The Role of Perceived Environmental Uncertainty on the Usage of Strategic Management Accounting Techniques Among Nigerian Manufacturing Firms

OJUA, Olusegun Michael
Department of Accounting, College of Business and Social Sciences, Unicaf University, Malawi, Nigeria.
DOI – http://doi.org/10.37502/IJSMR.2021.4408

Abstract

The objective of this research paper is to review the role of perceived environmental uncertainty (PEU) in the usage of SMATs by Nigerian manufacturing firms given the level of competition in the sector. To compete well, management decisions are influenced by the external environment due to the need for relevance. Using a sample of Hundred and Forty-Seven manufacturing firms and their accounts personnel as respondents, copies of questionnaires were distributed to gather primary data, the Correlation Coefficient, and other simple statistical tools of analysis calculated. The first hypothesis shows the ranking of 0.56 and 0.99 all above 0.5 level of acceptance, while the second hypothesis comparing PEU factors on the SMATs usage with a z-score all above the “3” mean score. The results indicated the significance of PEU in the use of SMATs by the firms.  The findings of the study will have implications for the firms ‘ decisions on the usage of SMATs. As a result of this research, it can be concluded that PEU factors are influencing the usage of SMATs among Nigerian Manufacturing firms.

Keywords:  Perceived Environmental Uncertainty, Strategic Management Accounting, SMAT usage.

