The Mediating Role of Business Strategies between Management Control Systems Package and Firms Stability: Evidence from SMEs in Malaysia

Muhammad Haseeb,Leonardus Ww Mihardjo,Ilham Haouas,Marcin Lis

doi:10.3390/su11174705

Muhammad Haseeb, Leonardus Ww Mihardjo + Show 2 more

Open Access

https://doi.org/10.3390/su11174705

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Abstract

The aim of the current study was to ascertain the influence of a management control systems (MCS) package on a firm’s sustainability with the help of mediating variables such as differentiation and cost leadership strategy in Malaysian small and medium enterprises (SMEs). Data were collected from managers working in Malaysian SMEs. A total of 384 questionnaires was finally used for analysis using SmartPLS 3.8.2. Area cluster sampling was used for data collection, and seven out of sixteen clusters were selected randomly. These included Selangor, Johor, Kuala Lumpur, Sabah, Penang, Sarawak, and Perak because these seven states cover 73.9% of total SMEs. Structural equation modeling (SEM) was used to test the hypotheses. Confirmatory factor analysis (CFA) was also used to examine the reliability and validity, and structural model assessment was used to test the relationship between variables. Findings revealed that an MCS package had a positive influence on a firm’s sustainability, cost leadership, and differentiation strategy. Moreover, cost leadership and differentiation strategy have a significant and positive influence on a firm’s sustainability. In addition, cost leadership strategies and differentiation strategies significantly mediate between the MCS package and a firm’s sustainability. This research assesses the influence of the MCS package through cost leadership and differentiation strategy on a firm’s sustainability of Malaysian SMEs. It helps top management to focus on the MCS package and business strategies in attaining a firm’s long-term sustainability. Finally, research recommendations discuss that the present study helps future researchers and academicians.

Highlights

Small and medium enterprises (SMEs) play an important part in growth of every economy
The current research used partial least square scanning electron microscopy (PLS-Structural equation modeling (SEM)) to examine the theoretical model because literature elucidated that the PLS technique is more capable of handling simple and complex models [110,111]
These results are consistent with the literature. It has been revealed by various studies that management control systems (MCS) is a significant element of the small and medium enterprises (SMEs) business, which facilitates sustained competitive advantage [16,19] that can be attained through differentiation strategy and cost leadership strategy

Summary

Introduction

Small and medium enterprises (SMEs) play an important part in growth of every economy. The SME sector is considered as the backbone of Asian economies [1,2]. In Malaysia, 98.5% of organizations are SMEs and this sector contributed to 36.6% of the gross domestic product in 2016 [3]. Literature reveals that SMEs play a significant role, but researchers ignore this in management accounting [4]. Prior researchers concluded that only a few studies have attempted to summarize as well as map the area of SMEs with existing knowledge [6]. The researchers consider management control in the area of SMEs

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