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Accounting
Empirical examination of information
organizational culture on system

accounting information system

and corporate performance 675

Evidence from a developing country perspective

Amoako Kwarteng
Business School, Ghana Institute of Management and Public Administration
(GIMPA), Accra, Ghana, and
Felix Aveh
Ghana Institute of Management and Public Administration (GIMPA), Accra, Ghana

Abstract
Purpose – The study aims to empirically examine the impact of organizational culture on accounting
information system and corporate performance of firms in Ghana.
Design/methodology/approach – A survey was conducted using top corporate executives of diverse
firms from different industrial sectors. The data were analyzed using structural equation modeling (SEM) and
a further post hoc test was done using analysis of variance (ANOVA).
Findings – The study demonstrates that there is a statistically significant relationship between organizational
culture on accounting information system and corporate performance. The results indicate that mission,
adaptability and consistency dimensions of organizational culture were significant and also accounting
information system influences corporate performance. Moreover, there are significant differences in the
means of accounting information system on different industrial sectors.
Research limitations/implications – The study is limited to the extent that only overall profitability
was used to measure performance. In addition, the study did not control for leadership style and
organizational structure in the relationships. The implication of the study is that ethical culture-shaped
accounting information system and financial reporting practice which ultimately leads to corporate
performance.
Originality/value – Ghana is a developing country where structures and institutions are not well
developed. Businesses and organizational forms are now beginning to pick up; therefore, organizational
culture, accounting information systems and their impact on corporate performance are not well documented.
These are all new phenomena in this part of the globe. The context of Ghana in terms of national culture that
feeds into organizational culture, institutions, quality and application of accounting information is entirely
different from that of advanced countries. The study therefore contributes to the extant literature by applying
the constructs of organizational culture, accounting information system and corporate performance within a
developing country perspective.
Keywords Organization, Culture, Accounting information system, Corporate performance, Ghana
Paper type Research paper

Introduction Meditari Accountancy Research

Organizational culture is a significant parameter for business survival and growth. Effective Vol. 26 No. 4, 2018
pp. 675-698
management must take into account not only the financial data, as they are presented in © Emerald Publishing Limited
2049-372X
business annual financial statements, but also the way culture affects quantitative and DOI 10.1108/MEDAR-01-2018-0264
MEDAR qualitative organizational variables as well (Wisna, 2015; Inah, Tapang and Uket, 2014;
26,4 Okpara, 2014; Denison, 1984, 1990, 1996, 2000). The organizational culture has been a
research object studied by many researchers throughout the years (Barney, 1986; Deal and
Kennedy, 1982; Denison, 1990; Ouchi, 1981; Pettigrew, 1979; Schein, 1985, 1990). As a result,
a series of definitions have been provided so as to explain the meaning of the term
“organizational culture” (Inah, Tapang and Uket, 2014). Despite the differences in these
676 definitions, some common characteristics seem to exist in all of them. First of all, they tend
to take into consideration elements that are widely acceptable among the company’s
employees. Secondly, all the definitions have accepted that organizational culture consists of
different layers. The core elements are the fundamental assumptions and the different
organizational values that exist since the day of the company’s foundation. These two
elements are resistant to change and determine the accepted behavioral norms (Inah,
Tapang and Uket, 2014). Taking into consideration all of the above, we can define the
organizational culture as the sum of those patterns of common convictions, rituals, fables
and sentiments that become collectively acceptable from the members of an organization
(Stokes and Harrison, 1992; Pettigrew, 1979; Denison, 1984).
The term organizational culture was used for the first time in the academic literature by
Pettigrew (1979) in the journal Administrative Science Quarterly. Organizational culture was
used to explain the economic successes of Japanese firms over American firms by
motivating workers who were committed to a common set of core values, beliefs and
assumptions (Denison, 1984). One of the most important reasons that explains the interest in
organizational culture is the assumption that certain organizational cultures lead to an
increase in organizational financial performance. According to Peters and Waterman (1982),
successful organizations possess certain cultural traits of excellence. Ouchi (1981) showed a
positive relationship between organizational culture and productivity. However, Rousseau’s
(1990) study showed no significant positive correlations between performance and culture.
Kotter and Heskett’s (1992) study found only a minor correlation between organizational
culture and long-term performance. Empirical evidence about organizational culture and
performance relationship so far has been inconclusive or at least mixed (Liviu and Corina,
2008). Moreover, despite the abundance of studies that have emphasized culture’s instrumental
value (Barley, 1988), there is still no comprehensive theory of how organizational culture may
influence organizational effectiveness (performance) or much empirical evidence to support the
idea (Denison and Mishra, 1989; Denison, 1984; Ogbonna and Harris, 2000; Rousseau, 1990;
Kotter and Heskett, 1992). Linked to the above discussion is the limited empirical studies on the
relationship between organizational culture, financial information system and corporate
performance (Liviu and Corina, 2008) in a single framework. The current study therefore
derives its motivation in part from this perspective.
Organizations today recognize the need to integrate the data associated with their
functions into large, seamless data warehouses. This integration allows internal managers
and possibly external parties to obtain the information needed for planning, decision-
making and control, whether that information is for marketing, accounting or some other
functional area in the organization (Bagranoff, Simkin and Norman, 2010). Information
systems provide information in the form of reports and displays to managers and many
business professionals. All information systems use people, hardware, software, data and
network resources to perform input, processing, output, storage and control activities that
transform data resources into information (O’Brien and Marakas, 2010; Hall, 2011) for
making corporate decisions. Accounting information system is a collection (integration) of
sub-systems, both physical and non-physical, that are interrelated and work together in
harmony with each other to process transaction or data related to financial issues into
financial information (Azhar, 2008). It has been posited in the previous research (e.g. Accounting
Marshall and Steinbart, 2017; Denison, 1984, 1990) that accounting information system is information
influenced by factors of corporate culture (corporate/organizational culture) which
ultimately leads to corporate performance.
system
The question to be addressed in this study therefore is: What is the impact of organizational
culture on the accounting information systems and corporate performance? In other words, it is
being proposed that organization culture has a strong influence on financial information
systems development and implementation. The identification and understanding of meanings, 677
norms and power in organizations is an important consideration when developing and
implementing an accounting information system (Indeje and Zheng, 2010) which will
ultimately lead to corporate performance.
The low quality of accounting information systems in Ghana has been documented by
the Ghana statistical service (GSS, 2017) and the Ghana Stock Exchange report (GSE, 2017)
that reporting system of local government and private commercial entities on financial
implementation tends to be inefficient in terms of both time and budget. Also, a number of
listed firms failed to submit financial statements which incidentally is part of the listing
requirements. Recent collapse of two major commercial banks in Ghana and its negative
effects on various stakeholders has rekindled the debate about quality of financial
information and reporting. The study therefore is timely to address the empirical gap in the
relationship between organizational culture, accounting information system and corporate
performance in the context of Ghana.