References

  • Abdel-Kader, M. & Luther, R. (2008). Management accounting practices in the British food and drinks industry. British Food Journal, 108(5), 336-357.
  • Agle, B. R., Nagarajan, N., Sonnenfeld, J. A., and Srinivasan, D. (2006). Does CEO Charisma Matter? An Empirical Analysis of the Relationships among Organizational Performance, Environmental Uncertainty, and Top Management Team Perceptions of CEO Charisma. Academy of Management Journal, 49(1), 161-174.
  • Ahmad, K. (2012). The adoption of management accounting practices in Malaysian small and medium-sized enterprises. Asian Social Science, 10(2), 236–249.
  • Ahmad, M. & Leftesi, A. (2014). An exploratory study of the level of sophistication of management accounting practices in Libyan manufacturing companies. International Journal of
  • Business and Management 2 (2), 1-10.
  • Ajibolade, SO., Arowomole, Ojikutu, R.K. 2010. Management accounting systems, perceived environment uncertainty and companies’ performance in Nigeria. International Journal of Academic Research, 2 (1) 195-201.
  • Al-Mawali, H. (2015). Strategic management accounting usage, environmental uncertainty and organizational performance. European Journal of Business and Management, 7(8), 219-234.
  • Alsoboa, S., Al Khattab, A, & Al-Rawad, M. (2015). The extent to which the Jordanian private industrial companies Use SMA Techniques. European Journal of Business and Management, 7(7), 456-465.
  • Andesto R. (2016). The influence of perceived environmental uncertainty and business strategy on management accounting system (survey on the Indonesia advertising companies). European Journal of Accounting, Auditing and Finance Research, 4,(3), 27-36.
  • Bhimani, A., & Bromwich, M. (1994). Advanced manufacturing technology and accounting: A renewed alliance. Advanced Manufacturing Engineering, 5(3), 199–207.
  • Bordens, S.K, & Abbott, B.B. (2002). Research Design and Methods: A Process Approach (5th Ed.) New York: McGraw-Hill.
  • Brownell, P. (1987). The role of accounting information, environment and management control in multinational organization. Accounting and Finance, 27, 1-11.
  • Buchko, A (1994) Conceptualization and measurement of environmental uncertainty: An assessment of the Miles and Snow perceived environmental uncertainty scale Academy of Management Journal , 3 (1), 410-425
  • Cadez, S., & Guilding, C. (2008). An exploratory investigation of an integrated contingency model of strategic management accounting. Accounting, Organizations and Society, 33(7-8), 836-863.
  • Chenhall RH & Morris D (1986). The impact of structure, environment and interdependence on the perceived usefulness of management accounting systems, Acc. Rev., 61, 16-35.
  • Chenhall, R. H. (2003). Management Control Systems Design Within its Organizational Context: Findings from Contingency-based Research and Directions for the Future Accounting, Organizations and Society 28(2/3), 127-168.
  • Cinquini, L., & Tenucci, A. (2010). Strategic management accounting and business strategy: A loose coupling? Journal of Accounting & Organizational Change, 6(2), 228-259.
  • Cleary, P. (2015). An Empirical Investigation of the Impact of Management Accounting on Structural Capital and Business Performance. Journal of Intellectual Capital, 16 (3), 566-
  • Cravens, K.S., & Guilding, C. (2001). An empirical study of the application of strategic management accounting techniques. Advances in Management Accounting, 10, 95-124.
  • Daft, R. L. (2004). Organizational theory and design. 8th edition. Thompson Southwestern.
  • Doz Y, & Kosonen M (2008), The Dynamics of Strategic Agility: Nokia’s Rollercoaster Experience, California Management Review, 50(3), 95-118.
  • Egbunike, F, Ogbodo, C., & Onyali, A. (2014). Utilizing strategic management accounting techniques for sustainability performance measurement. Research journal of Finance and Accounting,5(3), 140-153.
  • Fagbemi, T.,Abogun,S. & Uadiale, O.(2013). Appraisal of the adoption of cost management techniques in selected Nigerian manufacturing companies. KASU Journal of Accounting Research and Practice, 2(2), 1-13.
  • Gerdin, J., & Greve, J. (2004). Forms of contingency fit in management accounting research: A critical review. Accounting, Organizations and Society, 29(3-4), 303–326.
  • Gordon LA, Narayanan VK (1984). Management accounting systems, perceived environmental uncertainty and organizational structure: an empirical investigation, Acc. Org. Soc., 9(1): 33-47
  • Hoque, Z., Mia, L. and Alam, M. (2001). Market competition, computer-aided manufacturing and use of multiple performance measures: An empirical study. British Accounting Review 33, 23–45.
  • ICAN Study Pack (2010). Business communications and research methodology. Lagos: VI Publishers.
  • Imeokparia, L. & Sanusi, A. (2014). Target costing and performance of manufacturing industry in South-Western Nigeria. Global Journal of Management and business research, 14(4), 51-60.
  • Jusoh, R. (2008). Environmental Uncertainty, Performance, and the Mediating Role of Balanced Scorecard Measures Use: Evidence from Malaysia. International Review of Business Research Papers, 4(2) 116-135.
