literature Review
An accounting information system is a collection of resources such as individuals and equipment designed to
transform financial and other data in to information. This information is communicated to a wide variety of
decision makers. Bookkeeping data frameworks perform this change whether they are basically manual
frameworks completely computerized (Bodnar and Hopwood, 2013).
Computerized accounting information system is an electronic based system that processes financial data and
underpins errand of decision making within the setting of monetary administration and firm exercises. (Nicolau,
2000).
As discussed in various literatures, adoption of computerized accounting information system can be
affected by several factors. Factors that have gained more focus in this study are discussed in detail in the
following sections.

2.1 Cost- Benefit Perception

Perceived net benefit is the belief that the technology will provide benefit of greater value than its costs. The
potential advantage of accounting information technologies consists of cost savings and performance
improvement. Cost-benefit perceptions tend to have an impact on non adoption of accounting information
systems. The essential and common assumption in analyzing consumer behavior is value maximization. Guo and
Feng (2008) argued that chief executive officer who perceived the potential net benefits (excess of benefits over
costs) of using accounting information technologies is more likely to adopt them than a chief executive officer
who does not perceive the net benefit of the technology.

2.2 Human Resource

Human resources are most likely to be core sources of continuous competitive advantage of organizations
(Barney and Wright, 1998). According to Arocas and Camps, (2012), human asset have an impact on

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Vol.8, No.9, 2018

organizational performance. However, human resource is also main part of accounting information system as
they are involved in data entry, processing, and output. ALshbiel and Al-Awaqleh, (2011) in their study reported
a positive relationship between human resource and adoption of computerized accounting information system in
the hospitals of Jordan. Ahmed etal (2016) found a significant correlation between human resource and intention
to adopt computerized accounting information system. Gibson et al (2000) found that lack of skilled personnel is
the main problem for small businesses not to adopt information technology in Canada.

2.3 Perceived Ease of Use

Perceived ease of use can be defined as the degree to which an individual believes that using a particular system
would be free of physical and mental effort (Davis 1993). According to Muhammad etal (2017), perceived ease
of use means the user perceived that the system is very simple to use. Therefore, it is believed that users’
behavioral intention to use the system increases when system is perceived not difficult to use. Users that perceive
accounting information systems to be easy to use are more likely to adopt the technology than those that do not.
In line with this, Legrisa (2003) suggested that perceived ease of use is one of the most important factors in
explaining accounting information technology adoption. Thus the behavioral intention of chief executive officer
to adopt accounting information technologies is influenced by their perception of the characteristics of electronic
means. Therefore, chief finance officers who perceive accounting information technologies to be easy to
understand and use, are more willing to adopt electronic means. On the other hand Nasri and Charfeddine, (2012)
in their study found that there is no significant relationship between perception of a system as simple to use and
behavioral intention to use.

2.4 Firm Size

Information technology was limited to large companies in previous decades and can be used by small and
medium enterprises to enhance their performance (Ahmed et al, 2016). According to Gwangwava etal (2012),
firm size of a business also influences the intention to adopt accounting information systems. The size of firm
gives money related assets to acquire a new innovation and empowers spending on innovative activities. Larger
firms are more likely to be able to invest large amounts of capital, time and learning in order to use the
technologies than smaller firms.

2.5 Management Commitment

Management commitment is a style of leadership where both the manager and the subordinate participate
together in the foundation of work objectives, define authority levels, and clarify the performance commitments.
Management commitment is an underwriting to characterize, defend and support the main activities from the
earliest starting point to development of a project (Englund and Bucero, 2006).
Management commitment is very essential since without commitment of top management implementation
of many information system projects will fail. This is because management is a noteworthy supporter of
information system implementation in terms of guaranteeing the availability of resources, human resources and
visibility of system implementation (Schwalbe, 2006).
According to Cooper (2006), responsibility of top management is engaging in and maintaining behaviors
that others achieve the goals. Management commitment will improve the effectiveness of accounting
information system. Thong, et al. (1996) argue that if there is low level of top management support then top
management may not involved in aspects of information system implementation. They found that management
commitment improve the effectiveness of information system implementation, because they provide the
resources needed for information system projects. Rahayu (2012) on his study found that management
commitment has adequate effect on accounting information system implementation.

3. Research Methodology
As the objective of the research is to examine the relationship between computerized accounting information
system and its determinant factors, explanatory research design has adopted. The target population for the study
is hospitals in Addis Ababa city. According to Addis Ababa city health bureau there are a total of 52 hospitals,
12 of them are state run and 40 are privately owned hospitals in the city. For the purpose of this study since the
target population is too small census survey has been conducted. The study has used primary data collected
through structured questionnaires which is constructed on a likert scale and the gathered data was analyzed with
the help of STATA14 software.
Model Specification
Implementation (adoption) of computerized accounting information system can be affected by a number of
factors. For the purpose of this study, the dependent variable (adoption of computerized accounting information
system) is measured by questions developed on a likert scale basis and respondents are asked to rate each
question ranging from strongly disagree to strongly agree. For this reason (ordered ranking nature of the

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Vol.8, No.9, 2018

dependent variable i.e computerized accounting information system adoption), ordered logistic regression model
has been employed.
In this study adoption of computerized accounting information system will be explained by cost-benefit
perception, human resource, perceived ease of use, firm size and management commitment which can be
specified as follows:
CBP HR PEOU FS
Where:
ACAIS- Adoption of Computerized Accounting Information System
CBP- Cost- Benefit Perception HR- Human Resource
PEOU-Perceived Ease of Use FS- Firm Size
MGTC- Management Commitment ! "

4. Data Analysis
Cost-benefit perception, human resource, infrastructure, perceived ease of use, firm size and management
commitment were the independent variables tested by adopting binary logistic regression model.
The study used questionnaire to collect primary data. 52 questionnaires were distributed and 50 of them are
returned which bears a response rate of around 96%.