Theoretical framework
To address the question of the impact of organizational culture on the accounting
information systems and corporate performance, the current study adopted the
organizational culture framework of Denison et al. (Denison, 1990; Denison and Mishra,
1995; Fey and Denison, 2003), which was developed using a combination of qualitative and
quantitative investigations of organizational culture. We conceptualize organizational
culture along four dimensions that have shown to relate to organizational effectiveness:
involvement, consistency, adaptability and mission. The learned responses to the problems
of internal integration are observed by the traits of involvement and consistency. Survival in
the external environment is characterized by the adaptability and mission traits. Taken
together, the four traits measure:
[. . .] the underlying values, beliefs, and principles that serve as a foundation for an organization’s
management system as well as the set of management practices and behaviors that both
exemplify and reinforce those basic principles (Denison, 1990, p. 2).
This organizational culture model provides a systems approach to impacting organizational
effectiveness (Denison, 2000).
In system development, organizational culture can also have a positive influence on the
successful development of information systems (Stair and Reynolds, 2010). Organizational
culture is inherent in the development of an enterprise information system. Information
system designers, when designing information systems for an enterprise, cannot change the
norms that have become a culture in the organization (Laudon and Laudon, 2012).
Accounting information system is basically part of the whole organization information
system. Accounting information system is a specialized subsystem of the information
system that collect, process and report information related to the financial aspects of
business events, often integrated and indistinguishable from the overall information system
(El Louadi, 1998; Borthick and Clark, 1990; Wilkinson, 1993). Accounting information
MEDAR systems are a tool which, when incorporated into the field of information and technology
26,4 (IT) systems, are designed to help in the management and control of organization’ economic-
financial area. But the stunning advance in technology has opened up the possibility of
generating and using accounting information from a strategic viewpoint (El Louadi, 1998).
Accounting information system is vital to all organizations (Borthick and Clark, 1990;
Wilkinson, 1993), and perhaps, each organization either profit- or non-profit-oriented, needs
678 to maintain the accounting information systems. On the other hand, an accounting
information system is the whole of the related components that are put together to collect
information, raw data or ordinary data and transform them into financial data for the
purpose of reporting them to decision makers (Salehi, et al. 2010). To better understand the
term “accounting information system,” the three words constituting accounting information
system would be elaborated separately. Firstly, literature documented that accounting could
be identified into three components, namely, information system, “language of business”
and source of financial information (Wilkinson, 1993, pp. 6-7). Second, information is a
valuable data processing that provides a basis for making decisions, taking action and
fulfilling legal obligation. Finally, a system is an integrated entity, where the framework is
focused on a set of objectives (Bhatt, 2001). There are ten elements in the study of accounting
information systems, namely, technology, databases, reporting, control, business operations,
events processing, management decision-making, system development and operation,
communications and accounting and auditing principles (Boockholdt, 1999).
Firm performance is one of the most important constructs in management research. The
definition of firm performance could vary. According to Richard and Devinney (2009,
p. 719), organizational performance encompasses three specific areas of firm outcomes:
(1) financial performance (profits, return on assets, return on investment, etc.);
(2) product market performance (sales, market share, etc.); and
(3) shareholder return (total shareholder return, economic value added, etc.).

These three aspects complement each other. Profitability measures a firm’s past ability to
generate returns. Growth demonstrates a firm’s past ability to increase its size. Market value
represents the external assessment and expectation of firms’ future performance.

