Abstract
The present study was conducted to identify factors that affect Pakistani manufacturing SMEs decisions tooutsource management accounting practices in terms of transaction cost economics (TCE) and resource-basedview (RBV). A survey of 302 SMEs was carried out using convenience sampling, a personal interviewowners/managers/CFOs located in 9 major cities of Pakistan. Our multiple regression analysis revealed that thefrequency of non-routine tasks, asset specificity, opportunism, trust in accountant and competition has asignificant impact on accounting outsourcing. Furthermore, whilst we include control variables like gender,executive education, experience, firm size and firm age in our linear regression equation, the relationship amongfive variables and outsourcing intensity was remain statistically significant. The findings imply that SMEs withresource constraint should shift their traditional in-house accounting practices to the external knowledgeableprofessional accountant. Finally, this study contributes to the body of knowledge with respect to managementaccounting outsourcing, TCE and RBV in the emerging economics context.
Highlights
Small and Medium-Sized enterprises (SMEs) add considerably to economic development in term of job creation, gross domestic product (GDP) and help to stabilize the national economy in emerging countries (Ale-Ebrahim et al, 2010)
The results show a significant negative coefficient value of -0.203 for asset specificity, suggesting that asset specificity is negatively associated with management accounting outsourcing, thereby confirming H2 (p
It indicates that the outsourcing intensity is significantly positively associated with the degree of competition value of 0.109, which supports for Hypothesis 5 (p
Summary
Small and Medium-Sized enterprises (SMEs) add considerably to economic development in term of job creation, gross domestic product (GDP) and help to stabilize the national economy in emerging countries (Ale-Ebrahim et al, 2010). The Pakistani economy is largely depending on a commodity sector comprises of agriculture and industry; contributed 42.3 percent of GDP in year 2012–2013 (Wasti, 2013). The agriculture sector is a major source of raw material to industrial unit accounts for 21.4 percent of the GDP, which employs 45 percent labor force and contribute 60 percent in exports (Farooq, 2013). The most challenging situations for Pakistani economy is to generate employment opportunities for people who are willing to work. These economic indicators can be achieved by recognizing the significance of small businesses that generate employment and development of the nation (Khalique et al, 2011)
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