The Moderating Role of IT Development on the Relationship between Internal Control and the Quality Performance of Higher Education Institutions
Abstract
Purpose: This study examines the extent to which IT development for internal control purposes has been implemented. Also, it investigates the moderating effect of IT development on the relationship between internal control implementation and Higher Education Institution (HEI) quality performance.
Methodology/Approach: This research employed a survey method by distributing questionnaires to HEIs in all 34 provinces of Indonesia. As a result, 191 HEIs participated in this study. A Partial Least Squares (PLS) with the second-order analysis was utilised to test the relationship among the variables.
Findings: The results revealed that the IT development for internal control purposes was generally moderate. Additionally, IT development was positively associated with internal control implementation and strengthened the relationship between internal control and HEI quality performance.
Research Limitation/Implication: This study was based solely on a weak survey study regarding depth and breadth of exploration. Additionally, it did not cross-validated by re-testing the proposed model with secondary data.
Originality/Value of paper: This study adds to the body of knowledge on the moderating role of IT development. Also, the results of this research can be a meaningful input for HEI management since many consider internal control carried out manually to be sufficient without the role of IT. In fact, IT development can strengthen (be a moderator) the positive relationship between internal control and HEI quality performance.
References
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Becker, J.M., Klein, K. and Wetzels, M., 2012. Hierarchical latent variable models in PLS-SEM: Guidelines for using reflective-formative type models. Long range planning, [e-journal] 45(5-6), pp.359-394. DOI: 10.1016/j.lrp.2012.10.001.
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Chin, W.W., Marcolin, B.L. and Newsted, P.R., 2003. A partial least squares latent variable modeling approach for measuring interaction effects: Results from a Monte Carlo simulation study and an electronic-mail emotion/adoption study. Information systems research, [e-journal] 14(2), pp.189-217. DOI: 10.1287/isre.14.2.189.16018.
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Henseler, J., Dijkstra, T.K., Sarstedt, M., Ringle, C.M., Diamantopoulos, A., Straub, D.W., Ketchen, D.J., Hair, J.F., Hult, G.T.M. and Calantone, R.J., 2014. Common Beliefs and Reality about Partial Least Squares: Comments on Rönkkö & Evermann (2013). Organizational Research Methods, [e-journal] 17(2), pp.182-209. DOI: 10.1177/1094428114526928.
Kemenristekdikti (Ministry of Research, Technology and Higher Education), 2018. Press release Number: 24/SP/HM/BKKP/III/2018: Teknologi Informasi Penunjang Pelayanan Pendidikan Tinggi (Information Technology Supporting Higher Education Services). Jakarta: Kemenristekdikti. [online] Available at: < https://www.brin.go.id/teknologi-informasi-penunjang-pelayanan-pendidikan-tinggi-3/ > [Accessed 23 July 2022].
Länsiluoto, A., Jokipii, A. and Eklund, T., 2016. Internal control effectiveness–a clustering approach. Managerial Auditing Journal, [e-journal] 31(1), pp.5-34. DOI: 10.1108/maj-08-2013-0910.
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Mazza, T. and Azzali, S., 2018. Information technology controls quality and audit fees: Evidence from Italy. Journal of accounting, auditing & finance, [e-journal] 33(1), pp.123-146. DOI: 10.1177/0148558x15625582.
Memon, M., Hwa, C.J., Ramayah, T. and Ting, H., 2019. Moderation analysis: issues and guidelines. Journal of Applied Structural Equation Modeling, [e-journal] 3(1), pp.1-11. DOI: 10.47263/jasem.3(1)01.
Memon, M., Ting, H., Ramayah, T. and Hwa, C.J., 2020. Sample size for survey research: review and recommendations. Journal of Applied Structural Equation Modelling, [e-journal] 4(2), pp.1-20. DOI: 10.47263/jasem.4(2)01.
Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y. and Podsakoff, N.P., 2003. Common method biases in behavioral research: a critical review of the literature and recommended remedies. Journal of applied psychology, [e-journal] 88(5), pp.879-903. DOI: 10.1037/0021-9010.88.5.879.
