The Key Efficiency Determinants for Information System and its implications on Organizational Performance: A case study of commercial Banks operating in Sindh

Abstract

Management Information System is one of the most important tools in any organization, which aims to provide reliable, complete, accessible, and understandable information in a timely manner to the users of the system. In addition, it increases the organizational performance and labor productivity. The various determinants have been found important for the operating efficiency of the Information Systems by the researchers across Information Technology (IT) global environment. Key efficiency determinants for Information Systems are classified into three major categories i.e. i) Human Resource (HR) such as IS personnel skills & IS human resource specialty; ii) IT Infrastructure Flexibility (ITIF) such as platform, network, data & applications sophistications; and iii) Effective Relationship (ER) such as the relationship of IS unit with vendors and service providers. Currently the commercial banks in Pakistan are investing a handsome capital for IT to make their information systems efficient as the banks can operate their processes effectively and provide the better online services to their clients. The research is based on empirical study of commercial banking sector in Pakistan, which will evaluate the information systems in the context of organizational performance. For that, extensive research work has been carried out specially on designing comprehensive research methodology framework. The data has been primarily collected through the survey questionnaire which has been pilot-tested to determine its ease of understanding, applicability, reliability and validity. The collected data was coded, summarized and used for confirmatory factor analysis in the Structural Equation Model (SEM) through SmartPLS 3 software. SEM was composed of two path analyses; first representing the relationship of Information System Operating Efficiency (ISOE) with its key determinants, while second one was developed to establish the relationship between Organizational Performance (OP) & ISOE. Further, in the second part of analysis the moderating role of some control variables has also been assessed. It was found that most important efficiency determinant for IS is HR which is responsible to operate and manage. ITIF and ER have also been found to be positively correlated with ISOE which infers that any improvement made in each of these exogeneous variables will result in an incremental ISOE. The results showed that efficiency of IS is the key driver to the OP in which size and capital of a given commercial bank play pivotal roles in moderating the relationship between ISOE and OP. Meaning that as a commercial bank grows in size & capital, the impact of efficient IS is more likely to get enhanced. The findings of this study will serve as important input in the decision making of managers in commercial banks, government and private institutes who are committed to enhance information system technology in Sindh Pakistan. Finally, on the basis of findings it is suggested that to enhance the efficiency of IS, commercial banks and all other economic stakeholders should invest (i) to enhance the skills of HR, (ii) to make the IT infrastructure robust and adoptive and (iii) to develop effective relationship of IS team with the managers working inside the organization as well as with vendors and suppliers outside the organization.