Examining the Impact of Using Information Technology on Financial Performance of Third Party Logistic Providers (Case Study: Qazvin Province)

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1 International Research Journal Management Sciences. Vol., 3 (6), , 2015 Available online at ISSN x 2015 Examining the Impact Using Information Technology on Financial Performance Third Party Logistic Providers (Case Study: Qazvin Province) Mahyar Mehdinezhad 1*, Alireza Habibi 2 1 M.A. student, Management Faculty, Qaemshahr Azad Islamic University, Qaemshahr, Iran 2 Educator, Management Faculty, Qaemshahr Azad Islamic University, Qaemshahr, Iran * Corresponding Author: Mahyar Mehdinezhad ABSTRACT: The aim this research is to examine the relation between information technologies and financial performance third-party logistic providers within a practical attitude. Research method is correlative and data collection tool is questionnaire. Statistical population this research is consisted managers and experts third-party logistic providers (transportation firms in Qazvin province) that 124 persons are selected by availability sampling method through multiple stages. In this research, the structural equations technics are used, and for analyzing information Lisrel stware is utilized. Obtained results from structural equation test suggest that three factors importance, effort and information technology advantages have positive and significant influence on information technology, correspondingly information technology usage can greatly influence on financial performance thirdparty logistic providers. Keywords: Information technology, Financial performance, Importance IT, Advantages IT, Efforts IT. INTRODUCTION Within recent years, using information and communication technology has been considered as core many global changes and this accelerates accomplishment affair. Currently in any trade such as e-banking, e-education and e- insurance one can observe some signs information technology. In today world, internet as a tool has made it possible to use information in a useful and effective manner at an organization level. Using internet resulted in expansive changes in administrative affairs and information systems, so that it is possible to electronic transfer data, documents and correspondences through computer and telecommunication lines.therefore it is expected that telecommunication technology influences on financial performance firms. Therefore in this research at first one posed the problem in this regard and in continue, one engages in objectives, describing keywords, research literature, research conceptual model,, data analysis, test and conclusion and finally fering solutions. Importance information technology is increasing for firms and one feels its impact on world trade expansively. Rather, there is this discussion that information technology can lead in increase efficiency and reduction costs. Some views argue that information technology is economically important due to two reasons: 1- information technology facilitates organizational innovations and changes adaption in firms, like appearance new models business with income from cost reduction, better quality and customer-centered innovation 2- competitive conditions and market structures have changed. Due to reduction obstacles and developing new channels for delivering goods and services, the competition increases. Information technology is rather convergent with terms such as telecommunication and computer technology, in such manner that it has an important role in developing communication and information. Information technology includes study, design, development, implement and management information systems based on computer and especially its stware and hardware application. Information technology can be used strategically for improving quality performance in business. In approach 245