4.1 Determinants of Computerized Accounting information System: Ordered Logistic Regression

Analysis
The result of ordered logistic regression shows that human resource, perception of ease of use and management
commitment were found to be statistically significant factors for the adoption of computerized accounting
information system.
Table 1: ordered logistic regression result
Number of obs = 50
LR chi2(6) =132.82
Prob > chi2 =0.0000
Log likelihood = -13.962809 Pseudo R2 = 0.8263
Acais Coef. Std. Err. Z P>z [95% Conf. Interval]
Cbp .8540054 .9015893 0.95 0.344 -.9130771 2.621088
Peou 1.987319 .9580668 2.07 0.038 .109542 3.865095
Hr .9400499 .3496509 2.69 0.007 .2547468 1.625353
Fs .2787842 .3856464 0.72 0.470 -.4770689 1.034637
Mgtc 1.464091 .4272886 3.43 0.001 .6266209 2.301561
/cut1 11.35044 2.46836 6.512542 16.18834
/cut2 14.55477 2.829309 9.009425 20.10011
/cut3 18.34725 3.509141 11.46946 25.22503
/cut4 21.506626 3.937305 13.84929 29.28324
Source: stata14, 2018
As it is shown in the above table, there is a positive but statistically insignificant relationship between
adoption of computerized accounting information system and cost-benefit perception. There is no difference in
adopting computerized accounting information system between hospitals who perceive excess of benefits over
costs of using it and who don’t perceive. This result is contradicted with Guo and Feng (2008) who found cost-
benefit perception positively and significantly affects the adoption of computerized accounting information
system.
Perception of ease of use and adoption of computerized accounting information system found to be having a
positive and significant relationship in this study. This result suggests that if a hospital who perceives the
technology as easier to use and implement, the likely hood of adopting it will be high than hospitals who don’t
perceive it as easy to use. This finding is also supported by Legerisa (2003) who found perceived ease of use an
important factor for explaining computerized accounting information system. A study conducted by Abera
(2017), found insignificant relationship between complexity of the system and adoption of it by large and
medium enterprises in Addis Ababa. This is also supported by Nasri and Charfeddine (2012) who found
perceived ease of use hasn’t a significant effect for the adoption of computerized accounting information system.
In this study, human resource is found having a positively significant impact on the adoption of
computerized accounting information system in hospitals of Addis Ababa. This implies that organization who
have qualified and competent manpower are more likely to adopt computerized accounting information system.
This is also supported by Ahmad etal (2013) who found that human resource is significantly correlated with
adoption of computerized accounting information system. Additionally, Alshbiel and Alawaqleh (2011) in their

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Information and Knowledge Management www.iiste.org
ISSN 2224-5758 (Paper) ISSN 2224-896X (Online)
Vol.8, No.9, 2018

study found that human resource has a positive and significant impact on the adoption of computerized
accounting information system.
As it is depicted in the table, firm size did not appear to have a significant effect on the adoption and
implementation of computerized accounting information system by hospitals in Addis Ababa. This suggests that
hospitals adopt computerized accounting information system regardless of their size (i.e either big or small
companies will adopt it). This result is in contradiction with the findings of Fagbemi and Olaoye (2016) who
found firm size in terms of capital base has a direct association with the adoption of accounting information
system. Similarly, the finding in this study is against the finding in Gwangwava etal (2012) who found a positive
and significant relationship between adoption of computerized accounting information system and firm size.
Finally, this study found that management commitment and computerized accounting information system
adoption have a positive and significant relationship. The result is towards the argument that the more
management commitment and support, the more likelihood adoption of computerized accounting information
system. This finding is supported by Sharma and Yetten (2003) who concluded that management commitment
(management support) to be one of the critical factors in the successful implementation of computerized
accounting information systems. Similarly, Schwalbe (2006) argues that without top management commitment
support, implementation of computerized accounting system will fail. Ahmad etal (2013) also found there is
significant relationship between management commitment and computerized accounting information system.

5. Conclusion and Recommendation

The major objective of this study is identifying factors of computerized accounting information system adoption
by Hospitals in Addis Ababa. The determinant factors that are examined in this study are cost-benefit perception,
perceived ease of use, human resource, firm size and management commitment.
The findings imply that perceived ease of use (positive), human resource (positive) and management
commitment (positive) are the significant factors that affect the adoption of computerized accounting
information system by hospitals in Addis Ababa.
Accordingly, perception of potential excess of benefits received over costs of using computerized
accounting information system will increase the adoption of it. Moreover, if there is competent and qualified
human resource to operate the system in the organization, there is a high probability of adopting computerized
accounting information system. Additionally, an organization with highly commitment and support from
management is more likely to adopt computerized accounting information system.
Based on the findings the following recommendations are forwarded.
• Human resource has a positive and significant impact on the decision of the firm to adopt or not
adopting computerized accounting information system. Hospitals should attempt to employ qualified
and competent employees to use computerized accounting information systems and have to give
software training for their employees, so that they can adopt it. This can be done in collaboration with
higher education institutions to come up with appropriate curriculum and department to provide
qualified graduates.
• As the finding in this study indicates that perceived ease of use has a positive significant impact on
adoption of computerized accounting information system, it is recommended that accounting
information system vendors should strive to provide custom made accounting information packages that
are easy to use.
• The study finds a strong support for the argument that companies with high management commitment
are more likely to adopt computerized accounting information system than companies with little or no
commitment and support. The study recommends that management should support accounting
information system implementation, ensuring availability resources and facilitation of training to
accountants.

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