Management Accounting Section Midyear Meeting

The Impact of Management Accounting on the Perception of Business Performance Amongst Irish SMEs

• In Event: Break/Research Exhibition 3: Interfirm Issues and Governance

Abstract

Research examining the role of management accounting in small and medium sized enterprises (SMEs) is limited. This is despite the critical importance of SMEs to the generation of economic wealth and employment in many countries. Using an electronic survey instrument targeting Chief Financial Officers (CFOs) or equivalents, this exploratory research seeks to examine the impact of the use of various management accounting techniques/methods on the perceptual business performance of SMEs. To do so, a conceptual model was hypothesised to test if the primary areas of management accounting (i.e. costing, budgeting and performance management), enabled by a range of information technology (IT) tools, positively influence a perceptual measure of business performance amongst our sample of SMEs. The statistical approach used was a form of Structural Equation Modelling (SEM) called Partial Least Squares (PLS). The results suggest that the IT tools used by SMEs have a positive and statistically significant impact on all three areas of management accounting considered in this study. However, there is only partial support for the positive impact of management accounting on the perceptual business performance of the SMEs who participated in our study. Interestingly, when asked to consider the totality of management accounting techniques used within their firms, the respondents collectively reported a much greater perceptual impact on various aspects of their performance than that generated by the SEM-PLS based results. This divergence in results raises many questions as to the role that management accounting currently occupies amongst Irish SMEs.

Authors

• Peter Cleary, Univesity College Cork, Ireland

• Martin Quinn, Queen’s Management School, Queen’s University, Belfast, UK

• Pall Rikhardsson, Reykjavik University, Iceland

• Catherine Elisabet Batt, Reykjavík University