Using Management Information Systems (MIS) to Boost Corporate Performance

Roni Saputra (2261101204)

Master of Management Economics Study Program at Lancang Kuning University

This article is sourced from International Journal of Management Science and

Business Administration; Vol. 1, No. 11 pp. 55-61, 2015. Criticized title entitled “Using
Management Information Systems (MIS) to Boost Corporate Performance” written by Al-
Nakib Noofal Ahmed Mohsen Mohammed, Wang Hu School of Management, Wuhan
University of Technology, Wuhan, China. Email (corresponding author):
[email protected].

1. Summary
The study emphasizes the importance of Management information systems
(MIS) for corporate performance. Prior studies have been reviewed to substantiate
theories that explain how Management information systems (MIS) affect corporate
performance. Management information system (MIS) is providing information that
relates to possible future events, efficiency and output rates. Furthermore, greater
management information system capability leads to a higher degree of strategic
performance. These and many other factors are suggested to be critical features of
MIS that have a direct impact on financial and strategic performance of companies.
2. Introduction
Corporate operations and decision-making are widely based on information
that has been provided or generated by individual and specific IT systems. Such
systems are used to collect, harvest, organize, and generate an output that would back
up fast and sound business decision. Firms adopt new management techniques and
systems with the purpose of enhancing the decision-making processes, improve
results and minimize output costs (Henry and Mayle, 2003; AlMaryani and Sadik,
2012). Consequently, this is a way to enhance company operation effectiveness.
Various management techniques and management accounting practices improve
financial performance if firms follow specific strategic priorities (Chenhall and
Langfield-Smith, 1998; Naranjo-Gil, 2004). It is also suggested by studies that
companies using accounting techniques based on traditional management prove to be
more profitable than those using NMTs (Chenhall and Langfield-Smith, 1998).
Furthermore, researchers assume that managers, as rational agents, are unlikely to
adopt a management information system that does not improve their company's
financial performance (Chenhall, 2003). Therefore, management information are used
to considerably improve decision-making and, as a result, financial performance.
Likewise, firms that rate their management information system high will conceivably
adopt it to a much bigger extent, with the ultimate goal of maintaining and improving
their overall financial performance. Despite the limitations, some empirical studies
attempt to relate financial performance to management IS or new management
techniques. The majority of them analyze the individual effect of a particular
management method, although with a degree of divergence in results. In many
companies, such management information systems have been implemented as a
support in decision-making and a tool to attain high corporate performance. Still
investigating the relationship between MIS and corporate performance requires
further examining. In this research, we postulate a question whether MIS
implementation affects corporate performance and how. To answer these questions,
we utilize present theories that enable us to connect MIS concept to corporate
performance. We iscuss current studies and use existing methods to elaborate this
relationship. The current piece of work follows the approach of the above-mentioned
contributions to the prior literature and considers that a management information
system is satisfactory when it allows the company to make better decisions and
improve its financial performance.

Concept of MIS and its benefits ; Management information systems are formal
systems for presenting management with timely and suitable information necessary
for decision making (Leonardi and Bailey, 2008). The system gives information on
the past, present and project future and on related developments inside and outside the
organization (Baccarini, 1999). It may be described as an integrated and organized
system for collecting relevant data, transforming it into correct information and
providing the same to the concerned executives. The main purpose of MIS is to
“provide the right information to the right people at the right time” (Gray, 2000). The
ideas of management information systems were formed to counteract such inefficient
development and productive use of the computer. MIS concepts are crucial to efficient
computer use in business.

When a system gives information to people who are not part of the managerial
staff, then it will not be viewed as part of a Management information system (Belassi
and Tukel, 1996). Such a system, while it may contain similar interfaces as MIS, is
not a part of it. Examples of such systems are salary acknowledgments and excise
duty statements. Generally, MIS deals with information that is systematically and
routinely collected in accordance with a well-defined set of rules (Spathis et al.,
2007). Furthermore, Management information system is a part of the formal
information network in an organization. Information that has great managerial
planning importance is seldom obtained at golf courses. However, this information is
not part of MIS, but “one-shot market research data accumulated to measure the full
potential of a new product does not come within the goal of a Management
information system by our definition, seeing as such information which is
systematically retained is not collected on a regular basis” (Belassi and Tukel, 1996).
Frequently, the information provided by an MIS helps managers in making planning
and control decisions (Jorgenson, 1989). Each company or organization, in order to
function properly, must be able to execute particular operations, “whether it is a
wholesaler or car manufacturer or who has to provide water to its area of jurisdiction”
(Wu and Lee, 2007). All these operations need to be accompanied by meticulous
planning, meaning the car manufacturer must decide on the type of car and the
wholesaler should determine which pumping period to install for the five-year period
(Gray, 2000).

