DON HONORIO VENTURA STATE UNIVERSITY

College of Business Studies

THE RELATIONSHIP BETWEEN THE USAGE OF XERO ACCOUNTING

SOFTWARE AND THE INTELLECTUAL CAPITAL OF THE SELECTED
COMPANIES IN PAMPANGA

A Research Proposal Submitted to the

College of Business Studies
Don Honorio Ventura State University

In Partial Fulfilment
of the Requirements for the ACCTG ELEC 3
Accounting Research Methods

by
Researchers

BSA 4-A
NACPIL, Alyssa Jesse D.

BSA 4-D
DELGADO, Kyle Luigi B.
GALANG, Alvin Jr. M.

To:
Yuri Walter Akiate

June, 2023
 APPROVAL SHEET

ACKNOWLEDGEMENT

DEDICATION

ii
 ABSTRACT

Most companies are told that cloud-based accounting software will aid their

businesses to become more organized, to automate and improve the accuracy of the input

process data that helps them thrive in today's world. In line with that, this study aspired

to examine the usage of xero accounting software and how it affects a firm's intellectual

capital. The questionnaire was sent to the random 105 samples taken from the divided

subgroups. The researchers used a quantitative approach and analyzed the data using

several statistical treatments; Weighted Mean and Pearson's R. The researchers found that

companies perceive the usage of xero accounting software as favorable, and a significant

relationship were found towards the three sub-variables.

Keywords: Cloud-Based Accounting Software, Xero Accounting Software, Intellectual

Capital

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 TABLE OF CONTENTS

Title Page ........................................................................................................................... i

Approval Sheet ................................................................................................................. ii

Acknowledgement ........................................................................................................... iii

Dedication........................................................................................................................ iv

Abstract..............................................................................................................................v

List of tables .................................................................................................................. viii

List of figures .................................................................................................................. ix

List of appendices ..............................................................................................................x

CHAPTER I .....................................................................................................................1

Introduction ..............................................................................................................1

Statement of the Problem .......................................................................................11

Hypothesis of the Study .........................................................................................11

Conceptual Framework ..........................................................................................12

Significance of the Study .......................................................................................12

Scope and Delimitation ..........................................................................................13

Definition of Terms................................................................................................14

Acronyms ...............................................................................................................17

CHAPTER 2...................................................................................................................18

Research Design .....................................................................................................18

Respondents of the Study.......................................................................................19

Sampling Design ....................................................................................................20

iv
 Data Gathering Procedure ......................................................................................20

Research Instrument...............................................................................................21

Statistical Treatment ..............................................................................................22

Ethical Considerations ...........................................................................................24

CHAPTER 3...................................................................................................................25

Respondents' Perception of the Usage of Xero Software ......................................25

Respondents' Perception on the Usage of Xero Software as to the Firm's

Intellectual Capital .................................................................................................27

Human Capital ...........................................................................................27

Structural Capital .......................................................................................29

Relational Capital.......................................................................................30

Significant Relationship Between the Usage of Xero Accounting Software and a

Firm's Intellectual Capital ......................................................................................32

CHAPTER 4...................................................................................................................34

Summary of Findings.............................................................................................34

Conclusions ............................................................................................................36

Recommendations ..................................................................................................38

REFERENCES ..............................................................................................................39

APPENDICES................................................................................................................48

v
 LIST OF TABLES

No. Page

1 Descriptive Equivalent of Weighted Mean for Five-item Likert Scale 23

2 Respondents’ Perception on the Usage of Xero Software 26

Respondents’ Perception on the Usage of Xero Software as to the

3 28
Firm’s Intellectual Capital – Human Capital

Respondents’ Perception on the Usage of Xero Software as to the

4 30
Firm’s Intellectual Capital – Structural Capital

Respondents’ Perception on the Usage of Xero Software as to the

5 32
Firm’s Intellectual Capital – Relational Capital

Significant Relationship Between the Usage of Xero Accounting

6 33
Software and a Firm’s Intellectual Capital

vi
 LIST OF FIGURES

No. Page

1 Conceptual Model of the study “The Relationship between the 12

Usage of Xero Accounting Software and the Intellectual Capital of

the Selected Companies in Pampanga”

vii
 LIST OF APPENDICES

Letter Page

A Letter of Request to Conduct a Survey (Dean) 48

B Letter of Request to Conduct a Survey (Companies) 49

C Inquiry Letter to Selected Private Companies 50

D Letter to the Respondents 51

E Request Letter - Statistician 52

F Certification of Statistical Analysis 53

G Letter of Request for Validation 54

H Certification of Validation 57

I Sample Questionnaire 60

J Resume 64

viii
 CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

This chapter includes an overview of the background of the study, a review of

related literature and studies, a statement of the problem, and a conceptual framework.

The chapter also discusses the significance, scope, and delimitation of the study. Lastly,

definitions of terms and acronyms are also presented.

Introduction

Over the years, the accounting industry has undergone continuous change

through innovation and improvement making it easier to provide reliable and relevant

information. The advancement and development of the internet and information

technologies improves the accounting from traditional accounting to cloud accounting.

According to Broetje (2019), accounting and finance applications have been expanding

into the cloud ever since the advent of the internet. This gave rise to Cloud-based

accounting software, being one of the products of innovation, an accounting software

wherein the whole process of accounting is prepared remotely through the internet. It

enables a more significant number of users and businesses to share optimized resources

for their users. This gives ease of accessibility to accounting information at any time and

from any location through a network connection. This situation decreases the user’s

reliance on the hardware and applications installed on a single workstation.

According to Adonie and Ionescu (2019), the cloud has been one of the most

important developments in information technology in the past decade, having a

1
significant impact on financial reporting for both businesses and individuals. It is

considered to be an indispensable tool for accountants in the near future and would

improve the accuracy of financial information and the business strategy. The most recent

developments tend to confirm that cloud computing or cloud technology in accountancy

has been transformative as to how accountants work on a daily basis with their clients.

Corkern et al. (2015) mentioned that accountants who stay abreast of new developments

within the field of cloud computing, becoming not only educated but experienced, may

provide assistance and advice in an organization’s assessment process of this new cloud-

based delivery platform. Since accountants are involved in wide-ranging roles in

business, it is important for them to possess IT knowledge and skills relevant to their

roles to provide competent and professional services. Accountants can foster innovation

and the need for new technologies by constantly searching for methods to increase work

productivity.

