Information system sophistication and financial performance of small engineering firms

This study investigated the relationship between information system (IS) sophistication and financial performance in small firms. The major research proposition was that information system sophistication is one cause of small firm success. Data were collected from 289 engineering firms by mail questionnaire, including 120 with at least one computer. Non-parametric statistical tests suggested that firms with more sophisticated information systems performed no better than firms with no or less sophisticated information systems. Furthermore, among only the firms with computers, some negative rather than positive correlations were found between one IS variable and two measures of financial performance. Therefore, rather than support the major proposition that IS was a successful factor for small firms, the data provided evidence to the contrary.