Queiroz, M., Tallon, P.P., Sharma, R. and Coltman, T., 2018. The role of IT application orchestration capability in improving agility and performance. The Journal of Strategic Information Systems, [e-journal] 27(1), pp.4-21. DOI: 10.1016/j.jsis.2017.10.002.
Reich, J., 2021. Ed tech’s failure during the pandemic, and what comes after. Phi Delta Kappan, [e-journal] 102(6), pp.20-24. DOI: 10.1177/0031721721998149.
Rubino, M., Vitolla, F. and Garzoni, A., 2017. How IT controls improve the control environment. Management Research Review, [e-journal] 40(2), pp.218-234. DOI: 10.1108/mrr-04-2016-0093.
Saeidi, P., Saeidi, S.P., Sofian, S., Saeidi, S.P., Nilashi, M. and Mardani, A., 2019. The impact of enterprise risk management on competitive advantage by moderating role of information technology. Computer Standards & Interfaces, [e-journal] 63, pp.67-82. DOI: 10.1016/j.csi.2018.11.009.
Sekaran, U. and Bougie, R., 2019. Research methods for business: A skill building approach. John Wiley & Sons. DOI: 10.1108/lodj-06-2013-0079.
Sirmon, D.G., Hitt, M.A., Gilbert, B.A. and Ireland, R.D., 2011. Resource orchestration to create competitive advantage: Breadth, depth, and life cycle effects. Journal of management, [e-journal] 37(5), pp.1390-1412. DOI: 10.1177/0149206310385695.
Sofyani, H., Abu Hasan, H. and Saleh, Z., 2022. Internal control implementation in higher education institutions: determinants, obstacles and contributions toward governance practices and fraud mitigation. Journal of Financial Crime, [e-journal] 29(1), pp.141-158. DOI: 10.1108/jfc-12-2020-0246.
Sofyani, H., Riyadh, H.A. and Fahlevi, H., 2020. Improving service quality, accountability and transparency of local government: The intervening role of information technology governance. Cogent Business & Management, [e-journal] 7(1), pp.1735690. DOI: 10.1080/23311975.2020.1735690.
Tehseen, S., Ramayah, T. and Sajilan, S., 2017. Testing and controlling for common method variance: A review of available methods. Journal of management sciences, [e-journal] 4(2), pp.142-168. DOI: 10.20547/jms.2014.1704202.
Zhou, N., Zhang, S., Chen, J. and Han, X., 2017. The role of information technologies (ITs) in firms’ resource orchestration process: A case analysis of China’s “Huangshan 168”. International Journal of Information Management, [e-journal] 37(6), pp.713-715. DOI: 10.1016/j.ijinfomgt.2017.05.002.
Aguinis, H., Beaty, J.C., Boik, R.J. and Pierce, C.A., 2005. Effect size and power in assessing moderating effects of categorical variables using multiple regression: a 30-year review. Journal of applied psychology, [e-journal] 90(1), pp.94-107. DOI: 10.1037/0021-9010.90.1.94.
Ali, S., Green, P. and Robb, A., 2015. Information technology investment governance: What is it and does it matter? International Journal of Accounting Information Systems, [e-journal] 18, pp.1-25. DOI: 10.1016/j.accinf.2015.04.002.
Al-Thuneibat, A.A., Al-Rehaily, A.S. and Basodan, Y.A., 2015. The impact of internal control requirements on profitability of Saudi shareholding companies. International Journal of Commerce and Management, [e-journal] 25(2), pp.196-217. DOI: 10.1108/ijcoma-04-2013-0033.
Asiaei, K., Rezaee, Z., Bontis, N., Barani, O. and Sapiei, N.S., 2021. Knowledge assets, capabilities and performance measurement systems: a resource orchestration theory approach. Journal of Knowledge Management, [e-journal] 25(8), pp.1947-1976. DOI: 10.1108/jkm-09-2020-0721.
Barney, J., 1991. Firm resources and sustained competitive advantage. Journal of management, [e-journal] 17(1), pp.99-120. DOI: 10.1177/014920639101700108.
