Effects of Shared Financial Services on Firm Performance

Shared services have become an important model for delivering support business functions centrally as services to internal users via information systems. We perceive the shared services as a digital platform for business process execution, and argue that the value of shared services can be gained from process improvements in addition to cost savings. Focusing on corporate finance and accounting functions, we propose that shared financial services improve firm performance, and such a relationship is mediated by the working capital efficiency which is one performance measurement of finance and accounting functions. We test our hypotheses with data on Chinese public firms from 2008 to 2017. Data analysis results show both direct effect of shared financial services on profitability and mediating effect of working capital efficiency. This study expands our understandings about how shared services generate business value, and provides strong empirical support for the process-oriented perspective in IT business value research