ADOPTION OF FINANCIAL TECHNOLOGIES AND COMPETITIVENESS OF AN ORGANIZATIONS IN UGANDA: ACASE STUDY OF BRAC.
INTRODUCTION
1.0 Introduction
Financial technology, can be traced back several decades, in the 1970s-1990s: The Early Years, the introduction of electronic fund transfers (EFT) and Automated Teller Machines (ATMs) in the 1970s marked early innovations in financial technology, streamlining banking processes (Al-Mudimigh, & Anshari, 2020), The emergence of credit and debit cards in the 1980s facilitated electronic payments, reducing reliance on cash and in the 2000s the Rise of Online Banking and Payment Solutions, in the globally the expenditure in financial technology has been growing rapidly in recent years (Suryono, Budi, & Purwandari, 2020). According to a report by Statista, global investment in fintech companies reached approximately $135.7 billion in 2019, showing a substantial increase from $50.8 billion in 2017 (Kharisma, 2020). This chapter presents the background of the study, the problem statement, purpose, objectives of the study, research questions, study scope, justification of the study, significance, hypotheses, conceptual framework, as well as operational definition of key terms and concepts.
The section presents, historical background, theoretical, contextual background, conceptual background.
1.1.1 Historical Background
Financial technology (fintech), dates back centuries, with the earliest forms of banking and financial transactions taking place in ancient civilizations (Ayubjon o’gli, 2022), Financial technology, commonly known as fintech, is a term used to describe the application of technology to financial services. fintech dates back to the 1950s, when the first credit card was introduced in the United States (Davradakis & Santos, 2019) However, the term “fintech” itself is a relatively new concept, only gaining popularity in the early 21st century. In the 1960s and 1970s, the development of mainframe computers paved the way for the automation of financial processes, including trading, accounting, and payment processing (Wang et al., 2021). The introduction of automated teller machines (ATMs) in the 1980s further revolutionized the financial services industry by allowing customers to withdraw cash and conduct basic transactions without visiting a physical branch (Bomer, 2020).
The advent of the internet in the 1990s brought about significant changes in the way financial services were delivered (Momaya et al., 2020). Online banking, electronic payment systems, and brokerage services became more widely available, In 1995, the first online bank, Security First Network Bank, was launched in the United States (Leong, & Sung, 2018). The 2000s saw the emergence of new fintech players, such as PayPal, which provided a platform for online payments, and peer-to-peer lending platforms, such as Prosper and Lending Club (Hidayat, & Helmi, 2020). The growth of mobile technology and smartphones in the 2010s further accelerated the development of fintech, with mobile banking and payment apps becoming increasingly popular (Alzaidi, 2018; Ghurair, 2018). In terms of regional breakdown, the Asia-Pacific region, particularly China and India, has been leading in fintech investments. Europe, especially the United Kingdom, and North America, with a focus on the United States, have also been significant contributors to fintech investments (Al-Mudimigh, & Anshari, 2020).
In Africa, Financial technology, or fintech, has been rapidly growing and making a significant impact on the financial landscape (Eltweri, 2020). Fintech innovations in Africa have emerged as a means to address the challenges of limited access to financial services, promote financial inclusion, and drive economic development (Yermack, 2018). Here are some key aspects of fintech in African countries, Mobile money platforms have played a transformative role in Africa, enabling individuals to access basic financial services using their mobile phones (Kheira, 2021). M-Pesa, launched in Kenya in 2007, is a notable example that has expanded access to banking services, funds transfer, and payments in various African countries (Mbiti, & Weil, 2015), Other mobile money services, such as Airtel Money, MTN Mobile Money, and EcoCash, have also gained traction across the continent. Fintech solutions in Africa have facilitated digital payments, allowing individuals and businesses to make transactions electronically (Van Hove, & Dubus, 2019), Mobile wallets, such as Paga in Nigeria and Tigo Cash in Ghana, have gained popularity. Additionally, QR code payments and contactless payment solutions are being adopted in urban areas, providing convenience and security (Sangwan, Prakash, & Singh, 2020). Fintech has played a crucial role in promoting financial inclusion in underserved areas. Digital microfinance platforms, such as Branch, Tala, and Jumo, leverage alternative data sources and mobile technology to provide small loans to individuals and micro-entrepreneurs who are typically excluded from traditional banking services (Hua, Huang, & Zheng, 2019). Fintech has made cross-border payments and remittances more accessible and affordable. Companies like WorldRemit, TransferWise, and Flutterwave enable individuals to send and receive money across borders at lower fees compared to traditional channels. Blockchain technology is also being explored to facilitate secure and transparent cross-border transactions (Zheng et al., 2018).