On the other hand, cloud accounting is a developing technology in the Philippine

context that enables the use of hardware and software to deliver a service over a network.

Due to its adaptability, effectiveness, and affordability, cloud accounting has been

adopted in a number of applications, including business, healthcare, goeducation, and

education. Online accounting was present before the global health crisis, according to

Dapiton et al. (2023), but the significant increase in the number of Filipinos was only

brought to light as a result of the COVID-19 pandemic. Many Filipinos were already

engaged in freelancing prior to the pandemic, but after COVID-19 struck, it seemed more

appealing and useful (Tudy, 2021). Utilizing digital innovations and technologies while

working from home safely is made possible by working remotely (Trajano, 2021). Guo

2
(2021) added support to these claims by asserting that cloud computing is being embraced

by Philippine companies because it has allowed them to make quick and simple

adjustments in the face of the pandemic. They predict that in the near future, more

Philippine companies will use cloud services for their primary operations.

Cloud computing is an efficient system that offers on-demand network access to

sharing programmable computing resources that can be quickly set up with minimal

management or service provider engagement. The usage of cloud computing for

accounting and other financial functions can simplify tasks, assist company growth, and

help in global reach and expansion (Twilley, 2013). Furthermore, Saha et al. (2020)

suggested that, to minimize repetitive administrative processes and fees given to qualified

human resources for their expertise and knowledge, accounting professionals should

adapt to the new technology and also find new ways of working in the digitalized world.

In this journey, technology and the cloud model can make it easy, simple, and affordable

for them.

As said by DanielDern (2012), the primary benefits that attract Certified Public

Accountants (CPAs) to use it comprise of continuous software updates which means

everybody is using the same version, and automatic secure cloud backup, so the

companies wouldn’t need to worry about users doing their own backup in a regular,

secure fashion, and simplified access. Having the applications and data “in the cloud”

allows “anywhere, anytime” access. The users can acquire financial data from

smartphones and tablets, not just from desktop systems. Also, the accountants and clients

can work together since both have access to the same data. In order to implement and use

the cloud-based accounting software, the accountant must have ample knowledge about
3
it. Since accountants are entailed with broad roles in business, it is necessary for them to

have knowledge and skills about information technology relevant to their part to provide

competent and professional services (Tam, 2013). Tarmidi et al. (2014) has established

through their study regarding the awareness of cloud computing among accounting

practitioners in Malaysia, in which most of the respondents believe that the cloud-based

accounting is an advanced technology that molds the business process, even so they are

not acquainted from it and doesn’t have a clear concept about the cloud-based technology.

This has prevented them from appreciating the benefits and advancements offered by it.

Moreover, Ebenezer et al. (2014) conducted a study on whether cloud computing can be

used in accounting systems wherein they illustrated that 64% of accountants have an

extensive knowledge about cloud computing which means that it can help in the

accounting process in terms of cost-effectiveness and speed.

Different types of cloud-based accounting software have actually been

established and one of these is the Xero software. It is one of the most recognized

accounting software in today’s world and a lot of businesses use it. Xero is a cloud-based

accounting software that comes with a surfeit of integrations. Xero works for a range of

users from freelancers to small or even medium-sized businesses. Xero accommodates

unlimited users and user-level permissions and provides significant automations and

mobile functionality (Honea, 2021). As explained by Ilao (2022), Xero is an accounting

software that helps users create invoices, track payments, and manage inventory. It is

especially powerful when integrated with customer relationship management (CRM)

software, as this allows users to connect customer and financial records in real time.

Furthermore, Jones et al. (2021) stated that Xero is a commonly used accounting software

4
package designed for small businesses and was chosen for use in this course due to its

wide applicability.

Based on Baird (2022), Xero is an online cloud accounting software, which means

it’s accessible through the internet, rather than having to physically install it on your

computer. Xero originated in New Zealand back in 2006. Today, Xero is a major player

in the cloud accounting game and leads the New Zealand, Australian, and United

Kingdom cloud accounting markets. Globally, there are more than 2 million subscribers

that use Xero. Gone are the days of hard copies and faxes. Xero makes collaboration

between businesses and their bookkeeper, accountant, or financial adviser easy and

straightforward. As Xero is cloud-based, it also allows real-time updates so everyone can

look at the same information at the same time from different locations. Security also

comes into play here as well, as the user is always in control of who has access to Xero

and what they’re able to do in Xero. Like any cloud accounting software, the company’s

reputation hangs on whether or not they can guarantee that its data is adequately

protected. So it’s in Xero’s best interests to maintain the highest level of security to

protect its customers.

Research by Mauricette (2019) stated that users from the accounting firms and

SMEs in Auckland were generally satisfied and found the software Xero to be successful.

This implies that the EUCS model can further be utilized by researchers and practitioners

to evaluate similar cloud-based software in accounting firms and SMEs in New Zealand

and other countries. In addition, Eltweri and Cavaliere (2020) discovered that the e-

accounting impact that is most significant is that technological development has saved

time and costs for users as it reduces costs, enhances the standard of clerical work,
5
provides sufficient space for data storage and the processing of information so that

managers can make decisions in a manner that is timely. Through technological

advancement, the preparation and arranging of accounting records can now be undertaken

within an environment that is electronic. Because of such developments, an accounting

system can generate various kinds of information for the user in a much shorter time

frame. Comparable and synchronous presenting of financial statements is much more

easily achieved.

Consequently, the activation of innovation processes at the enterprises largely

depends on its ability to develop intellectual potential. It is the intellectual capital that

determines the strategic position of enterprises in the market in current conditions

(Kasych et al., 2021). Wang (2021) suggested that in the new strategic environment,

organizations would thrive when they see themselves as a learning organization whose

goal is to improve intellectual capital continually; an organization that cannot increase its

intellectual capital cannot survive. The term intellectual capital is used in the overlap of

all assets, intangible resources and non-physical resources of an organization, including

processes, innovation capacity and implicit and explicit knowledge of its members and

partner network. Intellectual capital is a concept that classifies all intangible resources as

well as their interconnections. Okoye et al. (2021) mentioned that intellectual capital

constitutes resources created, purchased, or maintained by an enterprise, which possess

no material form; these resources, together with material and financial assets of the

enterprise, help to create added value.

