Strategic Management Accounting Practices and Firm Performance: The Moderating Role of Environmental Uncertainty and Economic Crisis

Abstract

Technological advancement, coupled with uncertainties such as COVID-19, has caused immense changes in the business environment. This has compelled organisations to adapt their operations to meet current demands. Consequently, it has become necessary to implement contemporary accounting practices referred to as Strategic Management Accounting (SMA). This study aims to examine the impact of SMA practices on firm performance among Small and Medium-sized Enterprises (SMEs) in Ghana; and to investigate the effect of contextual factors (perceived environmental uncertainty and perceived economic crisis) on the relationship between SMA and firm performance. A cross-sectional survey design was used to gather data from 228 SME owners and managers drawn from the databases of the Ghana Enterprise Agency and the Association of Ghana Industries. The Partial Least Square Structural Equation Modelling (PLS-SEM) approach was used in analysing the data. Findings reveal that SMA Usage has a positive significant influence on firm performance. Moreover, perceived environmental uncertainty and perceived economic crisis significantly moderate the relationship between SMA Usage and firm performance. Findings suggest that the application of SMA techniques enhances firm performance; however, this depends on the alignment of the firm’s structure with its context. The findings will help policymakers, professional bodies, and SME owners and managers to come up with strategies to help businesses decrease and mitigate the impact of uncertainties. This study is among the few that considered economic crisis in the management accounting literature, hence provides insightful avenues for further research.