Financial technology, commonly known as fintech, has been making significant strides in Uganda’s financial sector, in recent years, Uganda has witnessed the emergence of various fintech companies and initiatives, contributing to the modernization and expansion of the financial sector (Akileng, Lawino, & Nzibonera, 2018), Mobile money services have played a transformative role in Uganda’s financial landscape (Mukong, & Nanziri, 2021). Companies like MTN Uganda with its Mobile Money service (MTN Mobile Money), Airtel Uganda with Airtel Money, and other providers have enabled individuals to send, receive, and store money using their mobile phones. Mobile money has greatly enhanced financial inclusion, especially among the unbanked population, by providing them with access to basic financial services (Aarakit, et al., 2022). Fintech companies in Uganda have facilitated the adoption of digital payment solutions, reducing reliance on cash transactions (Štrukelj, Mulej, & Zabukovšek, 2020). Platforms like Interswitch, Flutterwave, and Payway provide digital payment gateways and enable businesses to accept online payments (Rowan et al., 2018), Additionally, remittance services such as WorldRemit and Xoom have made it easier for Ugandans living abroad to send money back home digitally (Aarakit et al., 2022).
The history of measuring organizational competitiveness is a complex and evolving field, influenced by various theories and methodologies, In the early 20th century, Frederick W. Taylor introduced scientific management, which focused on optimizing work processes and efficiency to enhance competitiveness and During the mid-20th century, management scholars such as Peter Drucker emphasized the importance of market orientation, customer satisfaction, and innovation in achieving competitiveness (Taylor, 2004).
In the 1980s, Michael Porter’s Five Forces framework became a prominent tool for analyzing industry competitiveness. It identified five key forces (supplier power, buyer power, competitive rivalry, threat of new entrants, and threat of substitutes) that shape an organization’s competitive position and In the 1990s, the resource-based view gained prominence, focusing on an organization’s internal resources and capabilities as key determinants of competitiveness and on the same note Jay Barney and Birger Wernerfelt highlighted the importance of valuable, rare, inimitable, and non-substitutable resources (VRIN resources) in achieving sustainable competitive advantage. dimensions of competitiveness (Behl, 2022).
Organizations globally have adopted financial technology to improve performance and enhance their performance strategies, like Streamlining Processes and Efficiency, Fintech solutions automate and digitize various financial processes, reducing manual errors, paperwork, and time-consuming tasks (Almahirah, 2020). By leveraging fintech tools, organizations can streamline their operations, improve efficiency, and allocate resources more effectively, and also Enhancing Customer Experience, Fintech enables organizations to provide a seamless and user-friendly customer experience (Martinez, Serna, & Montoya, 2020). Digital payment solutions, mobile banking apps, and personalized financial management platforms offer convenience, speed, and accessibility to customers. This can lead to higher customer satisfaction, loyalty, and retention (Zainal, Yousuf, & Salloum, 2020).
1.1.2 Theoretical Background
The study will be guided by the Diffusion of Innovation theory is a social science theory that seeks to explain how new ideas, products, and technologies are adopted and spread through society. Developed by Everett Rogers in 1962, the theory identifies five stages in the adoption process: awareness, interest, evaluation, trial, and adoption. According to the theory, the adoption process is influenced by several factors, including the characteristics of the innovation itself, the communication channels used to promote the innovation, the social system in which the innovation is being introduced, and the individual characteristics of the adopter.