In accordance with Chrisman et al. (2015), intellectual capital tends to be an

important resource and a key contributor to the economic success and value creation in a
6
business. Intellectual capital is an intangible value driver in an organization that brings

about future benefits. According to Wasiluk (2013), intellectual capital plays an

important role in continuous operations, people motivations, relationships with

customers, and performance improvement. In the current markets, competition is high

and the buyers have become more informed. Also, the modern business environment is

quite dynamic and the business organizations are facing many changes. The survival of

many businesses depends on their willingness and ability to adapt to such changes.

Through intellectual capital, the firms are able to quickly adapt to the changes and remain

competitive in the markets. Intellectual capital has increasingly become a source of

competitive advantage due to innovation (Obeidat et al., 2017). Si (2019) mentioned that

with the advent of the era of the knowledge economy, intellectual capital has become one

of the important factors in improving the competitiveness and value of enterprises.

Intellectual capital can be considered as a collection of an organization's intellectual

assets, and also has significant impacts on the company's competitive position. In recent

years, research on intellectual capital and enterprise performance has become a new

hotspot in the field of management accounting. However, because the theoretical basis of

intellectual capital is not mature enough, scholars argue about it, and it is difficult to reach

a consistent conclusion. Even so, Chowdhury et al. (2019), discussed that the IC is a

significant resource in the sustainable development and creation of value of a firm. It has

been proven by many studies that IC has a critical role in improving firm performance.

Additionally, Daroneh et al. (2014) stated that intellectual capital is gaining importance

in today's knowledge economy and plays a vital role in innovation, productivity growth,

performance and competitiveness of organizations. The intellectual capital may include

7
the following areas: human resources, organizational structure and processes, research

and development, technology and rights related to intellectual property, and consumer

networks and software providers. Intellectual capital management is a field that involves

the creativity and intelligence of individuals, new management methods, new information

technologies, and new ways of thinking about post-industrial organization and the new

knowledge economy.

Chiucchi and Dumay (2015) defined that intellectual capital consists of human

capital, structural capital and relational capital. These three parts of the Intellectual capital

are defined in the study of Cleary and Quinn (2016). Tacit and explicit knowledge

gathered through the staff of a firm is defined as human capital. This can be the

experience of the staff, education, skill level etc. Structural capital is defined as

procedures, rules, norms that comprise the very center of the firm and which would

facilitate the flow of organization knowledge required to enhance the efficiency and

effectiveness of the organization. Knowledge gained through the external relationships

that are built with key stakeholders which enables the organization to gain competitive

advantage is defined as relational capital. All three elements of Intellectual capital

encompass knowledge depicting the requirement of the organization to convert

knowledge to saleable items such as goods and services. In the same study it has identified

accounting to be a part of structural capital. Subsequently, Xu and Li (2019) have

indicated that the three components of intellectual capital are interrelated and play an

essential role in influencing the growth and value position of the business.

To further explain the three constituents of intellectual capital, Nojedeh et al.

(2016) describe human capital as, in simple terms, anything but physical capital such as
8
properties, equipment, and financial capital. On the one hand, employees with solid

professional knowledge and rich technical experience would be more accurate when they

grasp the potential direction of innovation and can control possible errors in the operation

of technological innovation (Sok, 2013). They can make technological innovation more

efficient and with lower risk, thus making it more active. However, the knowledge

structure and professionalism of top managers can influence decision-making

(Khalilzadeh et al., 2021). Meanwhile, structural capital represents the organization’s

capabilities to meet its internal and external challenges. It includes infrastructures,

information systems, routines, procedures and organizational culture (Shanthi, 2018).

Structural Capital is everything in an organization that supports employees in their work.

Structural Capital is the supportive infrastructure that enables Human Capital to function.

Structural Capital is owned by an organization and remains with an organization even

when people leave. Structural Capital includes such traditional things as buildings,

hardware, software, processes, patents, and trademarks (Pegasus Intellectual Capital

Solutions, 2017). According to Tallinn University (2014), structural Capital (also

Organizational Capital, Internal Capital) - "that which is left after employees go home

for the night": processes, information systems, databases, policies, intellectual property,

culture, etc. Thus, the knowledge embedded in organizational structures and processes.

On the other hand, Relational Capital is the strength and loyalty of customer relationships.

The notion is that Customer Capital is separate from Human and Structural Capital, and

indicates its central importance to an organization’s worth. The relationship with

customers is distinct from other relationships either within or outside an organization

(Pegasus Intellectual Capital Solutions, 2017). According to Tallinn University (2014),

9
relational capital refers to all relations a company entertains with external subjects, such

as suppliers, partners, clients. External capital comprises relationships with customers

and suppliers, brand names, trademarks and reputation.

In a study by Cleary and Quinn (2016), it was found that there was a moderately

strong positive relationship between human capital and cloud-based accounting systems.

A similar relationship existed between relational capital and cloud-based accounting

systems. This indicated that cloud accounting-based systems have enabled employees to

perform their duties efficiently while using their knowledge in a more effective manner.

The positive relationship with relational capital reveals that cloud-based accounting

systems enable an organization to collect and analyze data to have increased and effective

interactions with their stakeholders. In addition to this, they also have mentioned that the

three elements of intellectual capital positively impacted the firm to varying degrees by

the use of a cloud-based accounting/finance infrastructure and that the continual

interaction amongst all three elements of firms IC (empowered by the use of a cloud-

based accounting/finance infrastructure creates organizational value, resulting in

enhanced business performance.)

Furthermore, it has been suggested by Afshari (2014) that cloud computing can

impact the business organization performance and innovativeness, ultimately impacting

the intellectual capital of an organization. There is a rich, varied literature on examining

the awareness, adoption, and ease of use of accounting software. However, less has been

done to explore the relationship between the usage of accounting software, specifically

Xero and the intellectual capital of the firm. This study aims to examine the relationship

between the usage of Xero accounting software and a firm's intellectual capital.
10
Statement of the Problem

The primary goal of this study is to determine the relationship between the use of

Xero accounting software and the intellectual capital of the selected companies. This

study examines how the use of accounting software, specifically Xero, affects a firm's

intellectual capital.