2 quality management, information technology can meet customers' expectations within continuous improvement program through increasing quality goods and services and reduction costs (Safari et al., 2012). The information technology effort is prediction required effort, time and number personnel for developing informational systems. Main components project cost are hardware costs, education and costs production stware including paying salary to stware engineers. Since a great part project cost is personnel cost, cost estimation and information technology effort are used mutually. Project successful management information technology plays pivotal role in organization efficiency. Therefore using effective methods for evaluating cost and effort influences greatly on project management. In case availably information, effort and cost developed information systems play a pivotal role in level effort and cost information system that will be developed in organizations (Kim & Sung-Hoon 2004). Evaluation required effort for developing an information technology is one important concerns project management. Methods evaluating costs that calculate system development cost at early stages project with minimum available information are highly essential. Appropriate cost evaluation provides possibility effective control time and cost system development. This study attempts to examine the impact using information technology on financial performance third-party logistic providers (case study: Qazvin province). Literature review Have conducted a research titled as "effects information technology: from performance to value" with aim defining and distinguishing firm performance and company firm. Also information technology demand and impacts information technology capability have been measured on firm performance and firm value. Data this research is from 100 Leader Company in information technology that has been collected by Information Week database within 1998 to Research findings have shown that information technology capabilities influence more on firm value than firm performance. Also a long-term effect information technology is greater than its short-term influences (Ong & Chen, 2013). Have carried out a research titled as "the relationship between sustainability practices and financial performance construction companies". The objective this research has been examination impact reports relating to environmental, social and governmental activities (ESG) on financial performance contractor companies. Statistical society this study is consisted 44 contractor firms in Australia and obtained results have been analyzed by analysis variance statistical method (ANOVA). The results the research have shown that financial performance contractor firm and scores from ESG reports have weak correlation (Siew et al., 2013). Have conducted a research titles as" information technology competency, knowledge processes and firm performance", with aim analyzing the impact IT capability on knowledge management process and relations between IT capability and knowledge management and consequences performance. Research data is collected among 162 managers and has been analyzed by structural equations modeling. The obtained results have shown that an IT capability has a key role in the knowledge management processes. Also knowledge management processes has direct relation with market performance and financial performance. The results showed that knowledge management processes has a mediator role between IT capacity and market performance (Lopez & Alegre, 2012). Have conducted a research titled as "examining relation between using technology opportunity and information affecting on it with financial performance the organization from viewpoint managers bank branches" in The objective this study was examining the relation between using technology opportunity and factors affecting on these opportunities with organization financial performance in eight private and governmental banks in Tehran. Data collection has been carried out by questionnaire and research has been evaluated and analyzed by Pls stware with patterning structural equations. Results research have shown that information technology opportunities can act as strong financial stimuli for firm performance and this increases firm's prit and income (Babaie & Shafi 2012). Have conducted a research titled as "examination role information technology on cold chain management performance in world-class organizations (a food industries research), in The objective this research was examining the role information technology on improving human source performance, improvement planning and transportation and logistics system within cold chain organizations. Questionnaires this research has been distributed among experts and managers working organizations in cold chain filed for collecting the desirable data and they have been analyzed by multiple regression analysis and by SPSS stware. The results this analysis have confirmed all three the research. 246

3 Research conceptual model IT Importance IT Involvement IT Involvement Financial performance IT Advantages Figure1. Research conceptual model. METHODOLOGY This research is a correlative by nature and its method is practical one. Also for collecting required data the field method is used. In this research for gathering the required data one has used the questionnaire. This questionnaire has 15 questions about examining the impact using information technology on financial performance third-party logistic providers and these questions are developed based on article.one has used Likert five-answer spectrum for measuring indexes within the questionnaire that is one the most common measurement scales. For examining the validity, at first the primary questionnaire the research has been designed and has been seen by assistant pressors and consultant, after carrying out corrective measures on the questionnaire in subsequent step number 30 questionnaires have been distributed among the research statistical population and the opinions respondents have been inquired about designed questions. Finally the final questionnaire has been designed in more expansive amount for distribution. At current research the Cronbach's alpha method has been used for measuring questionnaire reliability.by opinion assistant pressors and the consultant the number 30 questionnaires have been distributed for measuring reliability and then for determining the validity the SPSS stware has been used and the obtained Cronbach's Alpha coefficient for all questionnaire questions has been determined as that considering the fact that this value is greater than 0.7 then it shows that the questionnaire has the sufficient validity.statistical population this research includes managers and experts Third-party logistic providers (transportation firms in Qazvin province). For sampling and determining sample size one has used the principles determining sample size within multivariable regression analysis in structural modeling. Within multivariable regression analysis ratio sample number to independent variables should not be less than 5, otherwise the results obtained from regression equation is not such generalizable. One has proposed a more conservative ratio 10 observations for each independent variable. Based on James Stevenson's view even considering 15 observations for each predicting variable within multivariable regression analysis with ordinary method standard least squares can be considered as a good rule thumb. Hypothesis First : information technology importance has positive and significant influence on information technology involvement. Second : information technology efforts have positive and significant influence on information technology involvement. Third : information technology advantages have positive and significant influence on information technology involvement. Fourth : information technology involvement has positive and significant influence on financial performance. RESULTS Testing current study can take place by structural equations modeling. Structural equations method is an appropriate statistical method that examines correlative models by linear equation structure based upon some about existence correlative relations between variables. Thus structural equation modeling experiments theoretical relations between determined and assumed structural conditions and it makes it possible to evaluate the correlation between latent variables (not observed variables) as well as relations between measured variables (observed variables). Structural modeling is a highly comprehensive and powerful multivariable analysis technic from family multivariable regression family; in other word it is a general linear model that allows the researcher to experiment a set 247

