Adoption of Strategic Management Accounting Techniques in Bangladesh: An Exploratory Study

Abstract

The aim of this study is to explore the adoption status of a package of SMA techniques, factors influencing the adoption decision, and the impact of their usage on firm performance in the context of a developing economy-Bangladesh. To this end, using a structured questionnaire survey this study collects data from 83 listed public limited companies. Descriptive statistics such as frequencies, mean, median and mode are analyzed to present the current status of SMA usage. Multiple regression analysis is employed to recognize the contingent factors affecting the adoption of SMA techniques. Moreover, using the ground of New Institutional Sociology (NIS), management accounting changes specifically a shift from traditional management accounting techniques to SMA techniques has been addressed in this study by conducting 20 in-depth interviews in the second stage of this research. The findings show that strategic costing is the most popular SMA technique in the Bangladeshi listed companies followed by competitive position monitoring and strategic pricing. The overall SMA usage rate shows a slightly below average score (3.0403) indicating the awareness of the sample companies with respect to the innovation in the field of management accounting. With respect to the contingent factors, strategic pattern, degree of decentralization, organizational culture, process characteristics, advanced technology, environmental uncertainty, intensity of competition and institutional pressures appear to have significant influence on the adoption of SMA techniques. With respect to the management accounting change, controlling organizations such as parent company and fund providers (coercive isomorphism) of private sectors companies have substantial impact on the imitation of the best practices in the industry, whereas donor organizations such as the World Bank and International Monetary Fund via the government ministry and agency exert pressures on the state-owned enterprises to adopt rules and structures and MAPs of the most successful companies. The findings of the study have several implications from a theoretical, practice and policy perspectives. From a theoretical perspective, the findings support the notion of contingency theory and institutional (NIS) theory in many respects. Practitioners can get meaningful insights with respect to an appropriate package of SMA tools compatible to their strategic stance, structure of the organization, preferred cultural values, process characteristics, and the nature of operating technology. Policy makers may contemplate formulating suitable policies to improve the usage of innovative SMA techniques by taking into consideration the role of regulators, top management team, and several other external agents reported by this study.