Literature review and hypothesis development

Organizational culture and corporate performance
Denison et al. (Denison, 1990; Denison and Mishra, 1995; Fey and Denison, 2003) believed
that organizational culture is embedded in a set of basic assumptions, values and beliefs
about employees, management, customers, shareholders, suppliers and others. Denison’s
model is made up of 4 basic dimensions and 12 sub-dimensions that are found to be related
with organizational performance like return on investment, return on assets, growth in
revenues and sales, market share, overall profitability, innovation, quality of products and
services and employee satisfaction. The results were expressed in a model that measure four
basic dimensions: mission, involvement, adaptability and consistency.
The involvement trait focuses on employees’ commitment and sense of ownership,
involvement in decisions that affect them and team orientation. Effective organizations
empower their employees, use teamwork and continuously develop the capacity of their
employees (Becker, 1964; Deal and Kennedy, 1982; Denison, 2000; Fey and Denison, 2003;
Peters and Waterman, 1982). This hypothesis suggests that high levels of involvement and
participation create a sense of ownership and responsibility. Out of this ownership grows a
greater commitment to an organization and a growing capacity to operate under conditions
of greater autonomy. Increasing the input of organizational members is also seen as Accounting
increasing the quality of decisions and their implementation. Ouchi (1980; 1981) suggests information
that the application of these principles results in an organizational form called the “clan.”
system
The hypothesis is a compelling one and persists as a central hypothesis regarding
organizational culture and performance.
Consistency refers to the existence of organizational systems and processes that promote
real alignment and efficiency over time. It is the focus on a common set of management
679
principles, consensus regarding right and wrong ways to do things and coordination and
integration across the organization:
The fundamental concept is that implicit control systems, based on internalized values, are a more
effective means of achieving coordination than external control systems that rely on explicit rules
and regulations (Denison, 1990, p. 9).
Organizations are more effective when they are consistent and well-integrated (Saffold,
1988). Effective organizations combine involvement and consistency in a continual cycle
such that “involvement is used to generate potential ideas and solutions, which are then
refined into a more precise set of principles” (Denison, 1990, p. 11). A number of authors
(Frost et al., 1985; Martin et al., 1983) have stressed this theme, and they have emphasized
the importance of shared beliefs and values to organizational effectiveness. They argue that
shared meaning has a positive impact because an organization’s members all work from a
common framework of values and beliefs which forms the basis by which they
communicate.
Adaptability is the organization’s capacity for internal change in response to external
conditions (Denison and Mishra, 1995). Companies that are highly internally focused and
integrated can have difficulty adapting to external market demands (Lawrence and Lorsch,
1967); hence, it is important to ensure a capacity for creating change, understanding the
customer and meeting their needs and continuing to learn as an organization (Fey and
Denison, 2003; Nadler, 1998). Thus, three aspects of adaptability are likely to have an impact
on an organization’s effectiveness: first is the ability to perceive and respond to the external
environment. As Abegglen and Stalk (1986) have pointed out, one of the distinguishing
characteristics of successful Japanese organizations is that they are obsessed with their
customers and their competitors. Second is the ability to respond to internal customers.
Insularity with respect to other departments, divisions or districts within the same
corporation exemplify a lack of adaptability and have direct impacts on effective
performance. Finally, reacting to either internal or external customers requires the capacity
to restructure and re-institutionalize a set of behaviors and processes that allow the
organization to adapt. Without this the ability to implement an adaptive response, an
organization cannot be effective.
Mission refers to the degree to which an organization is clear on why it exists and where
it is headed. Effective organizations pursue a mission containing economic and noneconomic
objectives that provide meaning and direction for their employees (Denison and Mishra,
1995). More specifically, these organizations have a clear purpose and direction, goals and
objectives and a vision for the future (Fey and Denison, 2003; Mintzberg, 1987).
Operationally, each of these four traits comprises three factors, indexes or variables. A
mission provides purpose and meaning by defining a social role for an institution and
defining the importance of individual roles with respect to the institutional role. Through
this process, behavior is given intrinsic or even spiritual meaning that transcends
functionally defined bureaucratic roles. This process of internalization and identification
MEDAR contributes both to short- and long-term commitment and leads to effective performance
26,4 (Denison and Mishra, 1989).
From the preceding discussion, we proposed the following hypotheses:

H1a. There is a statistically significant positive relationship between organization

culture (mission) and corporate performance when controlling for the effect of firm
680 size.

H1b. There is a statistically significant positive relationship between organization

culture (involvement) and corporate performance when controlling for the effect of
firm size.

H1c. There is a statistically significant positive relationship between organization

culture (consistency) and corporate performance when controlling for the effect of
firm size.

H1d. There is a statistically significant positive relationship between organization

culture (adaptability) and corporate performance when controlling for the effect of
firm size.

Organization culture and accounting information system

Three factors that influence the design of an accounting information system: development in
IT, business strategy and organizational culture (Marshall and Steinbart, 2017). An
organizational culture perspective and perception of employees to create beliefs, values and
expectations. Organizational culture can be explained mainly through the observation of
others, events in the organization and training (Lussier, 2008). The linkage between
organizational culture and the success of the accounting information system revealed that
organizational culture has a strong influence on the development and implementation of
financial information systems (Indeje and Zheng, 2010). An important factor in the
development and implementation of information systems is identifying and understanding
the meaning, norms and power within the organization. Implementation of information
systems in the financial services sector needed strengthening organizational cultural values
associated with customer orientation, flexibility, quality and performance orientation. The
managers should create a culture/atmosphere that fits the characteristics of the implemented
information systems (Indeje and Zheng, 2010; Marshall and Steinbart, 2017). Following a
view that accounting is a socially constructed reality, financial reporting practice cannot be
separated from its cultural context. Indeed, culture plays important roles in constructing
social structure and institutions (Hofstede, 1984; Schein 2004; Taylor 2004; Velayutham and
Perera 1996; Zucker 1988). Scott (1995) also believes that culture is a carrier of cognitive,
normative and regulative rules into organizations. Consequently, culture influences the
accounting information system and financial reporting practices of a company (Adams 2002;
Adams and Kuasirikun 2000; Geriesh 2003; Hofstede 1987). From the above discussion, we
proposed the following hypothesis:

H2. There is a positive relationship between organization culture and accounting

information system when controlling for firm size.
Accounting information system and corporate performance Accounting
The financial control culture is based on the belief that success depends on achieving information
efficiency by having a well-managed/administered organization in which good management
information systems support cost planning and control systems (Caulkin, 2003; Handy,
system
1985; Hope and Fraser, 2003; Peters and Waterman, 1982). In this study, we conceptualize
financial control culture as accounting information system. In this kind of culture, an
accounting view of activities is dominant, with a centralized accounting system based on the
annual budgeting process. The managerial structure in these organizations is hierarchical,
681
with an emphasis on departmental performance where vertical patterns of communication
dominate. There is an annual cycle of budget preparation, negotiation and implementation,
with review against monthly management accounts. The fundamental objective of the
organization is to deliver the budgeted outcome (Caulkin, 2003; Handy, 1985; Hope and
Fraser, 2003; Peters and Waterman, 1982). The system assumes that senior management
controls the organization by setting targets in a top-down fashion, and then scrutinizes
performance by comparing it against the budget. This might be characterized as a
“command and control” philosophy. The emphasis on financial performance places the
short-run interest of shareholders as the primary goal of the business. There will be an
emphasis on profitability measures with profit expressed as a return on fixed capital
investment. The key performance indicator will be return on capital employed.
Performance is monitored monthly through review with senior management and, if
necessary, the year-end forecast will be revised. Department managers are often keen to
improve their own department’s performance without considering the impact on other
departments and how their actions fit with the broader strategic goals of the
organization. It is assumed that if each department operates efficiently, then the whole
organization will be effective (Caulkin, 2003; Handy, 1985; Hope and Fraser, 2003;
Peters and Waterman, 1982; Johnson, Scholes and Whittington, 2008). From the above
discussion, we proposed the following hypothesis:

H3. There is a statistical significant positive relationship between accounting

information system and corporate performance.
The hypotheses were deduced from the conceptual framework (see Figure 1).

Methodology
Based on the theoretical model described above, a set of 12 questionnaire items were
developed focusing on the four dimensions of organization culture. Following Marshall and
Steinbart (2017), accounting information system was measured based on the attributes of
information system: usefulness, economy, reliability, timeliness and flexibility. After
identifying a population of firms in the Ghana, a probability sample of firms was drawn
from the files of the Ghana Investment Promotion Council (GIPC) following Birley (1984).
The sample placed primary emphasis on large firms, rapidly growing firms, manufacturing
firms, business services and financial organizations. Surveys were addressed to the chief
executive officer or top individual in each organization, and the respondents were most
typically the chief executive, operating or financial officer. Following the initial
verification of names, addresses and locations, a survey questionnaire, follow-up letter,
second survey and follow-up postcard were hand-deliver by research assistants with no
relationship to this study each spaced about one week apart. After these four hand-
delivered mailings, telephone calls were made to those firms that had still not returned
their surveys. All data collection was completed by October 2017. From 525 surveys
MEDAR
26,4

682

Figure 1.
Conceptual
framework

sent, 250 completed surveys were received and analyzed for an overall response rate of
47.6 per cent.

Operationalization of the constructs

Organizational culture. Organizational culture was operationalized using the following
proxies adapted from Denison et al. (Denison, 1990; Denison and Mishra, 1995; Fey and
Denison, 2003) framework of organizational culture:
Mission
 There is a clear strategy that gives meaning, purpose and direction.
 Leadership has gone on record to create agreement about ambitious, but realistic
goals that are understood and measured.
 There is a long-term vision that creates excitement and motivation and is not
compromised by short-term thinking.

Involvement
 The organization continually invests in the development of employees’ skills to stay
competitive and meet ongoing business needs.
 Value is placed on working cooperatively toward common goals to which all
employees feel mutually accountable.
 The organization relies on team effort to get work done.
 Individuals have the authority, initiative, and ability to manage their own work.
 This creates a sense of ownership and responsibility toward the organization.
Consistency Accounting
 Different functions and units of the organization are able to work together well to information
achieve common goals. system
 Organizational boundaries do not interfere with getting work done.
 The organization is able to reach agreement on critical issues.
 This includes the underlying level of agreement and the ability to reconcile
differences when they occur.
683
 Members of the organization share a set of values that create a strong sense of
identity and a clear set of expectations.

Adaptability
 The organization is able to create adaptive change.
 The organization is able to read the business environment, quickly react to the
current changes and anticipate future changes.
 The organization understands and reacts to the customer and anticipates their
future needs.
 It reflects the degree to which the organization is driven by a concern to satisfy the
customer. The organization receives, translates and interprets signals from the
environment into opportunities for encouraging innovation, gaining knowledge and
developing capabilities.

Accounting information system

Following Zulkarnain (2009); Sajady et al. (2008), accounting information system was
operationalized using the following proxies:
 The data storage contributes to the integrity of the financial reporting process.
 The data storage in sufficient details to accurately and fairly reflect company asset.
 The implementation of data collection could save shareholder’s money and time.
 The data processing has capable of making a difference in a decision by helping
managers to form predictions about the outcomes of past, present and future events.
 The data processing caused the improvement of the quality of the financial reports
and facilitated the process of the company’s transactions.
 The automated data collection process speeds up the process of generating financial
statements and overcome human weaknesses in data processing.

A Likert scale questions ranging from 1 = strongly disagree, 2 = disagree, 3 = neither

disagree nor disagree, 4 = agree and 5 = strongly agree were used for both the
organizational culture and accounting information system constructs.