Becker, J.M., Klein, K. and Wetzels, M., 2012. Hierarchical latent variable models in PLS-SEM: Guidelines for using reflective-formative type models. Long range planning, [e-journal] 45(5-6), pp.359-394. DOI: 10.1016/j.lrp.2012.10.001.
Chalmers, K., Hay, D. and Khlif, H., 2019. Internal control in accounting research: A review. Journal of Accounting Literature, [e-journal] 42(1), pp.80-103. DOI: 10.1016/j.acclit.2018.03.002.
Chang, S.-J., Witteloostuijn, A.v. and Eden, L., 2020. Common method variance in international business research’. In: L. Eden, B. Nielsen, A. Verbeke, eds. 2020. Research Methods in International Business. Cham: Palgrave Macmillan. pp.385-398. DOI: 10.1007/978-3-030-22113-3_20.
Chin, W.W., 1998. Commentary: Issues and opinion on structural equation modeling. MIS Quarterly, 22(1), pp.7-16.
Chin, W.W., Marcolin, B.L. and Newsted, P.R., 2003. A partial least squares latent variable modeling approach for measuring interaction effects: Results from a Monte Carlo simulation study and an electronic-mail emotion/adoption study. Information systems research, [e-journal] 14(2), pp.189-217. DOI: 10.1287/isre.14.2.189.16018.
COSO (Committee of Sponsoring Organisations of the Treadway Commission), 2013. Internal Control-Integrated Framework. Durham: American Institute of Certified Public Accountants (AICPA).
COSO (Committee of Sponsoring Organisations of the Treadway Commission), 2019. COSO Internal Control-Integrated Framework: An Implementation Guide for the Health Care Provider Industry. Durham: American Institute of Certified Public Accountants (AICPA). [online] Available at: < https://www.coso.org/Shared%20Documents/CROWE-COSO-Internal-Control-Integrated-Framework.pdf > [Accessed 12 July 2022].
Durmusoglu, S., Jacobs, M., Zamantili Nayir, D., Khilji, S. and Wang, X., 2014. The quasi-moderating role of organisational culture in the relationship between rewards and knowledge shared and gained. Journal of Knowledge Management, [e-journal] 18(1), pp.19-37. DOI: 10.1108/jkm-05-2013-0183.
Fornell, C. and Larcker, D.F., 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, [e-journal] 18(1), pp.39-50. DOI: 10.1177/002224378101800104.
Grant, G.H., Miller, K.C. and Alali, F., 2008. The effect of IT controls on financial reporting. Managerial Auditing Journal, [e-journal] 23(8), pp.803-823. DOI: 10.1108/02686900810899536.
Hair, J.F. Jr., Hult, G.T.M., Ringle, C.M. and Sarstedt, M., 2021. A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications. DOI: 10.54055/ejtr.v6i2.134.
Henseler, J., Dijkstra, T.K., Sarstedt, M., Ringle, C.M., Diamantopoulos, A., Straub, D.W., Ketchen, D.J., Hair, J.F., Hult, G.T.M. and Calantone, R.J., 2014. Common Beliefs and Reality about Partial Least Squares: Comments on Rönkkö & Evermann (2013). Organizational Research Methods, [e-journal] 17(2), pp.182-209. DOI: 10.1177/1094428114526928.
Kemenristekdikti (Ministry of Research, Technology and Higher Education), 2018. Press release Number: 24/SP/HM/BKKP/III/2018: Teknologi Informasi Penunjang Pelayanan Pendidikan Tinggi (Information Technology Supporting Higher Education Services). Jakarta: Kemenristekdikti. [online] Available at: < https://www.brin.go.id/teknologi-informasi-penunjang-pelayanan-pendidikan-tinggi-3/ > [Accessed 23 July 2022].
Länsiluoto, A., Jokipii, A. and Eklund, T., 2016. Internal control effectiveness–a clustering approach. Managerial Auditing Journal, [e-journal] 31(1), pp.5-34. DOI: 10.1108/maj-08-2013-0910.
Lewis, B.R., Templeton, G.F. and Byrd, T.A., 2005. A methodology for construct development in MIS research. European Journal of Information Systems, [e-journal] 14(4), pp.388-400. DOI: 10.1057/palgrave.ejis.3000552.
