Management accounting adoption in small businesses: interfaces with challenges and performance

Antti Ylä-Kujala · Kati Kouhia-Kuusisto · Tuuli Ikäheimonen · Teemu Laine · Timo Kärri

25 citations0/0 files storedJournal of Accounting & Organizational Change

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Accounting and Organizational Management Accounting Theory and Financial Reporting Financial Literacy and Behavior

Abstract

Purpose While companies worldwide are largely comprised of small and medium-sized enterprises (SMEs), a significant amount of management accounting (MA) research focuses on larger organisations, thus leaving MA practice in SMEs relatively under-researched. This paper aims to examine MA adoption (MAA) and its interfaces with MA challenges and business performance from a small business perspective. Design/methodology/approach A sample of 502 small businesses is investigated with an embedded mixed methods research design comprised of qualitative content analysis, factor analysis and analysis of variance. Findings Up to 78% of small businesses are facing MA challenges that stem from organisation, systems, personnel and/or resources. Based on the present findings, MA challenges do motivate small businesses to at least consider investing in MAA as small businesses facing challenges are more likely to acquire systems and services than those reporting no issues at all. Hence, small business managers seem to not only recognise where their challenges lie, but also seek ways to improve the situation through MAA. The analysis also reveals that companies with the highest MA know-how have the best average solvency, suggesting that small businesses indeed benefit from MAA. Interestingly, the performance at medium levels of know-how declines while investments increase, revealing a “decreasing solvency phenomenon”. Potential explanations are, e.g. the MA not fitting the company’s exact needs, or information usability and use being limited by poor MA understanding. Originality/value The originality of the research lies in exploring the interfaces between MA challenges, MAA and small business performance using distinctive embedded mixed methods research design.

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References

2001The resource-based view of the firm: Ten years after 1991 1991Approaches to Qualitative-Quantitative Methodological Triangulation 2007The impact of firm characteristics on management accounting \npractices: A UK-based empirical analysis 2005Management Accounting Systems Adoption Decisions: Evidence and Performance Implications from Early-Stage/Startup Companies 2000The dynamics of accounting change Inter‐play between new practices, routines, institutions, power and politics 2007Management Control Systems in Early-Stage Startup Companies 2014Management Accounting in Small and Medium-Sized Enterprises: Current Knowledge and Avenues for Further Research 2001Extending the Boundaries of Management Accounting Research: Developing Systems for Performance Management

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