Linkage between information systems in smes and the performance of firms: A causal path analysis

Rapid technological developments, shorter product life cycle, greater expectations of customers and globalization lead to many consistent developments in the business operations. An effective information system is needed to cope with the changes in the environment. SMEs in India should understand the facts and benefits flowing from the linkage between the implementation of Information Systems (IS) and the Performance of Firms. The present study was conducted among the SMEs in Madurai District. The findings of the study reveal that there is a direct influence of system quality, information quality and service quality of IS on the users'satisfaction which has a direct influence on the firms’ performance. The indirect influence i.e., through users’ satisfaction, was higher than the direct influence of all qualities in IS. Hence the study suggests that the quality of IS should focus on the users’ satisfaction at first, so that it will generate the firm's performance automatically.