Mazza, T. and Azzali, S., 2018. Information technology controls quality and audit fees: Evidence from Italy. Journal of accounting, auditing & finance, [e-journal] 33(1), pp.123-146. DOI: 10.1177/0148558x15625582.
Memon, M., Hwa, C.J., Ramayah, T. and Ting, H., 2019. Moderation analysis: issues and guidelines. Journal of Applied Structural Equation Modeling, [e-journal] 3(1), pp.1-11. DOI: 10.47263/jasem.3(1)01.
Memon, M., Ting, H., Ramayah, T. and Hwa, C.J., 2020. Sample size for survey research: review and recommendations. Journal of Applied Structural Equation Modelling, [e-journal] 4(2), pp.1-20. DOI: 10.47263/jasem.4(2)01.
Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y. and Podsakoff, N.P., 2003. Common method biases in behavioral research: a critical review of the literature and recommended remedies. Journal of applied psychology, [e-journal] 88(5), pp.879-903. DOI: 10.1037/0021-9010.88.5.879.
Queiroz, M., Tallon, P.P., Sharma, R. and Coltman, T., 2018. The role of IT application orchestration capability in improving agility and performance. The Journal of Strategic Information Systems, [e-journal] 27(1), pp.4-21. DOI: 10.1016/j.jsis.2017.10.002.
Reich, J., 2021. Ed tech’s failure during the pandemic, and what comes after. Phi Delta Kappan, [e-journal] 102(6), pp.20-24. DOI: 10.1177/0031721721998149.
Rubino, M., Vitolla, F. and Garzoni, A., 2017. How IT controls improve the control environment. Management Research Review, [e-journal] 40(2), pp.218-234. DOI: 10.1108/mrr-04-2016-0093.
Saeidi, P., Saeidi, S.P., Sofian, S., Saeidi, S.P., Nilashi, M. and Mardani, A., 2019. The impact of enterprise risk management on competitive advantage by moderating role of information technology. Computer Standards & Interfaces, [e-journal] 63, pp.67-82. DOI: 10.1016/j.csi.2018.11.009.
Sekaran, U. and Bougie, R., 2019. Research methods for business: A skill building approach. John Wiley & Sons. DOI: 10.1108/lodj-06-2013-0079.
Sirmon, D.G., Hitt, M.A., Gilbert, B.A. and Ireland, R.D., 2011. Resource orchestration to create competitive advantage: Breadth, depth, and life cycle effects. Journal of management, [e-journal] 37(5), pp.1390-1412. DOI: 10.1177/0149206310385695.
Sofyani, H., Abu Hasan, H. and Saleh, Z., 2022. Internal control implementation in higher education institutions: determinants, obstacles and contributions toward governance practices and fraud mitigation. Journal of Financial Crime, [e-journal] 29(1), pp.141-158. DOI: 10.1108/jfc-12-2020-0246.
Sofyani, H., Riyadh, H.A. and Fahlevi, H., 2020. Improving service quality, accountability and transparency of local government: The intervening role of information technology governance. Cogent Business & Management, [e-journal] 7(1), pp.1735690. DOI: 10.1080/23311975.2020.1735690.
Tehseen, S., Ramayah, T. and Sajilan, S., 2017. Testing and controlling for common method variance: A review of available methods. Journal of management sciences, [e-journal] 4(2), pp.142-168. DOI: 10.20547/jms.2014.1704202.
Zhou, N., Zhang, S., Chen, J. and Han, X., 2017. The role of information technologies (ITs) in firms’ resource orchestration process: A case analysis of China’s “Huangshan 168”. International Journal of Information Management, [e-journal] 37(6), pp.713-715. DOI: 10.1016/j.ijinfomgt.2017.05.002.
Authors
Sofyani, H., Abu Hasan, H., & Saleh, Z. (2022). The Moderating Role of IT Development on the Relationship between Internal Control and the Quality Performance of Higher Education Institutions. Quality Innovation Prosperity, 26(2), 128–146. https://doi.org/10.12776/qip.v26i2.1711
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