Specifically, the study intends to answer the following questions:

I. How may the usage of Xero accounting software be assessed as perceived by

respondents?

II. What are the respondents’ perceptions on the use of Xero accounting software

as to the intellectual capital of the organization? Intellectual capital be

described in terms of the following:

a. Human Capital;

b. Structural Capital;

c. Relational Capital?

III. Is there a significant relationship between the usage of Xero accounting

software and a firm’s intellectual capital?

Hypothesis of the Study

From the review of associated literature, the following hypothesis can be

formulated with respect to the research problem set above:

H1: There is a significant relationship between the usage of Xero accounting

software and a firm’s intellectual capital.

11
Conceptual Framework

As shown in figure 1, the independent variable is the usage of Xero accounting

software and the dependent variable is the intellectual capital. Moreover, the figure also

shows the three sub-variables under intellectual capital: human capital, structural capital,

and relational capital.

The study aims to determine if there is a significant relationship between the usage

of Xero accounting software and the companies’ intellectual capital. And lastly, the study

wants to know if the usage of Xero accounting software significantly affects the

companies’ intellectual capital.

Significance of the Study

The findings of the study are deemed significant for the following:

Accounting Practitioners. These insightful findings may benefit accounting

practitioners in improving their knowledge in these areas and understanding the

relationship between using Xero accounting software and an organization's intellectual

capital, such as their professional skills and expertise.

12
 Cloud-based Accounting Developers. The study's insightful findings may

benefit cloud accounting developers in developing suitable adjustments to meet the needs

of accounting practitioners and the management.

Management. The findings of this study may be beneficial to management in

understanding how accounting software works in practice. In a way, it may help them

identify how the use of Xero accounting software affects their intellectual capital.

Users of Accounting Information. This study may provide them with an

understanding of how the use of Xero accounting software in providing accounting

information affects the organization's intellectual capital.

Students. As future professionals, this research can help them obtain knowledge

by learning more about how using Xero accounting software affects an organization's

intellectual capital.

Future Researchers. The findings of this study might be applicable as a reference

for future research. It may also contribute in expanding the existing literature on cloud-

based accounting software in aspects of developing and emerging economies. The study

intends to give data that may be significant to the study on the relationship between the

organization's intellectual capital and the use of the Xero accounting software.

Scope and Delimitation

The study covers the determination of the relationship between using Xero

accounting software and intellectual capital of the selected companies. The primary

subjects of this research study are the employees of selected companies in Pampanga.

13
Thus, the survey respondents are limited only to those who use Xero accounting software.

Non-users of Xero accounting software are exempt, although employed by such selected

companies in Pampanga. A Google form was used to distribute the adapted survey

questionnaires.

Moreover, the study takes into account the respondents’ perception on the use of

Xero accounting software in general and as to the intellectual capital of the organization.

Intellectual capital is described in terms of human capital, structural capital, and relational

capital.

Lastly, the study evaluates whether there is a significant relationship between the

usage of Xero accounting software and a firm’s intellectual capital.

Definition of Terms

For a clearer understanding of the study, the following terms are readily defined.

Accounting - is the systematic record-keeping of the financial transactions of a

business. The record-keeping procedure includes establishing a method of record-

keeping, tracking transactions within that system, and assembling the outcome

information into a set of financial reports (Steven B., 2021). In this study, accounting

refers to the process of tracking an individual or business’ financial transactions using

Xero software to generate an overall picture of an individual or business’ financial health.

Cloud-based Accounting Software - refers to carrying out basic accounting

tasks, like controlling and balancing the books, using software that is located in the cloud

and is regularly taken as a service model. Accountants can handle accounts payable,

14
accounts receivable, the general ledger, and more within the application. (McCue I.,

2021) In this study, cloud-based accounting software refers to Xero software which is

used by the selected companies as the modern way of recording, analyzing, and

performing business transactions.

Intellectual Capital - refers to the value of a company's combined knowledge

and resources that can be used to generate some form of economic benefit. It’s also used

to identify a firm’s intangible assets and divide them into meaningful categories such as

human capital, relationship capital, and structural capital (Corporate Finance Institute,

2021). The term "intellectual capital" in this study refers to intangible assets owned by

the company that are valued equally to tangible ones and contributes to the bottom line

of the company. These assets consist of the human capital, relational capital and structural

capital of companies.

Human Capital - a sub-category of intellectual capital which refers to the value

of an organization's human resources (Wooll M., 2022). It contains each employee's

education, training, intelligence, skills, health, and other things employers value such as

loyalty and punctuality (Kenton W., 2022). In this study, human capital refers to the

expertise that employees bring to the company. It also refers to the economic benefit that

an individual contributes to business based on their education, skills, loyalty, drive, and

well-being.

Perception – is defined as a combination of knowledge and ideas gained as a

result of having an experience in relation to a topic. (Kırkgöz, Y., 2018) In this study,

perception is defined as the understanding of selected companies’ Xero users on how the

15
software improves or harms their organization’s intellectual capital based on their

experience.

Relational Capital - is a sub-category of intellectual capital focusing on the

intangible value present in the organization’s relationships with business partners and

other external parties that contribute to fulfilling the company's needs, and also includes

elements like corporate reputation and customer potential (MBA Brief, 2022). Relational

capital, as used in this study, refers to the connections a company has with the people

who make up its stakeholders, including its customers, suppliers, the general public, and

investors.

Structural Capital - a sub-category of intellectual capital that pertains to the core

belief system of an organization, such as its mission statement, company policies, work

culture, and its organizational structure (Chen, 2021). In this study, structural capital is

the infrastructure and intellectual capital that a company has amassed over time which

helped improve its overall performance. These assets include the company's systems,

processes, patents, trademarks, licenses, and proprietary technologies.

Xero - a cloud-based accounting software that helps users create invoices, track

payments, and manage inventory. It allows users to connect customer and financial

records in real time. (Ilao, 2022) In this study, Xero is referred to as the modern way of

doing accounting on business transactions of the selected companies. Its main feature is

it can be accessed anytime and anywhere using the internet, making it easier for its users

to do their tasks.