The Diffusion of Innovation theory, proposed by Everett Rogers, is widely used in various fields to understand the adoption and spread of new ideas, products, or technologies. This theory has several strengths that contribute to its popularity and usefulness, One of the key strengths of the Diffusion of Innovation theory is its ability to predict and explain the rate of adoption of innovations. It identifies different categories of adopters based on their innovativeness, ranging from early adopters to laggards. This categorization helps in understanding the diffusion process and estimating the rate at which an innovation will be adopted by a particular group or society as a whole. The theory provides a comprehensive framework that considers multiple factors influencing the adoption and diffusion of innovations. It takes into account the characteristics of the innovation itself, such as its relative advantage, compatibility with existing values and practices, complexity, observability, and trialability. The Diffusion of Innovation theory has been applied to a wide range of contexts, including technology adoption, healthcare, agriculture, education, and social change. Its principles can be adapted and applied to various innovations and domains, making it a versatile theory.
The five categories of adopters identified in the theory are; Innovators: These are the first individuals to adopt an innovation. They are adventurous and willing to take risks, Early adopters: These individuals are opinion leaders and are respected by their peers. They adopt new ideas early in the process, Early majority: This group is more deliberate in their decision-making process and adopts innovations after they have been tried and tested by others, Late majority: This group adopts innovations only after they have become mainstream and are widely accepted by society. Laggards: These individuals are the last to adopt innovations and may resist change. The theory has been widely applied in various fields, including marketing, healthcare, and technology. It has been used to predict the adoption and diffusion of new products, technologies, and services, and to develop strategies for promoting their adoption. Overall, the Diffusion of Innovation theory provides a framework for understanding how new ideas, products, and technologies spread through society and how to effectively promote their adoption.
According to Diffusion of Innovation Theory by (Rogers in 1962), diffusion is governed by four elements including the innovation itself, communication channels, time and social systems. The four elements explain the process of change as determined by employees and the whole organization. Diffusion assumes that the propensity to adopt an innovation is primarily a function of the availability of information. It also assumes that in the dissemination of information particularly at the local scale, personal contacts are of much greater significance than the mass media (Deligiannaki& Ali, 2011).
Diffusion of innovations theory is often simplified to concentrate solely on a product or innovation. Little attention has been paid on the complex cultural, economic, technology and other factors that determine organizational performance (Green et al., 2009).
1.1.3 Conceptual background
Organizational competitiveness refers to an organization’s ability to maintain or increase its market position, profitability, and sustainability in the face of competition. It is a measure of how well an organization is able to satisfy the needs and preferences of its customers while simultaneously achieving its goals and objectives (Almahirah, 2020).
The term financial technology refers to a variety of services supported by various financial technologies for various businesses, with the main goal of raising the caliber of financial products and services supported by Information Technology (IT) solutions. Fintech is made possible by the creation of cutting-edge technologies, the most significant of which are those that may reveal secret information from multiple sources, effect security, and facilitate simple client communication (Hasan, Yajuan, & Mahmud, 2020).
FinTech adoption is making use of the availability of communication, making financial transactions easy and secure, the ubiquity of the internet, and the automated processing of information as well as transactions in the financial industry (Davradakis & Santos, 2019).
Financial technology, commonly known as fintech, refers to the use of technology to improve and automate financial services. Fintech includes a wide range of applications, from online banking and mobile payments to blockchain technology and cryptocurrencies. The goal of fintech is to provide faster, more efficient, and more convenient financial services to consumers and businesses. Fintech is an interdisciplinary field that combines finance, technology, computer science, and innovation to create new financial products and services that are more accessible, affordable, and user-friendly (Phan et al., 2020).
Technology refers to the application of scientific knowledge and tools for practical purposes. It involves the use of tools, machines, and techniques to create, modify, and improve products, processes, and systems. Technology encompasses a wide range of fields, including computer science, engineering, biotechnology, and telecommunications. It has transformed virtually every aspect of human life, from communication and transportation to medicine and entertainment. Technology has enabled us to achieve feats that were once thought impossible, and it continues to evolve and shape the world around us in profound ways (Hidayat et al., 2020).
