How finance shared services affect profitability: an IT business value perspective

Area of Science:

• Information Systems
• Business Management
• Financial Accounting

Background:

• Shared services are an IT-enabled organizational model for support functions.
• IT infrastructure consolidation in shared services lowers costs.
• Shared services systems improve business function performance at the process level.

Purpose of the Study:

• To investigate the impact of finance shared services on firm profitability.
• To examine the dual effect of cost savings and working capital efficiency.
• To explore the mediating role of working capital efficiency.

Main Methods:

• Empirical analysis using data from Chinese public firms (2008-2019).
• Testing hypotheses on the relationship between finance shared services and firm profitability.
• Assessing the mediating effect of working capital efficiency.

Main Results:

• Finance shared services have a direct positive effect on firm profitability.
• Working capital efficiency mediates the relationship between finance shared services and profitability.
• IT-enabled shared services contribute to financial performance.

Conclusions:

• Finance shared services enhance firm profitability through cost reduction and improved working capital efficiency.
• The study contributes to understanding IT business value in shared services.
• Findings support the strategic implementation of finance shared services.