16
Acronyms

CPA – Certified Public Accountants

CRM – Customer Relationship Management

EUCS – End-User Computing Satisfaction

IC – Intellectual Capital

IT – Information Technology

SMEs – Small and Medium-sized Enterprises

17
 CHAPTER 2

RESEARCH METHODOLOGY

This chapter presents the methods and techniques of the study, the population and

sample, the data gathering procedure, the research instruments, statistical treatments, and

ethical considerations that are applied in the analysis and interpretation of data.

Research Design

The study utilized a descriptive correlational research design approach in which

the researchers seek to describe the respondents’ perception on the use of Xero

accounting software and the intellectual capital of the selected companies in Pampanga.

The researchers chose to follow a quantitative research process to determine the

relationship between the variables that are tested to hypothesize to a larger group of

individuals than those who are participating in the study; this is to understand the

behavioral patterns and the reasons behind that behavior. Descriptive correlational design

is used in research studies that aim to provide static pictures of situations as well as

establish the relationship between different variables (Fowler, 2013). In correlational

research, two variables are studied to establish their relationship. The descriptive

correlational design is ideal for the study as there would be clearly outlined research

questions. This design allows for the systematic analysis of the relationship of the usage

of Xero accounting software (independent variable) and the intellectual capital of the

selected companies (dependent variable). The independent variable is defined as the

usage of xero accounting software. According to Sahayrak (2018), accounting software

such as Xero, replacing the traditional accounting methods used, to allow more
18
integration within the business environment, as well as helping to computerize labor

intensive processes within an organization to reduce costs and improve efficiency within

businesses. The usage of cloud computing for accounting and other financial functions

can simplify tasks, assist company growth, and help in global reach and expansion

(Twilley, 2013). The dependent variable is defined as the intellectual capital of the

selected companies in Pampanga. Kadim et al., (2020), said that intellectual capital as a

spectrum of artificial intelligence capabilities helps us reveal patterns of big data in

information-based historical data to do jobs faster and better with the help of technology.

Respondents of the Study

The respondents of the study are the employees of the selected private companies

in Pampanga who use Xero accounting software. Pampanga was chosen to be the location

of the study because the province is one of the urbanized regions in Central Luzon. This

means that there are a lot of companies residing in Pampanga; hence, sufficient

information can be acquired in this locale. The researchers gathered three private

companies to participate, and due to the Data Privacy Act, the aforementioned private

companies did not disclose the size of their population. Therefore, the total number of

respondents was undetermined. According to tools4dev.com (2022), most statisticians

agree that the minimum sample size to get any kind of meaningful result is 100. Also,

when the population is unknown, 100 participants are typically considered the minimum

sample size (Alshibly, H., 2018). In this study, the researchers opted to use the minimum

number of samples which led them to gather 105 respondents.

19
Sampling Design

Stratified random sampling is employed in choosing the respondents of this

study. Stratified random sampling is a sampling technique in which the population is

divided into subgroups or strata and a random sample is taken from each (Acharya, A. S.

et al., 2013). According to QuestionPro.com (2023), this method is useful when the

population is heterogeneous and simple random sampling might not yield reliable results.

The stratification of the population allows researchers to ensure that their sample is

representative of the population and free from biases associated with sampling. Since the

population was undetermined, the minimum sample size was divided by the researchers

proportionally to the selected private companies.

Data Gathering Procedure

Primary data was collected utilizing an adapted survey questionnaire. The

survey questionnaire was distributed through Google Forms to those employees of

selected companies in Pampanga who are users of Xero accounting software.

The researchers began selecting companies by using Google and the professional

networking site LinkedIn to filter and list companies in Pampanga that could be using

Xero accounting software. The listed companies were then emailed to confirm their use

of Xero accounting software. The three companies that responded via email with their

confirmations were selected as respondents for this study.

20
 Moreover, in anticipation of conducting the study, the researchers sought

permission from the management of selected companies and the confirmation of the

respondents to participate in the study.

Letters of approval from the university and the Dean of the College of Business

Studies were submitted and secured before the distribution of the questionnaires to the

respondents. Questionnaires are distributed only with the approval of the research

adviser. The researchers administered and disseminated the questionnaires to the

employees of selected companies in Pampanga that use Xero accounting software.

Research Instrument

In gathering data for this study, the researchers adapted a survey-based

questionnaire built on the success of foreign authors in evaluating respondents' perception

on the use of Xero accounting software in general and as to their intellectual capital of

the organization, and the relationship between the usage of Xero accounting software and

a firm’s intellectual capital.

This instrument provides reliable data that is easier to administer, analyze, and

interrelate, as well as direct data collection from respondents in an attempt to formulate

rational conclusions and recommendations for the study. The survey questionnaire is

verified by department experts and other knowledgeable individuals, taking into account

the study's specific questions.

The said experts, who worked at Don Honorio Ventura Technological State

University, assessed the instruments' content validity. Each item has been assessed for its

21
fit with the construct to which it is related. The contents of the instruments were modified

and revised in accordance with the experts' suggestions and recommendations.

Lastly, the questionnaire is divided into three sections. Part I of the questionnaire

examines the respondents' perceptions on the use of Xero software in general on their

organization, adapted from the study of Cleary, P and Quinn, M. (2016). The model used

for measurement is the Likert Scale Model which has scales from 5-1, interpreted as

Strongly Agree (5), Agree (4), Neutral (3), Disagree (2), and Strongly Disagree (1) per

item. Similarly, the same model of measurement is used in part II of the questionnaire,

which assesses the respondents’ perceptions on the usage of Xero software as to the

firm’s intellectual capital – human capital, structural capital and relational capital –

adapted from the study of Cleary, P and Quinn, M. (2016).

Statistical Treatment

The data gathered through the survey-based questionnaire are classified,

organized, tallied, tabulated, and subjected to statistical treatment. To treat the data,

mean, and Pearson’s r are used.