1.1.4 Contextual Background
Financial technology, commonly known as fintech, has been rapidly growing in Africa in recent years. Fintech companies in Africa are leveraging digital technology to provide financial services to individuals and businesses that are underserved or excluded by traditional banking systems. Here are some notable trends and developments in fintech in Africa, Mobile Money: Mobile money has been a game changer in Africa, allowing people to transfer money, pay bills, and make purchases using their mobile phones. Mobile money services such as M-Pesa in Kenya, MTN Mobile Money in Ghana, and EcoCash in Zimbabwe have become very popular and have helped to increase financial inclusion in the continent, Digital Banking; Digital banks are also emerging in Africa, offering banking services entirely through digital channels. Examples of digital banks in Africa include Kuda Bank in Nigeria and TymeBank in South Africa. Payment Solutions: Payment solutions such as Flutterwave, Paystack, and Paga have been developed in Africa to facilitate online payments and e-commerce. These platforms allow businesses to accept payments from customers across different channels and are also helping to drive e-commerce growth in Africa, Investment Platforms: Investment platforms such as FarmCrowdy and PiggyVest in Nigeria and EasyEquities in South Africa are making it easier for people to invest in agriculture, stocks, and other assets and Blockchain: Blockchain technology is also being explored in Africa, with projects such as Bitland in Ghana and SureRemit in Nigeria using blockchain to provide secure and transparent land registration and remittance services.
1.2 Statement of the problem
Financial technology (fintech) has disrupted the traditional financial industry by providing innovative solutions and products that have made financial services more accessible, efficient, and cost-effective. As a result, organizations that fail to adopt fintech solutions risk losing their competitive edge, as their customers increasingly demand faster, more personalized, and convenient financial services. financial technology on organizational competitiveness, therefore, is how to integrate fintech solutions effectively to gain a competitive advantage, reduce costs, increase revenues, improve customer experience, and streamline business operations. This involves addressing challenges such as regulatory compliance, data privacy, cybersecurity, talent acquisition, and cultural resistance to change. Organizations must also keep up with the latest fintech trends and innovations, such as artificial intelligence, block chain, digital payments, and open banking, to remain relevant and competitive in the market. Failure to leverage these technologies can lead to loss of market share, decreased profitability, and decreased customer loyalty.
In 2021, amount charged for impairment on loans was USD 430,234 compared to USD 4,952,582 in 2020. The decline in impairment on loans was primarily due to improvement in portfolio quality (Portfolio at Risk (PAR>30) is 13% this year against 20% in 2020. The company followed most stringent provisioning policy to be inline with Uganda Central Bank guidelines for regulated tier-II entity, In 2021, the company’s total assets decreased by 9% to USD 64,682,784 compared to the previous year’s total assets of USD 71,038,940 and the company holds a key position in the market. Loans and advances to customers decreased by 3% and is now 63% of total assets. In 2021, the company’s Savings deposits reported 32% growth, amounting to USD 18,530,074 from USD 14,053,661 in 2020. Net equity increase by 35% to USD 14,350,305 from USD 10,631,388 in 2020. Despite various investments in BRAC the company faces challenges in in areas of profitability, Growth specifically in areas of the number of active clients, High portfolio at risk and low customer satisfaction.
1.3 General objective of the study
To Investigate the influence of adoption of financial technology on organizational competitiveness.
1.4 specific objectives of the study
- To examine the influence of systems software on organizational competitiveness.
- To investigate the online payment systems on organizational competitiveness
- To investigate influence Employee technological knowledge and skills on organizational competitiveness
1.5 Research Questions
- What is the influence of systems software on organizational competitiveness?
- What is the influence of online payment systems on organizational competitiveness?
- To what extend does Employee technological knowledge and skills influence organizational competitiveness?
The content scope of the study will concentrate on; the influence of systems software on organizational competitiveness, the online payment systems on organizational competitiveness and the influence of Employee technological knowledge and skills on organizational competitiveness.
1.6.2 The geographical scope
The study will be carried out from BRAC Head office offices in Kampala.
1.6.3 Time scope
The period of data to be considered from will be from 2018 to 2023.
1.7 Operational definition of key terms
Customer satisfaction: This refers to the ability of an organization to serve the customer the right product, of the right quality, at the right price, in the right time.
Growth: This refers to the increase in an organization’s revenue as compared to expenditure and other fixed costs.
