Determinants of Management Accounting Implementation: Evidence From Selected Manufacturing Companies in Ethiopia

Abstract

n the era of globalization, the world has already been changed in to a small villege. Thus, being able to compete as per the demand of the existing business environment especially for business organizations is mandatory but not alternative choice. In other words, if large business organizations not able to be familiar with MAPs, they will lack power to be competent enough to assure survival. As a result, this research paper is conducte to investigate determinants of MAPs in selected large manufacturing companies in Ethiopia. To do so, the researcher used primary data that was collected from accountants and managers of selected large manufacturing companies in Ethiopia. Since implementation of MAPs increase as size of a company increase, the researcher purposively selected his sample elements from larger companies. Purposive samling was also applied to select directly related respondents out of all of the employees in a selected company. Amharic version of questionnaire was distributed to selected respondents like managers, dupty-managers, financial directors, chief accountants, senior management accountants or chief executivesetc. The questionnaire was prepared using a five level likert- scale type and each of the variables in the study were measured using this 5-point Likert scale which is ranged from lowest(“Strongly Disagree”) to highest (“Strongly Agree”) scale. The study used descriptive statistic, multiple linear regression(OLS) and hypothesis testing to get proper output of the study. Size of a company, production technology, strategy of a company, qualification of accounting staffs and intensity of market competition were hypothesized factors to be investigated and all of these proposed determinants were expected to have positive and statistically significant effect on MAPs. It was identified from the analysis that, size of a company and qualification of accounting staff are the two important determinants to affect management accounting practices out of these proposed five determinants. However, production technology, strategy of a company and intensity of market competition were determinants identified not to have statistically significant effect on MAPs. Regression output of the analysis showed that 50.81% of the study is explained by the model and it showed that all of the variables collectively could play crucial role to contribute for MAPs in large companies. Depending on findings of the study, the researcher would like to recommend that all concerned bodies should give attention to improve limitations of MAPs in all leveled Companies as it is important to be familiar with concepts and principles of management accounting to increase competitiveness of the companies in Ethiopia.