4 regression equations at the same time. For analyzing this research and considering presented model in relation with the impact factors found in this model on each other, one has used structural modeling. In figures 2 and 3, variables information technology importance (V1), information technology efforts (V2), information technology advantages (V3) involvement (usage) information technology (V4) and financial performance (V5) have been shown respectively. Figure 2. Statistic t for structural and measuring models. Also the figure 3 shows the standard coefficients for measuring model (standard coefficients for questions and their relating variables) and structural model (path coefficients for posed paths in the model among variables). Path among all independent variables with dependents ones are named with Gama path coefficient and path all dependent variables with dependent one are introduced with Beta path. According to presented model three paths are depicted with Gama factor and two with Beta and as follows they are examined within scheme five. Figure 3. Standard coefficient structural and measuring model. 248

5 Path Hypo thesis Standar d coeffici ent Table 1. Results test. Statistic t Compar ing with critical value V1 to V4 H >1. V2 to V4 H >1. V3 to V4 H >1. V4 to V5 H >1. Significance Result Fitness research model When a model is characterized by appropriate theoretical support, in the next step it is time to examine the fitness this model with the data that the researcher has collected. Thus some goodness fit tests that are discussed in chapter three can be utilized for research data and the used model to examine the fitness. In figure 2 model fit indexes are presented. Table 2. Fit indexes research model. Fit indexes Standard value Index value in the research Degrees freedom - 83 Chi-square Chi-square/degrees freedom (x 2 /df) Less than RMSEA Less than RMR Less than NNFI Greater than CFI Greater than IFI Greater than GFI Greater than AGFI Greater than As one can see in above table, index values (chi-square/degrees freedom, RMSEA, RMR, NNFI, CFI, IFI, GFI and AFGI) are in very good level and show an acceptable fit. Also the index is close to standard and represents a relatively good fit. Therefore considering the fact that in total all indexes are in acceptable level, one can conclude that the research model has a good fit. DISCUSSION AND CONCLUSION In this research, considering the presented model, five presented and collected data have been analyzed by structural equation test. The results test have shown that based upon first test findings, the path presented by data is supported, positive and significant. Therefore we conclude that importance information technology has a positive and significant influence on information technology and this is confirmed. The results research indicates that having a modern informational system and developed technology can result in increase involvement managers different sectors in strategic planning within information technology section. Have achieved to the same conclusion as well. In 2011 have conducted a research consistent with the same subject with title "examining the role information technology on performance cold chain management in world-class organizations ". Questionnaires this research have distributed among experts and managers organizations working within cold chain for collecting data and its results have been analyzed by multiple regression analysis and SPSS stware and the results this analysis have confirmed all three this research. The second has evaluated the impact information technology efforts on usage information technology. According to second test findings, the path presented by data is supported, positive and 249