Financial technology
Financial technology, commonly referred to as “fintech,” is the use of technology to improve and automate financial services. Fintech companies aim to provide better, more efficient, and more convenient financial services than traditional financial institutions such as banks and insurance companies. Fintech services range from mobile banking and investment apps to blockchain-based cryptocurrencies and peer-to-peer lending platforms. Fintech has the potential to democratize access to financial services, reduce costs, and increase the speed and efficiency of financial transactions (Hwihanus, Wijaya, & Nartasari, 2022).
Organizational competitiveness
Organizational competitiveness refers to an organization’s ability to maintain or improve its market position and profitability relative to its competitors (Sołoducho-Pelc, & Sulich, 2020). This includes a range of factors such as product quality, innovation, customer service, marketing, supply chain management, and cost efficiency. A competitive organization is able to respond quickly to changes in the market, adapt to new technologies, and develop strategies that differentiate it from its competitors. Organizational competitiveness is important because it can lead to increased market share, higher revenue, and improved financial performance.
1.8 Conceptual Background
Financial Technology organizational competitiveness
Moderating variables
Figure 1: conceptual framework
According to the figure illustration above, financial technology is the independent variable
The study will provide future scholars with literature on mobile payments
The study will also enable the policy makers to make informed policy decision regarding financial technology.
The study will also enable future academicians to have enough knowledge regarding the growth of small and medium enterprises
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
The study established the effect of Information systems on performance of government agencies in Uganda, taking a case of URA. This chapter presents the review of theoretical and related literature to the study. It involves theoretical review, actual literature review, and a summary of literature review. The actual literature was reviewed objective by objective, and the sources of literature reviewed include; secondary sources especially text books, journals, newspapers, research dissertations, government reports and publications, and primary source, especially pilot study that was carried out.
2.2Theoretical review
The study was guided by Diffusion of Innovation Theory by Rogers in (1962).The Diffusion of Innovation Theory states that diffusion is governed by four main interacting elements; the innovation itself, communication channels, time and social systems. These four components explain the process of change as determined by individuals and the whole organization (Deligiannaki& Ali, 2011).
Using this theory, the innovation of Information systems at URA was numerous, these included; adoption of modern website systems and the use of software in most of its operations. URA adopted these innovations to enable the organization to eliminate the key challenges. Diffusion assumes that the propensity to adopt an innovation is primarily a function of the availability of information. The Iinformation systems at URA wasadopted to enhance better performance.
2.3.1 The effect of information systems software and the organizational performanceInformation systems software covers vast areas of technologies such as mobile and wireless technology, telecommunications, software development, security, intelligent systems etc. Information system has a huge impact on industries, the community in general and our daily lives. Information systems software can be applied to many fields. One of the emerging applications in recent years is in most of the organizations to enhance better performance (Kwok Hung Lau &Haibo Huang 2012). Information systems software is fast becoming one of the main drivers of change, posing new strategic challenges (Lee & Kim, 2016). The business environment today has been undergoing unprecedented change and many companies are seeking new ways to stand out from the competition by sustaining their competitive advantage. In today’s highly competitive global marketplace, the pressure on organization is to find new ways of creating and delivering value to customers in growing stronger.
Technology can be thought of as the application of scientific knowledge for practical purposes. From the invention of the wheel to the harnessing of electricity for artificial lighting, technology is a part of our lives in so many ways that we tend to take it for granted (Laudon & Laudon, 2016).
Pearlson, Saunders, and Galletta, (2016) emphasizes that the need for Information systems development cannot be understood unless one also understands the use of software in the organization and unless the software can be applied to the organization to enhance its better performance.The integration of Information Technology and business processes has irrevocably changed the way in which modern organisations operate. The majority of medium-to-large organisations invest significant amounts of time, money and effort on Information systems (IS); which combine hardware, software and networking capacity to enhance the efficiency and effectiveness of their business processes (Grant & Meadows, 2016). In some circumstances the IS/IT that supports a business process becomes so integral that it can be very difficult to differentiate between them. The way in which organisational accounting processes have become embedded and reliant upon Accounting Information Systems (AIS) is an apt example of this phenomenon.
Information systems software works hand in hand with the hardware to enable the organization be in position to achieve its goals and objectives. Computers, keyboards, disk drives, iPads, and flash drives are all examples of information systems hardware (Pinedo, 2016).
