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THE IMPACT OF MANAGERIAL ACCOUNTING PRACTICES ON FINANCIAL PERFORMANCE OF SELECTED SMALL AND MEDIUM ENTERPRISES IN NAKAWA DIVISION

Dept: BUSINESS ADMINISTRATION File: Word(doc) Chapters: 1-5 Views: 8

Abstract

Research in management accounting has a long tradition with a variety of theories being utilized and applied in the process (Scapens & Bromwich, 2010). Some of the main theories, of grand or meta-theories or more accounting or organization-specific theories (Llewelyn, 2003), are outlined in this section as part of building on the existing accounting-relevant theories (Becker in Ahrens et al., 2008). Scapens (2006) as cited in Khaldoon Al-Htaybat et al (2013) provides a personal account and outlines his own experience with some of the research approaches that were popular throughout the years. The very first studies assumed a quantitative mathematical approach to management accounting with little belief that anything important could be found, as everything had been done already (Scapens, 2006). Some of the earliest studies have adopted a contingency theory approach (Chapman, 1997; Chenhall, 2003; Scapens, 2006) which is derived from organizational studies and says that the successful

CHAPTER ONE

                                                INTRODUCTION

1.1.

Introduction

This chapter is organized into five sections. The first section describes briefly the background to small and medium sized enterprises (SMEs) and the role of management accounting practices (MAPs) in the management of all organizations. Section two discusses the problem statement followed by the identification of research objectives, research questions, and hypotheses. Next the rationale and importance of this study is explained. The section ends with the development of a methodology and the specification of the organization of the thesis.

1.2.        

Background

1.2.1.              

Historical perspective. 

Small and medium-sized enterprises (SMEs) make up the vast majority of the business population in most countries in the world therefore they constitute a vital force in modern information-based economies (Mitchell and Reid, 2000). In Nakawa Division the SMEs population comprises approximately 99 per cent of all Nakawa businesses (The Department of Statistics, 2005). Therefore this sector plays a crucial role in the economy as an engine to generate economic growth in Nakawa Division. SMEs also contribute to the economy in other ways. Cook (2001) highlighted some of those which includes; 

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The encouragement of entrepreneurship; 

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The greater likelihood that SMEs will utilize labor intensive technologies and thus have immediate impact on employment generation; 

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The fact that they can usually be established rapidly and put into operation to produce quick returns; 

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The ability of SME development to encourage the process of both inter-and intraregional decentralization; and  

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The notion that they may become a countervailing force against the economic power of larger enterprises. More generally, the development of SMEs is seen as accelerating the achievement of wider economic and socio-objectives, including poverty alleviation.

In addition to the  advantages stated above, Mitchell and Reid (2000) argued that part of the reason for stressing the importance of small firms or SMEs is that their flexibility makes them well suited to the niche opportunities which are so characteristic of the ‘New