CRIEFF Discussion Paper Number 0306
Co-evolution of Information Systems in Fast-Growing Small Firms
Gavin
C. Reid and Julia A. Smith
Abstract
The paper examines the co-evolution of different
dimensions of information systems for a sample of fast-growing small firms. The
investigation uses primary source longitudinal empirical evidence. The data are
taken from a large database on the lifecycle experience of
one-hundred-and-fifty new business starts over a four-year period. They were
collected by face to face interviews with owner-managers of small
entrepreneurial firms. Interviews were conducted using an administered
questionnaire that covered the agenda of markets, finance, costs, business
strategy, the development of a management information
system, human capital, organisation and technical
change. This work uses primarily the data on management information systems.
The basic approach
used is to compare the attributes of the fastest and slowest paced firms, as
identified by their growth rates. We then examine the evolution of these firms’
management information systems. The measures used to identify changes in
systems include: capital investment techniques, such as return on investment,
residual income, net present value, internal rate of return and payback period;
methods for managing costs, like just-in-time management, activity-based
costing, quantitative risk analysis, value analysis, strategic pricing and
transfer pricing; and using computer applications for storing information,
project appraisal, financial modelling, forecasting
and sensitivity analysis.
‘Time lines’ are
graphed to show the points at which various features of information systems are
introduced (e.g. data storage, forecasting, sensitivity analysis), and derived
techniques (e.g. ROI, ABC) implemented. Firms are dichotomised
into highgrowth and low-growth groups. Comparisons
are made within firms and across firms in terms of the co-evolution of
different aspects of their accounting information systems.
JEL Classifications: D21, D8, D92, M21, M41, O33
Keywords:
Coevolution, accounting information system (AIS), small
firms
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