6 significant. Therefore we conclude that information technology efforts have positive and significant influence on usage information technology and this has been confirmed. The research results show that information technology can result in improvement effectiveness, flexibility and logistic cost and service quality. However due to high cost and lack expertise users the rate adaption information technology is lessened among logistic firms. Therefore due to this low rate adaption information technology within users logistic firms, there is an appropriate opportunity for third-party logistic providers (3PL) to present its developed information technology skills. Therefore information technology plays an important and essential role within third-party logistic providers together with supply complicated chain activities between logistic users and their customers. Also the results the research show that efforts for improving information systems and updating them and attention to enhancing information technology and its usage within business process can encourage the organization to use more updated and developed tools and systems to greater extent in its work. Have achieved to the same results. Also they conducted in 2014 a study titled as " impacts information technology: from performance to value" which its objective was definition and distinction concepts firm performance and firm value. Also one has examined the information technology demand and impacts information technology capabilities on firm performance and firm value. The data this research is extracted from 100 leader firms in information technology that are collected from Information Week database during 1998 to The research findings showed that information technology capacities influences more on firm value than on firm company. Also long term effects information technology is greater than its short term effects. Based on third, advantages information technology influence on using information technology. Based upon findings third test the path presented by data is supported, positive and significant. Therefore we conclude that information technology advantages have positive and significant influence on using IT, and this has been confirmed. Have achieved to the same conclusion. Research results show that manager can exchange their view in such meetings through their personal computer at their work place without need to consume high cost and time for traveling, and as a result contribution in decision making may be very easier in this way. Therefore the role IT in management activities is more highlighted, especially within decision making: Higher contribution interested groups in decision making, Rise speed and decrease time in preventing repetition messages, Improvement identifying problems and increasing speed in recognizing them. Today from one side precondition any work or establishing any communication is strongly dependent to information technology and its tools. From other side, information technology in comparison with old manners doing business results in higher speed and quality works. This can increase speed and level organization success in the competition field. It is many years that viewpoint business mangers has changed about IT value from operationoriented toward strategic-oriented. And one can conclude that IT can be as one the important components firm capability and as one the sustainable competitive advantage sources. In a research with title impact on information technology on financial performance third-party logistic providers in China (), the researchers addressed this issue. The objective this research was examining the impact IT on financial performance third party logistic firms. They have achieved to the same conclusion. Fourth : using IT influences on financial performance third-party logistic firms. Based upon fourth test finding, the path presented by data is supported, positive and significant, therefore we conclude that using IT has positive and significant influence on financial performance third-party logistic providers and this is confirmed. Have achieved to the same conclusion. The results the research show that as the organization are more involved (usage) with IT and identify newer systems and make use them within the organization, the financial performance the organization comes to be improved. Have achieved to the same results. Another research in this regard is carried out in 2012 by with title "examining relation between using technology opportunity and information affecting on it with financial performance the organization from viewpoint managers bank branches". The objective this research is examining the relation between using technology opportunities and factors affecting these opportunities with financial performance organization within eight private and governmental banks Tehran. Data collection has been carried out by questionnaire and research has been evaluated by Pls stware and structural equations patterning method. Research results have shown that information technology opportunities are a strong financial stimulus for firm performance and increases firm benefit and income (Wang et al., 2008). Suggesting solution 250 Recruiting specialized employees within IT section that have sufficient awareness and priciency in informational systems and innovations IT so that they help the organization in using these developments. Cyclic examination informational systems in terms quality and adequate responding to organizations activities. Observing existing standards in this regard and updating information systems features. Allocating appropriate budget for implementing updated information systems and developed technologies. Using participative management for all sectors manager contribution in information technology strategic planning.

7 Needs assessment throughout the organization for determining effectiveness information systems and preventing waste sources arising from deficiency these systems, and enhancing level effective involvement personnel and managers with this part. Efforts for acquiring competitive advantages through adopting new information systems. Offering a clear view to managers through presenting financial advantages that can be achieved by establishing these systems, so that they can be convinced to allocate budget in this regard. REFERENCES Babaie M., Shafi N, Examine the relationship between taking advantage the opportunities technology and factors influencing financial performance from the perspective bank branch managers, magazine Outlook Business Administration. Magazine outlook Business Administration no.12: Kim G, Sung-Hoon. K, Comparison Of Construction Cost Estimating Models Based On Regression Analysis, Neural Networks, And Case-Based Reasoning. Building and Environment. 39: Lopez SP, Alegre J, Information technology competency, knowledge processes and firm performance. Industrial Management & Data Systems. 112 (4): Ong Ch, Chen P, Information technology capability-enabled performance, future performance, and value. Industrial Management & Data Systems. 113 (5): Safari S, Shirzad Sh, Khalili H, Quality management structure supported by information technology (research on Central Insurance Agency. Journal Information Technology Management. No.12 Siew RYJ, Balatbat MCA, Carmichael DG, The relationship between sustainability practices and financial performance construction companies. Smart and Sustainable Built Environment. 2 (1): Wang Q, Lai F, Zhao X, The impact information technology on the financial performance third-party logistics firms in China. Supply Chain Management: An International Journal.13/2: