The Use Of Management Accounting Techniques Among Small And Medium-Sized Enterprises: A Study In Selangor, Malaysia

Abstract

Purpose- Management accounting techniques provide numerous benefits to businesses by providing information that allows managers to understand the financial performance of the business and plan for necessary improvements in revenue earned, in managing the cost of operations, and in adding value to the organization. However, what was found from past studies is that studies on the use of management accounting techniques among SMEs are still scarce, especially in Malaysia. Having said that, this study was conducted by the authors with the aim of examining the possible relationships that may exist from certain influential factors, such as intensity of competition, extent of decentralization, top management support, and availability of resources on the use of management accounting techniques among SMEs in Selangor, Malaysia. This study was conducted with the objective that the research results will contribute to existing studies on the use of management accounting techniques among SMEs, and suggest possible government-led interventions for SMEs. This is to ensure that SMEs have access to assistance such as financial aid, programmes, training, and support for digitalization in the area of management accounting systems.

Design/methodology/approach- The study design used a deductive approach and a quantitative method. Data was collected from 151 respondents who held the position of middle or senior level managers with accounting & finance experience working in SMEs that are located in the state of Selangor, Malaysia. A questionnaire survey using non-probability sampling, a convenient sampling method was used. Data analysis was done using the Statistical Package for Social Sciences (SPSS), followed by Partial Least Squares Structural Equation Modelling (PLS-SEM) to test the reliability, validity, and to test the hypotheses of the study.

Findings-The research findings revealed that the intensity of competition and top management support had significant relationships with the use of management accounting techniques among SMEs in Selangor, Malaysia.

Practical Implications- The study provides recommendations that the Malaysian government must continue to provide support to SMEs by providing grants, loans, tax incentives, and training and development to help SMEs navigate the competitive landscape and teach management on how to utilize the right management accounting techniques.

Social Implications- The study would promote the use of management accounting techniques among SMEs. This study provides impetus for the need to provide SMEs with training and support in using management accounting techniques, subsequently supporting lifelong learning and upskilling.

Originality/value-The scientific novelty of the study comes from being able to identify the possible factors that influence the use of management accounting techniques among SMEs in Selangor, Malaysia. Secondly, the test results of the extent of decentralization and availability of resources refuted the results of past studies. The study also provides practical implications based on the research findings.