  • Lucey, T. (2003). Management Accounting (5th Ed). London. Continuum
  • Karimi, J., Somers, T. and Gupta, Y. (2004). Impact of Environmental Uncertainty and Task Characteristics on User Satisfaction with Data. Information Systems Research, 15 (2): 175-184.
  • Kotha, Suresh and Nair, Anil (1995). Strategy and environment as determinant of performance: Evidence from the Japanese machine tool industry, Strategic Management Journal, 16(7), 497-518.
  • Kren, L. and J. L. Kerr. (1993). the effect of Behaviour Monitoring and Uncertainty on the use of Performance-contingent Compensation. Accounting and Business Research, 23, 159-168.
  • Langfield-Smith, K., 2007, A Review of Quantitative Research in Management Control Systems and Strategy, in: C. S. Chapman, A. G. Hopwood, and M. D. Shields, eds., Handbook of Management Accounting Research, Vol. 1 (Elsevier: Oxford, UK), 753-784).
  • May, R. C., Stewart, W. H. J. & Sweo, R. (2000). Environmental scanning behavior in a transitional economy: evidence from Russia. Academy of Management Journal, 43, 403-427.
  • Milliken, F. J (1987). Three types of perceived environmental uncertainty about the environment: State, effect, and response uncertainty. Acad. Manage. Rev., 12, 133-143.
  • Oetinger, B. V. (2004). A plea for uncertainty: Everybody complains about uncertainty, but it might be a good thing to have. Journal of Business Strategy. 25 (1), 57-59.
  • Ogunsiji, A. S. & Akanbi, P. A. (2013). The Role of Perceived Environmental Uncertainty and Strategic Agility on the Performance of Selected Banks in Oyo State of Nigeria. Information and Knowledge Management iiste.org, 3 (7), 23-32.
  • Ojra,J. (2014). Strategic management accounting practices in Palestinian companies: Application of contingency theory perspective. A doctorate thesis submitted at Norwich Business School, University of East Anglia, United Kingdom.
  • Ojua, O.M. (2016). Management perceptions of the role of strategic management accounting  techniques in decision making: A survey of Nigerian petroleum marketing. Imperial Journal of Interdisciplinary Research, 2(8), 1-10.
  • Pearson II, J. A., Robinson Jr, R. B. & Mital, A. (2008). Strategic management: formulation, implementation, and control, Tata McGraw-Hill
  • Ramljak, B., & Rogoši ć, A., (2012). Strategic management accounting practices in Croatia. The Journal of International Management Studies, 7(2), 93-100.
  • Regan, P. (2012). Making Sense of Uncertainty: An Examination of Environmental Interpretation. International Journal of Business and Management, 7(6), 18-29.
  • Saunders, M., Lewis, P. & Thornhill, A. (2007). Research Methods for Business Students, 4th edition, Financial Times Prentice Hall, Harlow.
  • Sawyerr, O. 1993. Environmental uncertainty and environmental scanning activities of Nigerian manufacturing executives: A comparative analysis. Strategic Management Journal 14: 287-299.
  • Schoute, M. (2009). The relationship between cost system complexities, purposes of use, and cost system effectiveness, The British Accounting Review, 41, 208-226.
  • Sidhu, B.K. & Roberts, J.H. (2008). The marketing/accounting interface: lessons and    Journal of Marketing Management, 24(7-8), 669-686.
  • Tillman, K., Goddard, A., (2008), Strategic management accounting and sense-making in a multinational company. http://eprints.soton.ac.uk/346737/ (downloaded: 01.05.2016).
  • Turban E, Leidner D, Mclean E, Wetherbe J (eds.) (2008), Information Technology Management: Transforming Organizations in the digital Economy. John Wiley & Sons Ltd.
  • Tymon, W. G., Stout, D. E., and Shaw, K. N. (1998). Critical Analysis and Recommendations Regarding the Role of Perceived Environmental Uncertainty in Behavioural Accounting Research. Behavioural Accounting Research, 10, 23-46.
  • Udeze, C (2015). Change management and its effects on employees’ performances in the Nigerian manufacturing firms. Ebonyi State University Journal of contemporary management, 3, 103-108.
  • Van der Stede, W. A., Chow, C. W. and Lin, T. W. (2006). Strategy, Choice of Performance Measures, and Performance. Behavioral Research in Accounting . 18, 185-205.
  • Waweru, M. N., Hoque, Z. & Uliana, E. (2004). Management accounting change in South Africa: Case studies from retail companies, Accounting, Auditing and Accountability Journal, 17 (5), 675-704.
  • Webb, A., S. A. Jeffrey and A. Schulz. (2010). Factors affecting goal difficulty and performance when employees select their own performance goals: Evidence from the field. Journal of Management Accounting Research(22): 209-232
  • Westerberg, Mats and Wincent, Joakim. (2008). CEO Succession, Honing, and Enterprising: A Promising Way to Achieve Small Business Performance. Journal of Developmental Entrepreneurship, 13( 2) ,117-132.

Works Cited

OJUA, Olusegun Michael. (2021). The Role of Perceived Environmental Uncertainty on the usage of Strategic Management Accounting Techniques among Nigerian Manufacturing firms. International Journal of Scientific and Management Research, 04(04), 106-118. doi:http://doi.org/10.37502/IJSMR.2021.4408

PDF