To statistically analyze the information regarding the respondents’ perceptions of

the usage of Xero accounting software in general to the organization, the responses are

calculated using a weighted mean. Similarly, the same treatment is used in determining

the respondents’ perceptions on the use of Xero software as to the firm’s intellectual

capital – human capital, structural capital and relational capital. The table below is used

in the weighing of the questionnaire during the data analysis. The means were interpreted

as follows: Strongly Disagree in the point range of 1.00-1.80, Disagree 1.81-2.60, Neutral

22
2.61-3.40, Agree 3.41-4.20, and Strongly Agree 4.21-5.00 (see table 4) (Cobern, W. et.

al., 2020)

Table 1. Descriptive Equivalent of Weighted Mean for Five-item Likert Scale.

Weighted Mean Point Scale Descriptive Rating

4.21 – 5.00 5 Strongly Agree

3.41 – 4.20 4 Agree

2.61 – 3.40 3 Neutral

1.81 – 2.60 2 Disagree

1.00 – 1.80 1 Strongly Disagree

Source: https://www.researchgate.net/figure/Qualitative-Interpretation-of-5-Point-Likert-Scale-
Measurements_tbl2_348329285

To determine the relationship between the usage of Xero accounting software and

a firm’s intellectual capital, Pearson correlation coefficient or Pearson’s r is used.

According to Chao, C. (2017), the Pearson correlation coefficient (also known as Pearson

product-moment correlation coefficient) r is a measure to determine the relationship

(instead of difference) between two quantitative variables (interval/ratio) and the degree

to which the two variables coincide with one another—that is, the extent to which two

variables are linearly related: changes in one variable correspond to changes in another

variable.

23
Ethical Considerations

All references in this paper are cited to ensure that the authors of the works cited

are properly credited. This ensures that the data and information gathered from the

articles, books, and journals cited are respected.

A copy of the authorization for the Dean of the College of Business Studies is

enclosed with this paper to further authenticate the approval of the performance of this

research with its legalities.

Furthermore, the researchers obtained permission from the management of

private companies and the respondents through the consent form attached to this study.

The consent form ensures the confidentiality of the respondent's responses. This consent

form helps respondents understand the purpose of this research.

The researchers emphasized the importance of maintaining the confidentiality of

the data gathered. The respondents guarantee that their responses are fairly assessed and

that all information provided is used in any paper other than this research. This procedure

ensures that the outcomes are free of bias and subjectivity.

24
 CHAPTER 3

RESULTS AND DISCUSSIONS

This chapter presents and examines the gathered data that correspond to the

problem of the study provided in the first chapter. It illustrates the relationship between

the usage of Xero accounting software and the intellectual capital of companies. The

results and findings of the study are based on the analysis of the data gathered through

the research instrument.

I. Respondents’ Perception on the Usage of Xero Software

Table 2 features the employees’ perception on the usage of Xero software in the

organization. As observed on the table, the respondents strongly agreed that utilizing

Xero software simplified the process for their accounting tasks (x=5.00). On the other

hand, the respondents disagreed with the reverse statement that the software limits their

ability to customize accounting systems based on their needs (x=4.01).

The analysis of the data regarding the respondents' assessment shows that they

concurred that the use of the Xero accounting software made the accounting process

simplified, standardized, and eased communication with users. According to Marushchak

L. et al. (2021), accounting software programs are created to produce simple money

transactions (bookkeeping) between companies and other entities to record all financial

inflows and outflows in order to simplify analysis procedures and decision-making

processes. Also, according to Pavlykivska, O. et. al. (2021), accounting software makes

accountants work easier and provides data on the "true health" of businesses; therefore,

25
business owners are willing to pay a substantial sum for complex and advanced

accounting technologies. Coordination among businesses with foreign branches has

always been a challenge (particularly the timing of report delivery, which can delay the

decision-making process), but since the advent of cloud technologies, most issues have

been resolved. The main benefit of cloud accounting software is that it puts the entire

accounting system on a cloud-based platform with no time or constraints on location.

(Marushchak L. et al., 2021)

Table 2. Respondents’ Perception on the Usage of Xero Software

Std. Descriptive
Indicator Mean
Dev Rating

1. It has limited our ability to customize

4.01 1.00 Disagree
accounting systems to our needs.

2. It has made our daily accounting tasks

4.25 0.66 Strongly Agree
more standardized.

3. It has simplified our accounting processes. 5.00 0.00 Strongly Agree

4. It has made it easier for any accounting

4.50 0.50 Strongly Agree
staff member to perform any accounting task.

5. It has made it easier to communicate

accounting procedures to new 4.25 0.43 Strongly Agree
accounting/finance staff

6. It has made it easier to document

4.50 0.71 Strongly Agree
accounting procedures.

7. It has made it easier to adapt accounting

4.38 0.70 Strongly Agree
procedures.

8. It has made it easier to replicate

accounting/finance systems to other 4.25 0.66 Strongly Agree
parts/branches of the organization.

GRAND MEAN 4.39 0.58 Agree

26
II. Respondents’ Perception on the Usage of Xero Software as to the Firm’s

Intellectual Capital

A. Human Capital

The table 3 presents the perception of the respondents on the usage of Xero

accounting software within the organization with regard to the firm’s intellectual

capital, specifically to human capital. The results show that the respondents

strongly agreed that the software has enhanced their ability to collaborate within

the organization (x=4.50), and their ability to generate knowledge (x=4.50). Also,

the respondents agreed that with the use of Xero accounting software it enhances

the retention of accounting/finance employees (x=3.62). Gridlex.com (2022)

claims that collaboration and communication features are frequently found in

accounting software. Employees can easily share information, collaborate on

financial reports, and work together on budgeting and forecasting when financial

data is managed centrally. A more unified and encouraging work environment may

result from this improved collaboration, which will help retain more workers and

increase employee satisfaction. (Gridlex.com, 2022)

Generally, the findings regarding the dependent variable, specifically in

human capital are substantiated. The respondents "Agree" that the usage of Xero

Accounting Software is beneficial towards the employees' skill and expertise

enhancement in their field of work. According to Kariyawasam, A.H.N. (2019),

cloud accounting has a significant positive relationship with human capital. This

27
 shows that utilizing cloud accounting has improved job performance, collaboration,

and knowledge creation for employees.