Software is not tangible, it cannot be touched. When programmers create software programs, what they are really doing is simply typing the list of the organization’s instructions that tell the hardware what to do. There are several categories of software, with the two main categories being operating-system software, which makes the hardware usable, and application software, which does something useful. Examples of operating systems include Microsoft Windows on a personal computer and Google’s Android on a mobile phone. Examples of application software are Microsoft, Excel and Angry Birds (Chen et al., 2016).
According to Huang et al., (2013), Governments around the world are under the pressure from citizens and business to be more open and transparent in managing public funds, deliver quality public services as per needs of citizens. Therefore, in the last quarter of 2017, the world wide expenditure on software development was 480 billion dollars (Hughes et al., 2017).This expenditure was in information systems software to enable better service delivery and improve on general public sector performance.
Clearly, Internet and intranet technology has practical integrative applications for organizations. In addition to the practical use of IT as an integrative mechanism, the management of technology also has increased. Andrade &Doolin (2016) makes a strong argument that companies use IT to structure organizations. In addition, he argues that he and many others consider the management of IT as the biggest challenge. The research from this thesis addresses both of these two issues, namely; the use of IT for integration and the implications associated with the management of Information Technology itself.
According to Rana et al., (2017) Information systems initiatives in India was first started in 1990 with a minimal financial investment into National Informatics Centre to enable computerization of operations and automation of the pension fund. This was to eliminate the several challenges with the mismanagement and poor record keeping of the files of the pensioners.
Krecie (2016) reports that the government of Philippines invested around 8-10% of its GDP on Information systems to enable integrating the operations of government agencies and also on improving transparency in public sector. These financial investments in Information systems by different public sector organizations across the globe, is a manifestation of the long-term benefits of the service in enhancing better organizational performance.
Aisara and Pather (2011), in line with world trends, the government of South Africa has over the last decade, recognized the importance of Information and Communications Technology (ICT) and more recently Information systems in improving the standards of service quality and increasing the overall efficiencies of government. Asa result, the government has provided systems software to different public institution amounting to over R14 billion during2015/2016 financial year.
Abdullahi(2014),reports that the government of Nigeria in an effort to eliminate inefficiencies in service delivery and improve general performance, invested 32 billion dollars in 2015 to improve on the network systems and elimination of inefficiencies in the Information systems performance.
Karim, 2015 reports that Nigeria has some of the worst public sector delivery systems in the world characterised by corruption and delays in delivery of public services.
2.3.2 The Information Systems infrastructure and organizational performance
Wachira(2015) the use of computer systems in the organization improves performance in a number of ways. Firstly, the computers improve the level of coordination between different departments in a public sector. This has enabled the government across the globe to improve on public service delivery effectiveness and general better organizational performance of the government agencies.
Wachira (2015) further contends that Information systems infrastructure also improves on speed and reliability of organizational transfer and processing of information among members in the organization. This helps the different departments in the organization to send and receive information in a short time whichleads to improved performance and better competitive strength of the organization. There is a delay of government services in reaching the people that need it. In Ethiopia, some of the departments that people delay in accessing services include the pension (Lavers & Hickey, 2016).
The use of internet services as an effective Information systems infrastructure in Nigeria has been adopted by the government to eliminate unnecessary government costs incurred as a result of paper work and enhance performance of public sector agencies in the country (Ukachi, 2015).
Rotich (2015) also believes that the adoption of computers in the organization is to provide better and an effective communication between different departments in the organization and also between the organization and the outside world. The government’s effort to use computers in the monitoring of public agencies is to ensure that business between the government and the citizens is effective and fast.
Wilson et al., (2015) states that the use of websites is to enable long-term relationship between the organization and the customers. He further asserts that websites are where customers keep checking on the major changes in the organizational products. The public sector websites provide information to the customers about the products the organization has.
Government across Sub-Saharan Africa have acquired advanced software in key government agencies like Taxation and water management systems; this is to enable government manage public utilities better.
Paul and Pascale (2013) the government of Ghana was able to realize an increase in revenue collection due to the use of advanced software and internet services. Using this system, the public could pay for their taxes online. With the use of systems infrastructural facilities, Ghana was able to realize an increase in revenue collection by 22% in 2017. This was estimated at GH¢13.2 billion against the target of GH¢12.8 billion.