Corporate performance
The dependent variable in our analyses, corporate performance, is primarily operationalized
through the respondents’ ratings of a performance measures using overall profitability. The
respondent was asked to rate his or her firm’s average performance for three years against
the industry average on a five-point Likert-type scale from 1 = poor, 2 = below average,
MEDAR 3 = average, 4 = above average, 5 = excellent in each of the profitability indicators.
26,4 Following Santos and Brito (2012), the profitability indicators were as follows:
 return on assets;
 EBTIDA margin;
 return on investment;
684  net income/revenues;
 return on equity; and
 economic value added.

A similar subjective question to assess firm performance was used in the work of
Wiklund and Shepherd (2003) and produced valid and reliable results. We adopted
this approach for two reasons. Comparing the firm to the industry’s average allowed
controlling for different economic activities in the sample (Dawes, 1999). Other
researchers also relied on respondents to minimize the sector influence on the data set
(Slater and Olson, 2000). Additionally, the use of a period of time (three years) instead of a
single year smoothens eventual fluctuations in the results of the companies (Kim et al.,
2004).
Following Anderson and Gerbing (1988), the size of the firm was measured using the
number of the employees of the firm. This was translated into a questionnaire on a Likert-type
scale. 1 = 1-499, 2 = 500-999, 3 = 1,000-4,999, 4 = 5,000-7,999, 5 = 8,000 and above. Structural
equation modelling (SEM) was used to analyze the data using IBM AMOS version 23.
Table I presents the demographic features of the respondents. Four industrial sectors (i.e.
mining and extractive, manufacturing, services and retail) participated in the study. The

Demographic Frequency (%) Cumulative (%)

Sectors
Mining and extractive 10 4 4
Manufacturing 115 46 50
Services 113 45 95
Retailing 12 5 100
Total 250 100
Position
Chief executive officers 50 20 20
Director of operations 65 26 46
Chief finance officers 73 29 75
Functional heads 62 25 100
Total 250 100
Experience
Above 10 years 51 20 20
5 to 10 years 110 44 64
Less than 5 years 89 36 100
Total 250 100
Table I. Gender
Demographic Male 165 66 66
characteristics of Female 85 34 100
respondents Total 250 100
services were made up of financial institutions, insurance companies and education. The Accounting
position of the respondents was mixed of chief executive officers, director of operations, information
chief finance officers and other functional heads in the various firms. Experience of the system
respondents cuts across with majority having between 5 to 10 years of experience. Gender
had male constituting 66 per cent while female was 34 per cent. The sample mixed was
considered adequate for all groupings.
685
Presentation of results
The application of the SEM for the data analysis was done using two major steps: the first
step involves the analysis of the measurement model to ensure reliability, convergent and
discriminant validity and any adjustment that will be necessary for the fitness of the model.
The second involves the analysis of the structural model to establish the relationships
between the constructs (Henseler et al., 2009; Götz et al., 2010).

Measurement model
We checked for reliabilities, convergent and discriminant validity of the constructs. The
(Fornell and Larcker, 1981; Henseler et al., 2009) criteria, that is, the values of the AVEs
should be greater than 0.50 (AVE > 0.50) should be used to ensure convergent validity
(Table II). For reliabilities, we used both Cronbach alpha (CA) and composite reliability (CR).
CA is very sensitive to the number of variables in each construct.
CA values above 0.60 and 0.70 are considered fitting in exploratory studies, and CR
values of 0.70 and 0.90 are considered satisfactory for confirmatory (Hair et al., 2014).
The study also evaluated the discriminant validity (DV) of the SEM, to assess the
independence of the constructs (Hair et al., 2014). Using the Fornell and Larcker (1981)
criteria, we compare the square roots of the AVE values of each construct with the Pearson
correlations between the constructs (Table II). The square root of the AVE should be greater
than the inter constructs correlation (Table III).

Analysis of structural model

Having established model fitness, we analyses the structural model. The study
evaluated Pearson’s coefficients (R2). R2 evaluates the portion of the variance of the
endogenous variables, which is explained by the structural model. The overall model,
i.e. organizational culture construct, is able to explain approximately 29 per cent of the
variance in the accounting information system, while accounting for information
system is able to explain about 25 per cent of the variance in the corporate
performance. Because the study deals with correlations and linear regressions among
the constructs, there was the need to assess if the relationships among the constructs
were significant (p # 0.05).

Constructs AVE Composite reliability Cronbach’s alpha

ACC INFO SYSTEM 0.649 0.881 0.820

ADAPTABILITY 0.532 0.773 0.760
CONSISTENCY 0.768 0.908 0.852
INVOLVEMENT 0.772 0.931 0.902 Table II.
MISSION 0.650 0.881 0.822 Reliabilities and
OVERALL PROFIT 0.727 0.930 0.906 convergent validity
 26,4

686

Table III.
MEDAR

Discriminant validity
Constructs ACC INFO SYSTEM ADAPTABILITY CONSISTENCY INVOLVEMENT MISSION OVERALL PROFIT

ACC INFO SYSTEM 0.806

ADAPTABILITY 0.429 0.729
CONSISTENCY 0.341 0.451 0.876
INVOLVEMENT 0.395 0.318 0.150 0.879
MISSION 0.388 0.297 0.159 0.491 0.806
OVERALL PROFIT 0.396 0.300 0.050 0.368 0.319 0.853

Note: Italic diagonal numbers are the square root of the AVE
As can been seen from Table IV, there is a statistically significant relationship between Accounting
organizational culture as measured by mission, adaptability and accounting information information
system ( b = 0.270, C.R. = 3.365, p < 0.000) ( b = 0.273, C.R. = 2.932, p < 0.003) without
controlling for the effect of firm size. However, consistency and involvement were not
system
significant. Moreover, the following variables have a significant effect on the overall
profitability without controlling for the effect of firm size: accounting information system
( b = 0.325, C.R. = 3.505, p < 0.000), mission ( b = 0.156, C.R. = 1.860, p < 0.071), adaptability
( b = 0.195, C.R. = 1.964, p = 0.049), consistency ( b = 0.209, C.R. = 2.280, p = 0.023). 687
Nonetheless, involvement was insignificant in relation to overall profitability (Figure 2).
We decided to control for the firm size since it is known to affect the design of accounting
information system and corporate performance. Underlying theoretical basis for arguing

Coefficient
Constructs Path Constructs estimate ( b ) SE CR p-values

ACCINFOSYSTEM / MISSION 0.270 0.080 3.365*** 0.000

ACCINFOSYSTEM / ADAPTABILITY 0.273 0.093 2.932*** 0.003
ACCINFOSYSTEM / CONSISTENCY 0.099 0.088 1.116 0.265
ACCINFOSYSTEM / INVOLVEMENT 0.094 0.088 1.066 0.287
OVERALLPROFIT / ACCINFOSYSTEM 0.325 0.093 3.505*** 0.000
OVERALLPROFIT / MISSION 0.156 0.086 1.806* 0.071 Table IV.
OVERALLPROFIT / ADAPTABILITY 0.195 0.099 1.964** 0.049
OVERALLPROFIT / CONSISTENCY 0.209 0.092 2.28** 0.023
Structural
OVERALLPROFIT / INVOLVEMENT 0.031 0.091 0.343 0.731 relationships without
controlling for
Note: *p < 0.1; **p < 0.05; ***p < 0.01 firm size

Figure 2.
Path relationship
without firm size
MEDAR that a firm size is related to profitability can be found in the traditional neoclassical view of
26,4 the firm and the concept known as economies of scale (Lee, 2009; Jonsson, 2007).
As can be seen from Table V, even after controlling for the effect of firm size,
organizational culture measured by mission and adaptability has a significant effect
on corporate performance as measured by overall profitability. Moreover, accounting
information system was statistically significant in relationship to corporate performance
688 after controlling for the effect of firm size.

One-way ANOVA test

The study considered four industrial sectors, i.e. mining and extractive, manufacturing,
services and retailing. As a result, a one-way ANOVA test was conducted to compare the
means of financial performance, accounting information system and organizational proxies
in relation to the various industrial sectors. To perform this test, the factor score was
computed so as to obtain a composite variable to represent the latent constructs. The test
results show that there was no significance difference between the means of financial
performance and organizational culture proxies [ANOVA F(3,246) = 1.760, p = 0.155; 1.351,
p = 0.258; 1.859, p = 0.137; 0.564, p = 0.640; 0.620, p = 0.602 for overall profit, adaptability,
consistency, involvement, mission, respectively] (Table VI). However, there was significance
difference between the means of accounting information system in relation to the industrial
sectors as determined by one-way ANOVA F(3,246) = 5.849, p = 0.001) (Table VI). This is
not surprising given the fact that the nature and size of the industry can influence the design
and implementation of accounting information system.
Post hoc analyses using the Tukey post hoc criterion for significance indicated that the
mean of the accounting information system was significantly lower in the mining and
extractive sector condition (M = 1.25, SD = 1.507) than in the other sectors such as
manufacturing, services and retailing (M = 0.013, SD = 0.921; M = 0.093, SD = 1.012; M =
0.038, SD = 0.349, respectively).
Table VII, Multiple Comparisons, shows which groups differed from each other. We
can see from Table VII that there is a significant difference in the mean accounting
information system between mining and extractive (Min_Extract) and manufacturing
(p = 0.001), services (p = 0.000), retailing (p = 0.012) sectors. However, there were no
differences between manufacturing, services and retailing (p = 0.923, p = 0.923, p =
0.998, respectively).

Constructs Path Constructs Estimate SE CR p-value

ACCINFOSYSTEM / MISSION 0.258 0.081 3.182*** 0.001

ACCINFOSYSTEM / ADAPTABILITY 0.274 0.093 2.949*** 0.003
ACCINFOSYSTEM / CONSISTENCY 0.093 0.088 1.054 0.292
ACCINFOSYSTEM / INVOLVEMENT 0.098 0.088 1.119 0.263
ACCINFOSYSTEM / FIRMSIZE 0.064 0.077 0.834 0.404
OVERALLPROFIT / ACCINFOSYSTEM 0.335 0.092 3.637*** 0.000
OVERALLPROFIT / MISSION 0.175 0.087 2.017** 0.044
Table V. OVERALLPROFIT / ADAPTABILITY 0.191 0.099 1.937* 0.053
OVERALLPROFIT / CONSISTENCY 0.200 0.091 2.196** 0.028
Structural OVERALLPROFIT / INVOLVEMENT 0.022 0.091 0.242 0.809
relationships when OVERALLPROFIT / FIRMSIZE 0.118 0.080 1.489 0.136
controlling for
firm size Note: *p < 0.1; **p < 0.05; ***p < 0.01
Constructs Details Sum of squares df Mean square F Significance
Accounting
information
OVERALLPROFIT Between groups 5.252 3 1.752 1.760 0.155 system
Within groups 244.749 246 0.995
Total 250.001 249
ACCINFOSYSTEM Between groups 16.646 3 5.549 5.849 0.001
Within groups 233.351 246 0.949
Total 249.997 249 689
ADAPTABILITY Between groups 4.052 3 1.351 1.351 0.258
Within groups 245.948 246 1.000
Total 249.999 249
CONSISTENCY Between groups 5.543 3 1.848 1.859 0.137
Within groups 244.457 246 0.994
Total 250 249
INVOLVEMENT Between groups 1.706 3 0.569 0.564 0.640
Within groups 2448.291 246 1.009
Total 249.997 249
MISSION Between groups 1.877 3 0.626 0.620 0.602
Within groups 248.121 246 1.009 Table VI.
Total 249.998 249 ANOVA test results

95% Confidence interval

(I) Sectors (J) Sectors Mean difference (I-J) Std. error Sig. Lower bound Upper bound

Min_Extract Manufacturing 1.2622409* 0.3211024 0.001 2.092829 0.431652

Services 1.3434366* 0.3213297 0.000 2.174613 0.51226
Retailing 1.2877967* 0.4170213 0.012 2.366496 0.209097
Manufacturing Min_Extract 1.2622409* 0.3211024 0.001 0.431652 2.092829
Services 0.0811958 0.129008 0.923 0.414898 0.252506
Retailing 0.0255558 0.2954608 1.000 0.789818 0.738706
Services Min_Extract 1.3434366* 0.3213297 0.000 0.51226 2.174613
Manufacturing 0.0811958 0.129008 0.923 0.252506 0.414898 Table VII.
Retailing 0.05564 0.2957077 0.998 0.709261 0.82054 Multiple
Retailing Min_Extract 1.2877967* 0.4170213 0.012 0.209097 2.366496
Manufacturing 0.0255558 0.2954608 1.000 0.738706 0.789818
comparisons
Services 0.05564 0.2957077 0.998 0.82054 0.709261 dependent variable:
ACCINFOSYSTEM
Note: N = 250; *p < 0.05 Tukey HSD

OLS regression and interaction term results

As a way of robustness test on the model, we regress organizational culture and
accounting information system constructs on corporate performance and further tested
their interaction terms also on performance. The result is presented as follows: as can
be seen from Table VIII, the organizational culture and accounting information system
constructs are significant except involvement which was insignificant. However, the
interaction terms (organizational culture  accounting information system) were not
significant except the involvement dimension of organizational culture ( b = 0.177, p =
0.014). This means that accounting information system moderates (i.e. strengthen)
the positive effect of involvement dimension of organizational culture on corporate
performance.
MEDAR Regression p-
26,4 Constructs Path Constructs estimate SE CR values

OVERALLPROFIT / ACCINFOSYSTEM 0.329 0.069 4.747*** 0.000

OVERALLPROFIT / ADAPTABILITY 0.218 0.071 3.062*** 0.002
OVERALLPROFIT / CONSISTENCY 0.265 0.071 3.752*** 0.000
OVERALLPROFIT / INVOLVEMENT 0.104 0.069 1.500 0.134
690 OVERALLPROFIT / MISSION 0.169 0.061 2.778** 0.005
OVERALLPROFIT / ACCINFOSYS__MISSION 0.059 0.059 0.993 0.321
OVERALLPROFIT / ACCINFOSYS__ADPTA 0.029 0.076 0.380 0.704
Table VIII. OVERALLPROFIT / ACCINFOSYS__CONSIST 0.077 0.065 1.194 0.232
OLS Regression and OVERALLPROFIT / ACCINFOSYS__INVOLVE 0.177 0.072 2.453** 0.014
interaction effect
results Note: N = 250; ***p < 0.01; **p < 0.05

Discussion
This study has a focus of examining the relationship between organizational culture using
the Denison framework on accounting information system and corporate performance
within the context of Ghana. H1a, H1c, H1d and H3 were all confirmed and supported. This
is in line with Denison and Mishra (1989) study that confirmed that organizational culture
constructs (mission, adaptability, involvement and consistency) have strong influence on
corporate effectiveness, particularly the mission dimension of culture. Companies (both local
and multinational) operating in Ghana should recognize that organizational culture plays
crucial role in the type and design of accounting information system, which is the main
source of data for major decisions bothering on the long-term success and survival of
organizations. Managers of multinational firms should recognize that national culture that
feeds into organizational culture, institutions, quality and application of accounting
information are all entirely different from what pertains in the advanced countries because
they are generally influenced by local/domestic dynamics. However, their relevance when it
comes to the determination of corporate performance and success of business may be the
same. It was quite strange that H1b which has involvement as a dimension was not
supported. This may be due to the fact that in the context of Ghana, corporate leaders tend
to exhibit autocratic leadership style where majority of corporate employees are not
involved in key decisions affecting the organization.
H2 was mixed with mission and adaptability confirmed and supported, while
consistency and involvement dimensions of culture were not supported. It is not surprising
that the involvement and consistency constructs were not supported, as accounting
information system is a technical function that does not require the involvement of everyone
at the design stage. However, once the system is established, it should be capable of
generating information to serve the decision-making function of all stakeholders. Besides,
the business environment is dynamic; therefore, accounting information system should
respond to the dynamics of the changing environment for which reason the consistency
function was not supported. As mentioned previously, the interest in organizational culture
can be explained by the assumption that certain organizational cultures lead to an increase
in corporate financial performance. This assumption is founded on the perceived role of
culture in generating competitive advantage (Scholz, 1987). According to Krefting and Frost
(1985), organizational culture may create competitive advantage if the boundaries of the
organization are designed in a manner which facilitates individual interactions and if
the scope of information processes is limited to appropriate levels. Theorists also argue
that the values that are widely shared and strongly held enable managers to predict Accounting
employee reactions to certain strategic options and in this way minimize the scope for information
undesired consequences (Ogbonna and Harris, 2002, 2000). The results from the current
study supported this assumption.
system
An accounting information system is a set of interrelated activities, documents and
technologies designed to collect the data, process it and report information to a diverse
group of internal and external decisions-makers in organizations (Hurt, 2008). Such
decisions include the need to maximize returns for the owners of the organization which is 691
usually measured in terms of profit. With this definition which is widely shared by firms in
Ghana, it is not surprising that the relationship between accounting information system and
corporate performance was confirmed in this study.
Corporate performance is one of the most important organizational factors. State-owned
or private, nationally or internationally operated, small or large, each organization has to
pay attention to performance. The study has established that corporate leaders in Ghana
should pay attention to organizational culture, those shared values, norms, beliefs, basic
assumptions, artefacts that organization members learned as they solved organizations
problems have strong influence on the long-term success and survival of the organization.
The paper contributes to the extant literature by documenting that taken-for-granted beliefs,
norms, values have shaped the behavior of organizational members and have driven the
company to commit to ethical culture. This ethical culture has also shaped its financial
reporting practice, leading to ultimate corporate success. Moreover, the culture of the
organization affects the quality of accounting information systems. The quality of
accounting information systems can be further improved by taking into account factors of
organization, especially the factor of organizational culture.
The one-Way ANOVA test shows that the means of organizational culture and that of
corporate performance are not different between industrial sectors. This is to be expected
given the fact irrespective of the definition of organizational culture, there are some common
themes or elements within all of them. This means that different industrial sectors do not
influence the description of organizational culture. Nonetheless, the means of the accounting
information system were different for different industrial sectors (MD = 1.2622409, p =
0.001; MD = 1.3434366, p = 0.000; MD = 1.2877967, p = 0.012 for manufacturing,
services and retailing, respectively) (see Table VII. Note: MD is the mean difference). In
particular the accounting information system of the mining and extractive industry is
different from that of manufacturing, services and retailing sectors. This is to be expected,
as the mining operations will require a different form of accounting information system,
perhaps more sophisticated than the other sectors. It is worthy of note that the interaction
terms of organizational culture and accounting information system were insignificant for
mission, adaptability and consistency dimensions of organizational culture, implying that there
is no moderating effect for those dimensions. However, the interaction term was significant for
the involvement dimension of culture. This means that there exists a moderating effect of
accounting information system on the relationship between involvement dimension and
corporate performance.
The specific significance of the Ghana case study to the extant literature in general is that
Ghana is a developing country where structures and institutions are not well developed.
Businesses and organizational forms are now beginning to pick up; therefore, organizational
culture, accounting information systems and their impact on corporate performance are not
well documented. These are all new phenomena in this part of the globe. The study therefore
contributes to the extant literature by applying the constructs of organizational culture,
accounting information system and corporate performance within a developing economy
MEDAR perspective. The context of Ghana in terms of national culture that feeds into organizational
26,4 culture, institutions, quality and application of accounting information is entirely different
from that of advanced countries. It is therefore refreshing to see that the study constructs are
equally applicable and accounting information system to some extent moderates the
relationship between organizational culture and performance.
Nonetheless, the study is limited to the extent that corporate performance is not only
692 measured in terms of profits. Other variables such as sales growth, market share, customer
satisfaction, return on investments are all important dimension of corporate performance.
Future study could include as many as possible of these measures to comprehensively
assessed corporate performance. Moreover, future study should control for the leadership
style and organizational structure to confirm the relationships. Future studies should
consider the effect of different industrial sectors on the hypothesized relationship by way of
multigroup analysis and the mediating role of accounting information system.

Conclusion
In this study we examined the link between organizational culture accounting information
system and corporate performance. The study confirmed the hypothesized relationship
between organizational culture and corporate performance. The only exception was the
involvement dimension which was not supported. Also, we confirmed the relationship
between accounting information system and corporate performance. There were mixed
results about the relationship between organizational culture and accounting information
system. The mission and adaptability hypotheses received particularly strong support, as
did the prediction of accounting information system on overall profitability. The
implications of this study for the integration of these four dimensions of organizational
culture into the corporate practices is very profound if corporate success is to be assured.
Regardless of how beliefs, values and norms are institutionalized to shape individuals’
behavior, and to socially construct accounting information and reporting practice, this study
concluded that the accounting information system and financial reporting practice is a
socially dynamic process. It is a socially constructed reality involving interplay between
individual, social values and organizations to ensure corporate performance. Taken-for-
granted beliefs have shaped the behavior of organizational members and have driven the
company to commit to ethical culture. This ethical culture has also shaped its accounting
information system and financial reporting practice which ultimately leads to corporate
performance.

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Corresponding author
Abdullah Hamoud Ismail can be contacted at: akwarteng@gimpa.edu.gh

Appendix

Cover Letter and Research Instrument

Dear Participant:
I would like to enlist your help. I am conducting a study on organizational culture, corporate
performance and accounting information system. The purpose of the research is to understand how
organizational culture impacts corporate performance and the mediating role of accounting
information system.
Would you please help me by completing this survey?
The survey should only take about 15-20 min of your time. Your answers are anonymous, DO
NOT put your name on the survey. All answer will be kept confidential. Only group results will be
presented or documented, not individual answers. Your help with this research is strictly voluntary.
You do not have to answer any questions you don’t want to. Return of an answered survey will
indicate your consent to participate in this study. The results of this research will inform policy
direction in organization.
Thank you for your time and consideration.
Sincerely,
The Research Team
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