Table 3. Respondents’ Perception on the Usage of Xero Software as to the Firm’s

Intellectual Capital – Human Capital

Std. Descriptive
Indicator Mean
Dev Rating

It has enhanced…

1. The ability of accounting/finance

employees to collaborate within the 4.50 0.50 Strongly Agree
organization.

2. Management decision-making. 4.37 0.49 Strongly Agree

3. The ability of accounting/finance staff to

4.50 0.50 Strongly Agree
generate knowledge.

4. The ability to transfer organization

4.25 0.66 Strongly Agree
knowledge within accounting/finance.

5. The motivation of accounting/finance

3.87 0.79 Agree
employees.

6. The retention of accounting/finance

3.62 1.11 Agree
employees.

7. The ability of non-accounting staff to

4.00 0.71 Agree
utilize accounting/finance knowledge.

8. The feasibility of cross-functional

4.00 0.71 Agree
teamwork across the organization.

9. The willingness of accounting and finance

staff to embrace further use of cloud 4.38 0.70 Strongly Agree
technology.

GRAND MEAN 4.17 0.68 Agree

28
B. Structural Capital

Table 4 exhibits the perception of the respondents on the usage of Xero

accounting software within the organization concerning the firm’s intellectual

capital, specifically structural capital. According to the findings, the respondents

strongly agreed that the software has enhanced their capacity to acquire relevant

data/knowledge (x=4.50). Moreover, the respondents agreed that the software has

enhanced their ability to use accounting and finance systems within the

organization (x=4.11). Overall, the respondents strongly agreed that the

organization's use of the Xero Accounting Software has strengthened its structural

capital, which includes its processes, data, systems, etc. According to Young

(2010), it has also been asserted that from an accounting perspective, the use of

cloud computing has the potential to increase the flow of information within an

organization by ensuring that it becomes more formalized and accessible. This

could lead to improved organizational decision-making at all levels, which might

have a positive effect on subsequent organizational performance. Indeed, as stated

by Quinn et al. (2014), “the main advantage [of cloud accounting] cited was an

efficiency improvement in business processes.”

29
Table 4. Respondents’ Perception on the Usage of Xero Software as to the Firm’s
Intellectual Capital – Structural Capital

Std. Descriptive
Indicator Mean
Dev Rating

It has enhanced our ability to…

1. Acquire relevant data/knowledge 4.50 0.50 Strongly Agree

2. Acquire relevant data/knowledge from

4.13 1.06 Agree
multiple sources

3. Access relevant data/knowledge for

4.38 0.70 Strongly Agree
decision-making

4. Access relevant data/knowledge for

4.38 0.70 Strongly Agree
planning/control

5. Share relevant data/knowledge for

4.38 0.70 Strongly Agree
decision-making

6. Share relevant data/knowledge for

4.38 0.70 Strongly Agree
planning/control

7. Retain relevant data/knowledge 4.13 1.06 Agree

8. Use accounting/finance systems within

4.11 0.79 Agree
the organization

9. Upgrade accounting/finance systems 4.26 0.83 Strongly Agree

GRAND MEAN 4.30 0.78 Strongly Agree

C. Relational Capital

Table 5 shows the perception of the respondents on the usage of Xero

accounting software within the organization concerning the firm’s intellectual

capital, specifically with respect to relational capital. The respondents strongly

agreed that using Xero accounting software has enhanced their ability to acquire

and use information about customers (x=4.37) and suppliers (x=4.37). According

to Nwakaego & Ikechukwu (2015), The task of performing accounting transactions

30
can be made much simpler and more effective by integrating AI-based accounting

software into operational tasks. Strong relationships between a company and its

suppliers will be supported by effective account management. Additionally, it will

enhance business operations and strengthen favorable credit histories for future

growth. Moreover, the respondents correspondingly remain neutral on the

software’s capability in helping them predict future customer and market trends

(x=3.37). With this in mind, the information gathered indicates that respondents

agree that the organizations' adoption of Xero accounting software improves their

relational capital, which includes the organizations’ relationship with their

customers, suppliers, the public, and investors. This finding supports the findings

of Kariyawasam (2019) that the significant association in the area of relational

capital is that cloud accounting has made it possible for organizations to efficiently

obtain and use stakeholder information.

31
Table 5. Respondents’ Perception on the Usage of Xero Software as to the Firm’s

Intellectual Capital – Relational Capital

Std. Descriptive
Indicator Mean
Dev Rating

It has enhanced our ability to…

1. Acquire and use information about Strongly

4.37 0.49
customers Agree

2. Acquire and use information about Strongly

4.37 0.49
suppliers Agree

3. Acquire and use information about

3.61 1.00 Agree
competitors

4. Meet current customer and market needs 3.87 0.79 Agree

5. Predict future customer and market trends 3.37 0.86 Neutral

6. Interact with our employees 3.85 0.83 Agree

7. Interact with our shareholders 3.48 0.90 Agree

8. Interact with relevant Government agencies

(e.g., The Office of the Revenue 4.12 0.60 Agree
Commissioners)

9. Interact with financial institutions (e.g., Strongly

4.25 0.66
banks) Agree

GRAND MEAN 3.92 0.73 Agree

III. Significant Relationship Between the Usage of Xero Accounting Software and

a Firm’s Intellectual Capital

Table 6 shows the significant relationship of the variables by Pearson’s R, Human

Capital (R = .738, Sig. = .000), Structural Capital (R = .657, Sig. = .000), and Relational

Capital (R = .810, Sig = .000). Thus, the hypothesis is accepted. The Intellectual Capital

32
(dependent variable) exerts a significant relationship towards the usage of Xero

Accounting Software (independent variable).

Furthermore, the findings indicate the usage of cloud-based accounting software

can positively impact the users’ skills, professional beliefs, corporate reputation, and

organizational structure. In the study of Kariyawasam (2019), Cloud-based accounting

impacts all three components of Intellectual Capital positively. It has been suggested by

Afshari (2014) that cloud computing can impact the business organization performance

and innovativeness, ultimately impacting the intellectual capital of an organization.

Table 6. Significant Relationship Between the Usage of Xero Accounting Software and

a Firm’s Intellectual Capital

Variables R Sig.
Human Capital .738 .000
Usage of Xero
Structural Capital .657 .000
Software
Relational Capital .810 .000

33
 CHAPTER 4

SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS

This chapter shows the summary of findings, conclusions drawn and suggested

recommendations derived from the information reported in the previous sections of the

study.