Ronald and Nazarius (2011) Uganda Revenue Authority has been experiencing a failure to meet its targets which has been a challenge to the organizational top management despite the adoption of ASYCUDA world software. Ghmire, (2014) indicates that taxation software enhances efficiency in revenue collection and reduces costs.
2.3.3 User knowledge and skills on organizational performance.
Knowledge has become one of the most highly valued commodities in the modern economy. Further, knowledge is considered the principal tool of competitiveness and innovation in the composition of commodity chain to the broader processes of regional and national economic development (Ajuwon, 2015). The new paradigm is that, within the organization, knowledge must be shared in order for it to grow thus sharing knowledge among its management and staff grows stronger and becomes more competitive (Tarhini et al., 2015).
Some of the most significant changes are the growing importance of knowledge as a catalyst of economic growth within the global economy, the revolution of information and communication technology (ICT), the integration of the global labour market and worldwide socio-political transformations (Lwoga et al., 2016).
Lwoga et al., (2016) further notes that access to and production of knowledge are essential prerequisite for participation in the global economy; this is witnessed by the fact that information and communication technologies have significantly increased the speed of production, use and distribution of knowledge, thus making a country’s economic and social wellbeing dependant on how quickly it can adjust its capacity to share and generate knowledge.
Komba et al., (2016)transformations brought to different firms as a result of Information systemsoffer many potential opportunities for both developed and developing nations. However, on the negative side, they also pose serious threats, and especially for developing nations. There is ample evidence that processes of globalization and the ascent of Manuel Castell’s ‘Information Society’ have given rise to new problems, such as the growing knowledge gap and digital divide between the information rich and the information poor among and within nations.
According to Meeker, (2015) the concept of Knowledge Management (KM) has attracted the attention of researchers over the last decade since it is considered an important tool to achieve innovation and sustainable competitive advantage. Takieddine& Sun (2015) noted that in highly unstable economies the only sure source of lasting competitive advantage is knowledge. Bayero, (2019) notes that firms that adopt knowledge management practices perform better than competing firms that do not. On the same line of thought, Ukachi, (2015) further asserts that knowledge management practices have been implemented in different industries both service and manufacturing to enhance better performance and increased output.
According to Ludeman&Erlanson, (2013) the late 1980’s saw a growing shift towards computer integration which emphasized the use of computers in most of the government’s daily work like the preparation of reports, accountability and monitoring of government projects which changed from manual to automated.
The 1990’s saw a heightened focus on increasing the use of computer technology in Education, Health and Defence departments of most governments across the globe. Busagala (2013) notes that there is growing attention and pressure to implement technology in education, one of the most significant features of the technological or digital era of much relevance to education is the Internet.
- 4 Summary of related literature
The literature reviewed indicated that systems software has different roles on the effectiveness of Information systems on performance of a government agency. Some of the roles include ensuring that there is transparency in management of public funds. The use of Information systems also enables the government to have better ways of record keeping, achieve improved standards of service quality and increase the overall efficiencies of government.
The study indicated that Information systems infrastructure had an influence on performance of government agencies like the use of computer systems in the organization improves performance. Internet services as an effective systems infrastructure enables URAto eliminate unnecessary costs incurred as a result of paper work and enhance performance. The adoption of computers in the organization is to provide better and an effective communication between different departments in the organization and also between the organization and the outside world.
The literature indicated that user knowledge and skills have an influence on organizational performance since knowledge is believed to be the principal tool of competitiveness which enhances innovation in the organization.
The literature does not indicate how Information system influencesfinancial performance in an organization since it’s difficult to measure performance. Most organizations have different ways of measuring performance because of their different goals, for example, profit making organization may assume that profitability is the key determinant of performance while government organization which are not profit making may use another parameter in determining performance. In addition, organizations with long term ambition prefer to use customer growth as a measure of performance.
Though a number of studies were carried out on performance in relation to government agencies, those addressing performance are still limited. Even those existing, were done in a different geographical setting other than Uganda Revenue Authority, at different time and using different methods.
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