Small and medium-sized enterprises (SMEs) are crucial for economic growth and productivity, particularly in their ability to adapt quickly to market changes and develop new products or services. However, many Iraqi SMEs struggle due to limited financial resources, outdated technology, and a lack of administrative innovation. Previous research emphasizes the importance of accounting information systems (AIS) in boosting SME performance and enabling strategic adaptation. This study addresses the gap in the literature by exploring the mediating role of AIS between SME strategies and organizational performance in Iraq. The research aims to identify the specific strategies employed by SMEs and how the adoption and effective use of AIS can impact their overall performance. The study's significance lies in its contribution to understanding the challenges faced by Iraqi SMEs and providing practical strategies for improvement in a context characterized by unique socio-economic factors and limitations.

The literature review examines existing research on SME strategies, AIS adoption, and their impact on organizational performance. Studies highlight the positive correlation between business strategy and SME performance in terms of profits and sales. Research also shows a significant positive relationship between firm strategy and AIS use, as well as the positive impact of AIS on organizational performance. However, there is a lack of consensus on optimal strategies, and the impact of AIS can vary depending on factors such as firm size, industry, and the specific strategies implemented. Some studies highlight the mediating role of AIS between business strategy and SME performance, while others emphasize the importance of aligning AIS capabilities with strategic requirements. This study builds on this existing research by focusing specifically on the Iraqi context, where SMEs face unique challenges, and by employing a comprehensive model that considers various strategic dimensions.

This quantitative study employs a purposive sampling method to select 363 Iraqi SMEs in Basra governorate that utilize AIS. A structured questionnaire with closed-ended questions on a 5-point Likert scale was used to collect data from SME managers and owners. The questionnaire assessed various dimensions of SME strategies (finance source, administrative innovation, organizational culture, capability development, information source, business manager development, and technological innovation), AIS usage, and organizational performance. Data analysis involved descriptive statistics using SPSS and structural equation modeling (SEM) using SmartPLS3 software to test the relationships between the variables and examine the mediating role of AIS. The questionnaire was rigorously tested for reliability and validity using Cronbach's alpha and Fornell-Larcker criterion, ensuring the quality and accuracy of the collected data. The SEM analysis included both a measurement model to assess the reliability and validity of the constructs and a structural model to evaluate the hypothesized relationships. Discriminant validity was also assessed using the Heterotrait-Monotrait ratio (HTMT) to ensure that constructs were distinct and not overlapping. The study also incorporated demographic information such as respondents' positions, educational levels, and experience with AIS to provide a richer understanding of the context.

The study confirmed four hypotheses. First, SME strategy is positively and significantly related to organizational performance, supporting the idea that effective strategies lead to better performance. Second, there's a significant positive relationship between SME strategy and AIS use, indicating that firms with better strategies are more inclined to adopt and utilize AIS effectively. Third, AIS use positively and significantly affects organizational performance, highlighting its crucial role in boosting operational efficiency and decision-making. Finally, AIS partially mediates the relationship between SME strategy and organizational performance, indicating that the positive impact of strategy on performance is partly channeled through the effective implementation and use of AIS. The adjusted R² values for organizational performance (0.594) and AIS (0.334) suggest that a considerable portion of the variance in these variables is explained by the model, showcasing the strong impact of strategy and AIS on performance. The SEM analysis also highlights the specific relationships between the sub-factors of SME strategies and both AIS use and organizational performance. These details provide a granular understanding of which specific strategies contribute most to performance improvement through the application of AIS.

The findings confirm the crucial role of AIS in mediating the relationship between SME strategies and organizational performance in Iraqi SMEs. Effective implementation of diverse strategies coupled with the full utilization of AIS capabilities significantly enhances performance. The study demonstrates that investment in AIS is a worthwhile endeavor for Iraqi SMEs as it allows for efficient decision-making, minimizes errors, and provides timely information crucial for navigating dynamic market conditions. The partial mediation suggests that while strategy is a primary driver of performance, the proper use of AIS acts as a significant facilitator and amplifier of that impact. This supports the adoption of a holistic approach that combines robust strategies with a strong AIS infrastructure for optimal results. This research provides valuable insights for policymakers and business leaders in Iraq, highlighting the importance of promoting AIS adoption and providing support to SMEs in developing and implementing effective strategies. The findings also contribute to the broader literature on SME strategy and performance, especially in emerging economies facing unique challenges. The context-specific nature of the study provides actionable insights for businesses in similar environments.

This study provides significant insights into the crucial role of AIS in enhancing the organizational performance of Iraqi SMEs. It emphasizes the importance of aligning AIS implementation with comprehensive strategic planning across various dimensions, including finance, administration, and technology. While the study highlights the positive impact of both strategy and AIS, it also points to the need for a concerted approach to achieving optimal results. Future research could explore the impact of online marketing, AI integration, sustainability considerations, and a broader geographical scope to provide even more comprehensive insights into the dynamics of SME performance in Iraq and beyond.

The study's limitations include its focus solely on Basra province, potentially limiting generalizability to other regions of Iraq. The reliance on managers' and owners' perceptions may not fully capture the complexities of organizational performance. Additionally, the study did not consider other factors potentially influencing performance, such as online marketing strategies or the integration of artificial intelligence. Future research should address these limitations by expanding the geographical scope, using multiple data sources, and incorporating other relevant variables.