Summary of Findings

After analysis and interpretation of the gathered data, the significant findings are

as follow:

1. Respondents’ Perception on the Usage of Xero Software. According to the

findings, the respondents firmly agreed that using the Xero accounting software

helped simplify (x=5.00) and standardize (x=4.25) the procedure for their accounting

tasks. Additionally, the software made it easier for any member of the accounting

staff to carry out every accounting task (x=4.50), communicate accounting

procedures to new hires (x=4.25), document accounting procedures (x=4.50), adapt

accounting procedures (x=4.38), and replicate accounting/finance systems to other

departments or branches of the organization (x=4.25). The respondents disagreed

(x=4.01) that the software restricts their ability to customize accounting systems to

suit their requirements. The result about the respondents' assessment shows that the

respondents agreed (x=4.39) with the following indicators about how the organization

used the Xero Accounting Software.

34
2. Respondents’ Perception on the Usage of Xero Accounting Software as to the

Organizations’ Intellectual Capital

a. Human Capital. The findings indicate that the respondents strongly agreed that

the software has improved their capacity for collaboration within the organization

(x=4.50), management decision-making (x=4.37), developing knowledge

(x=4.50), transfer of knowledge (x=4.25), and willingness to embrace further use

of cloud technology (x=4.38). The respondents also concurred that the use of Xero

accounting software improves the ability of non-accounting staff to use

knowledge of accounting and finance (x=4.00), the motivation (x=3.87) and

retention of accounting and finance employees (x=3.62), and the viability of

cross-functional teamwork throughout the organization (x=4.00). In general, the

findings about the dependent variable, particularly in human capital, are favored.

The respondents "Agree" (x=4.17) that using Xero Accounting Software helps

employees improve their skills and expertise in their field of work.

b. Structural Capital. The results showed that the respondents firmly agreed that the

software had improved their ability to gather (x=4.50), access, and communicate

pertinent data and knowledge for decision-making (x=4.38), planning, and control

(x=4.38). The respondents also strongly agreed that the software has assisted them

in upgrading their accounting and financial systems (x=4.26). The findings show

that the respondents strongly agreed (x=4.30) that using the Xero Accounting

Software had strengthened the organization's structural capital, which includes its

processes, data, systems, etc.

35
 c. Relational Capital. Analysis of data reveals that the respondents strongly agreed

that utilizing Xero accounting software has improved their capacity to gather and

apply information about clients (x=4.37) , suppliers (x=4.37), and competitors

(x=3.61) while also enabling them to communicate more effectively with their

staff, shareholders, pertinent governmental agencies, and financial institutions

(x=4.25). Additionally, the respondents concurred that the software improves

their capacity to satisfy current customer and market demands (x=3.87) while

remaining unconvinced of the software's ability to assist them in forecasting

future customer and market trends (x=3.37). In light of this, the data indicates that

respondents agree (x=3.92) that the adoption of Xero accounting software by the

organizations enhances their relational capital, which includes their relationships

with their clients, suppliers, the general public, and investors.

3. Significant Relationship Between the Usage of Xero Accounting Software and a

Firm’s Intellectual Capital. The result reveals a strong correlation between the

variables. It follows that the hypothesis is true. The usage of Xero Accounting

Software has a significant relationship with intellectual capital. The results show that

using cloud-based accounting software can have a positive impact on users' abilities,

professional perspectives, company reputation, and organizational design.

Conclusion

Based on the findings, the following were concluded:

1. Based on the perception or assessment of the individuals, the usage of Xero

Accounting Software is propitious to its users. The software makes the users’ daily

36
 tasks more standardized and simplifies the process making it easier for any

accounting staff to perform tasks and communicate the accounting procedures to new

staff. While making the tasks easier, the software does not limit the users to customize

it according to their needs.

2. The aforementioned findings showed a strong correlation between the variables

interpreted that using Xero Accounting Software positively affects human capital,

structural capital and relational capital of a company. In Human Capital, it positively

affects the management’s decision making and the cross-functional teamwork across

the organization. Being a user-friendly software, Xero also has a positive impact on

employees’ motivation and retention in the company. Regarding the Structural aspect,

Xero Accounting Software enhanced its users’ ability in acquiring data for decision-

making, planning and control and upgrading their accounting systems. Lastly, the

Relational Capital, it helps the users in acquiring information about its customers,

suppliers and competitors. The software enhances the ability of the users to meet the

needs of the customers, predict the trends, and interact with their employees,

shareholders and other financial institutions.

3. All components of the dependent variable exert a significant relationship towards the

usage of xero accounting software, revealing that cloud-based software enables an

organization to accumulate and scrutinize data to have progressed and effective

interactions with their stakeholders. Xero Accounting Software enables companies to

have knowledgeable and committed employees, establish firm beliefs and structure,

and achieve enhanced relationships with stakeholders.

37
Recommendations

The following are being recommended by the researchers:

1. Companies must support their employees in getting Xero certification to increase

their knowledge and competency in using the software, such as providing tutorials on

how to navigate the website, its tools, and the process of acquiring the certification.

2. Teaching basic knowledge, i.e., tools and uses, on cloud-based accounting software

shall be included in the college curriculum of related programs to increase the

competency of fresh graduates.

3. Companies must conduct regular training for their employees regarding cloud-based

accounting software to keep up with the technological advancements.

4. Other entities should be encouraged to adapt cloud-based accounting software to

benefit from its functions such as ease of access, secured data, improved business

efficiency, and more.

5. Future researchers ought to explore other cloud-based accounting software to assess

if their findings about its effect on their selected organization's intellectual capital are

comparable to the results of this study. An additional study about the effect of a

different cloud-based accounting software on the intellectual capital of a company

may support or oppose the findings of this study; hence, this will provide future

researchers with an opportunity to delve deeper into the topic of cloud-based

accounting software.

38
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APPENDIX A

APPENDIX B

APPENDIX C

APPENDIX D

APPENDIX E

APPENDIX F

APPENDIX G

APPENDIX H

APPENDIX I

APPENDIX J

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