Abstract Information technology is playing a key role in the rising economies of the world. Today, in the era of information technology, the world is witnessing tremendous advancements in technology every day. So, the main aim of the study is to know the impact of internal financial sources and investment in information technology on performance of firms in urban areas. A sample of 500 respondent firms from Punjab, Haryana, and Himachal Pradesh in the healthcare services and hospitality sector have been considered. To reach the target population, judgmental sampling technique has been used. Multiple regression technique has been applied to analyse the results. The study found that the independent variable investment in information technology has a positive impact on the operational performance. So, it is suggested that more and more investments in operational performance will enhance entrepreneurial performance and also help in survival and generating profits. In future, more studies can be carried out on human capital and financial performance of a firm. Keywords: Information Technology, Internal Financing, Micro and Small Firms, Operational Performance, Punjab, Haryana, Himachal Pradesh Impact of Internal Financial Sources and Investment in Information Technology on Performance of Firms in Urban Areas Gaganpreet Kaur*, Harvinder Singh** * Assistant Professor, Management Studies, Path Rattan Jathedar Gurcharan Singh Tohra Institute of Advance Studies in Sikh- ism, Bahadurgarh, Patiala, Punjab, India. Email: gaganmalhans@yahoo.in ** Assistant Professor in Commerce, University College Benra, Dhuri, Punjab, India. Email: hsmand27@gmail.com International Journal of Financial Management 12 (3) 2022, 17-21 http://publishingindia.com/ijfm/ Submitted: 13 May, 2022 Accepted: 26 September, 2022 which has changed the entire world. It has made everyone’s life easy, fast, and full of challenges. It has impacted all segments of society. According to Harindranath, Dyerson and Barnes (2008), Information Technology can increase micro and small enterprises’ effciency and effectiveness in various ways, including making technical improvements, dropping transaction costs, enabling them to improve performance, and maximising frm benefts. Kambil, Brynjolfsson and Gurbaxani (1994) defned it as a technology that facilitates society to collect, create, merge, manage, communicate, and process information in multimedia and a variety of digital formats fordifferent purposes. Technologies like personal computers, cable TV, mobile phones, the Internet, and so on, are all a part of information technology. Governments are also adopting IT to provide superior services to their citizens. Entrepreneurs now realise that information technology can be used as an engine to speed up processes, eliminate or reduce paperwork, increase the quality of output and service delivery, decrease storage costs, and enhance information sharing and communication. The rich diversity of different perspectives towards factors that affect the IT adoption process are available in a huge body of literature. The review of previous research has identifed several infuencing factors. There is a vital need for micro and small-scale frms in rural areas to employ information technology to take advantage of substantial economic benefts (Charles & Frank, 2012). Therefore, internal fnancing sources are essential to survive and fourish during and after the COVID-19 pandemic. A study by Gill et al. (2016) specifed that most of the frms operate with a greater level of internal fnancing sources, with family members’ fnancial contributions. The greater level of internal fnancing sources enhances Introducton Information technology is playing a major role in the growing economies of the world. Today, in the era of information technology, the world is witnessing tremendous advancements in technology every day (Khatri, 2019). It can be viewed in terms of sophistication,