Study on the Impact of Digitalization on Financial Performance in Small and Medium-Sized Enterprises

Bibliographic Information

Other Title
  • 中小企業のデジタル化が業績に与える影響
  • チュウショウ キギョウ ノ デジタルカ ガ ギョウセキ ニ アタエル エイキョウ
Published
2025
DOI
  • 10.34576/jarsmes.2025.11_77
Publisher
Japan Accounting Association for SMEs

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Description

<p>The extent to which digital technologies, such as Artificial Intelligence (AI) and cloud technology, impact the financial performance of small and medium-sized enterprises (SMEs) remains unclear. To address this, the present study aims to investigate the actual level of digitalization in SMEs, its impact on business performance, and the role of external accountants (accountants and tax advisors for SMEs) in providing business advice. For this purpose, we conducted a questionnaire survey involving 160 SME owner-managers (SMOMs) in Hyogo Prefecture, Japan. The results of our analysis revealed that superficial digitalization alone does not positively impact SMEs' financial performance. However, performance improves significantly when SMOMs perceive digital technology as being comprehensively integrated into their business processes. Additionally, the findings show that the more SMOMs perceive digital technology as useful, the more likely they are to associate digitalization with improved financial performance. Furthermore, the adoption of cloud accounting was found to have a positive impact on enhancing employee involvement. In turn, SMOMs who recognized this improvement tended to perceive digitalization as a driver of better financial performance. Finally, the results indicate that the more SMOMs regarded external accountants' business advice as useful, the better their company's financial performance. With these new insights into SMEs in Japan, this study contributes to the accounting literature by providing a deeper understanding of the relationship between digitalization, financial performance, and the role of external accountants. The study concludes with a discussion of its contributions, limitations, and opportunities for future research.</p>

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