lso, a company or organization must control the operations according to the

plans and targets developed in the planning process (Jorgenson, 1989). The car
manufacturer must make decisions to improve the deviation or revise his plans. On
the other hand, similarly, the wholesaler must determine the impacts that his
commissions have had on sales and make decisions to fix conflicting trends (Wu and
Lee, 2007). Management information systems take care of planning and control
(Leonardi and Bailey, 2008). Elaborate systems exist for information that assists
operations. The car manufacturer will hold a system for presenting information to the
workers on the shop floor concerning the job that needs to be performed on a
particular quantity of material. There may be route sheets, which accompany the rate
materials and components in their movement through various machines (Lewis,
2004). This system provides only the information to support operation. It has no
managerial decision-making significance. It I not part of an MIS. If, however, the
 system does provide information regarding productivity, rejection rates or machine
utilization, meaning that the system is part of a Management information system

3. Implementation In Indonesia
The success of the management information systems can be achieved by analyzing its
effect on results. Various authors consent with this concept and directly affirm that the
goal of management information systems should be to obtain an improvement and
enhancement in the firm's financial performance. For instance, authors say that
management information systems should aid companies in taking more appropriate
decisions or improving their comprehensive financial performance (Dopuch, 1993);
the objective of management information systems is to enhance overall financial
performance, not to obtain more precise costs (Cooper and Kaplan, 1992); firms
utilize innovation to obtain advantages that indirectly or directly impact economic
performance indicators (Cagwin and Bouwman, 2002); or the primary objective of
management information systems is to improve and enhance the potential role of the
system in improving the firm's overall financial performance (Ranganathan and
Kannabiran, 2004). Taken together, these findings, along with the conceptual model,
have significant research and managerial implications.
Moreover, according to a study conducted by (Naranjo-Gil 2009), Management
information system has an influence on flexibility-based strategic performance and
cost-based strategic performance, taking into account the decentralization of
responsibilities, updating customer knowledge and customer participation in
management, the cooperation with other units with the scope of increasing the firm
budget, and actualization and use of management information (Slotegraaf and
Pauwels, 2008). According to their research combined with prior knowledge on
management information systems, a study was made how different team compositions
interact with a management information system, directly influencing strategic
performances, focused on flexibility and the reduction of costs. The results exhibit
how the effect of management information system on strategic performance is
supervised and governed by top management team diversity. The extent to which the
management information system is providing information that relates to possible
future events, efficiency, output rates, information on the effect of various events, that
also relate to the impact that the employees decision has on the performance of other
 departments. (Naranjo-Gil, 2009). Furthermore, greater management information
system capability leads to a higher degree of strategic performance.

4. Positive and Negative Impact

Management information system is vital for the development of business, with many
benefits that may result from it. These benefits can be obtained from the business
owner application of information systems. To be able to keep compete with
competitors will require a safe and reliable management information systems. MIS is
a concept linked with man, machine, marketing and methods for collecting
information from the internal and external source and analyzing this information to
facilitate the process of decision-making of the business. Previous research of DeLone
and McLean (2003) implied that "the success of information systems will enhance the
performance of enterprises." This is the reason numerous companies have invested
considerably in information systems as a strategy trying to gain an advantage over
competitors. All business crave improved operational efficiency and flexibility. Also,
in the long run, a good and most of all operational, functional and efficient
management information system should be sustained by electronic data
communication network systems that are proven to be stable and reliable. With the
use of valid information systems, the company can exchange information more
effectively and efficiently (Priem and Butler, 2001). In addition, a way to increase
company operations and improve their overall effectiveness, companies adopt new
management techniques with the goal of enhancing overall decision-making
processes, improve results and finally reduce costs. (Henry, 2001; AlMaryani and
Sadik, 2012). Although there are many benefits of integrating information technology
in businesses, there some drawbacks when it comes to MIS (Liang et al., 2007). To
install and implement such a system is quite costly for companies, as it usually
requires integration with the existing technology. There is also a question of
Maintenance of Management information systems. A well-trained workforce who can
deal with MIS maintenance is also expensive. Management information systems may
also become ineffective (Gray, 2000) as insignificant or non-essential information is
supplied which in turn may slow the business decision-making process down. An
implementation may also cause the elimination of jobs when people that were
performing the tasks MIS performs now become obsolete (Pfeffer and Sutton, 2000).
 Information technology systems also become vulnerable to security breaches,
especially via the Internet (Gray, 2000). Future studies may focus on drawback
research as well as on the empirical study of MIS benefits, which have a huge
influence and role on providing efficiency, and effectiveness of strategic decision
making and analyzing an organized approach to the study of an organization's
management at every level in making operational, tactical, and strategic decisions. By
comparing similarities and differences between multiple variances of management
information systems, the abovementioned conducted studies and prior research extract
several patterns that explain how management information systems play a core role in
achieving a high level of agility and competitive performance.
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