Accounting Functions Outsourcing and SMEs: Empirical Evidence from Iran
Abstract
The purpose of this paper is to examine the factors that influence the outsourcing of accounting functions in Iranian manufacturing small and medium enterprises (SMEs). Using transaction cost economics (TCE) and resource-based theories, results from a questionnaire survey of 658 SMEs show that outsourcing of accounting functions is positively associated with trust of the SME owner/manager in an external accountant. In addition, the technical competence is positively and significantly related to outsourcing, but firm size was not supported in our sample.
References
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Bayati, A., & Taghavi, A. (2007). The impacts of acquiring ISO 9000 certification on the performance of SMEs in Tehran. The TQM Magazine, 19(2), 140-149.
Bennett, R., & Robson, P. (1999). The use of external business advice by SMEs in Britain. Entrepreneurship & Regional Development, 11(2), 155–180.
Bennett, R., & Robson, P. (2003). Changing use of external business advice and government support by SMEs in the 1990s. Regional Studies, 37(8), 795-811.
Berry, A. J., Sweeting, R., & Goto, J. (2006). The effect of business advisers on the performance of SMEs. Journal of Small Business & Enterprise Development, 13(1), 33-47.
Blackburn, R., Eadson, W., Lefebvre, R., & Gans, P. (2006). SMEs, Regulation and the Role of the Accountant (No. 96). London: Certified Accountants Educational Trust.
Blois, K.J. (1999) Trust in business to business relationships: An evaluation of its status. Journal of Management Studies, 36(2), 197.
Boter, H., & Lundström, A. (2005). SME perspectives on business support services: The role of company size, industry and location. Journal of Small Business & Enterprise Development, 12(2), 244-258.
Brouthers, K., & Brouthers, L. (2003). Why service and manufacturing entry mode choices differ: The influence of transaction cost factors, risk and trust. Journal of Management Studies, 40(5), 1179–1204.
Bachmann, R. (2001). Trust, power and control in trans-organizational relations. Organization Studies, 22(2), 337–365.
Caldeira, M. M., & Ward, J. M. (2003). Using resource-based theory to interpret the successful adoption and use of information systems and technology in manufacturing small and medium-sized enterprises. European Journal of Information System, 12 (2), 127-141.
Carey, P., Simnett, R., & Tanewski, G. (2005). Providing Business Advice for Small to Medium Enterprises (No. 1-876 874 260). Melbourne: CPA Australia.
Carey, P., Subramaniam, N., & Ching, K. C. W. (2006). Internal audit outsourcing in Australia. Accounting & Finance, 46, 11-30.
Doran, M. (2006). Bean counter or business adviser? An exploratory study of changing times for the accounting practitioner in Ireland. The Irish Accounting Review, 13(1), 23-46.
Doving, E., & Gooderham, P. N. (2005). Small firm accountancy practices as business advisors: A dynamic capabilities view of the scope of their services (Working Paper, No:65/05). Norway: Norway Institute for research in economics and business administration.
Dyer, L. M., & Ross, C. A. (2008). Seeking advice in a dynamic and complex business environment: Impact on the success of small firms. Journal of Developmental Entrepreneurship, 13(2), 133-149.
Espino-Rodríguez, T. F., & Padrón-Robaina, V. (2004). Outsourcing and its impact on operational objectives and performance: A study of hotels in the Canary Islands. Hospitality Management, 23, 287-306.
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Gooderham, P. N., Tobiassen, A., Doving, E., & Nordhaug, O. (2004). Accountants as sources of business advice for small firms. International Small Business Journal, 22(1), 5-22.
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Jayabalan, J., Raman, M., Dorasamy, M., & Ching, N. K. C. (2009). Outsourcing of accounting functions amongst SME companies in Malaysia: An exploratory study. Accountancy Business & the Public Interest, 8(2), 96-114.
Jiang, B., & Qureshi, A. (2006). Research on outsourcing results: Current literature and future opportunities. Management Decision, 44(1), 44-55.
Johnson, S., Smallbone, D., & Froud, M. (1998). Support for new and micro enterprises: The case for selectivity. Proceedings of the Institute of Small Business Affairs Annual Conference. Durham.
Johnson, S., Webber, D. J., & Thomas, W. (2007). Which SMEs use external business advice? A multivariate subregional study. Environment & Planning, 39, 1981 – 1997.
Kim, J., So, S., & Lee, Y. (2007). The effects of trust on the intention of adopting business process outsourcing: An empirical study. International Journal of Computer Science & Network Security, 7(10).
Marlow, S., & Carter, S. (2005). Access to Finance: Women’s Enterprise and the Role of the Accountant (No. 90). London: The Association of Chartered Certified Accountants.
Marriott, N., & Marriott, P. (2000). Professional accountants and the development of a management accounting service for the small firm: Barriers and possibilities. Management Accounting Research, 11, 475-492.
Mashayekhi, B., & Mashayekh, S. (2008). Development of accounting in Iran. The International Journal of Accounting, 43, 66–86.
McIvor, R., Humphreys, P., McKittrick, A., & Wall, T. (2009). Performance management and the outsourcing process: Lessons from a financial services organisation. International Journal of Operations & Production Management, 29(10), 1025-1048.
Mirshekary, S., & Saudagaran, S. M. (2005). Perceptions and characteristics of financial statement users in developing countries: Evidence from Iran. Journal of International Accounting, Auditing & Taxation, 14, 33–54.
Mohan-Neill, S. I. (1995). The influence of firm's age and size on its environmental scanning activities. Journal of Small Business Management, 33(4), 10-21.
Bayati, A., & Taghavi, A. (2007). The impacts of acquiring ISO 9000 certification on the performance of SMEs in Tehran. The TQM Magazine, 19(2), 140-149.
Bennett, R., & Robson, P. (1999). The use of external business advice by SMEs in Britain. Entrepreneurship & Regional Development, 11(2), 155–180.
Bennett, R., & Robson, P. (2003). Changing use of external business advice and government support by SMEs in the 1990s. Regional Studies, 37(8), 795-811.
Berry, A. J., Sweeting, R., & Goto, J. (2006). The effect of business advisers on the performance of SMEs. Journal of Small Business & Enterprise Development, 13(1), 33-47.
Blackburn, R., Eadson, W., Lefebvre, R., & Gans, P. (2006). SMEs, Regulation and the Role of the Accountant (No. 96). London: Certified Accountants Educational Trust.
Blois, K.J. (1999) Trust in business to business relationships: An evaluation of its status. Journal of Management Studies, 36(2), 197.
Boter, H., & Lundström, A. (2005). SME perspectives on business support services: The role of company size, industry and location. Journal of Small Business & Enterprise Development, 12(2), 244-258.
Brouthers, K., & Brouthers, L. (2003). Why service and manufacturing entry mode choices differ: The influence of transaction cost factors, risk and trust. Journal of Management Studies, 40(5), 1179–1204.
Bachmann, R. (2001). Trust, power and control in trans-organizational relations. Organization Studies, 22(2), 337–365.
Caldeira, M. M., & Ward, J. M. (2003). Using resource-based theory to interpret the successful adoption and use of information systems and technology in manufacturing small and medium-sized enterprises. European Journal of Information System, 12 (2), 127-141.
Carey, P., Simnett, R., & Tanewski, G. (2005). Providing Business Advice for Small to Medium Enterprises (No. 1-876 874 260). Melbourne: CPA Australia.
Carey, P., Subramaniam, N., & Ching, K. C. W. (2006). Internal audit outsourcing in Australia. Accounting & Finance, 46, 11-30.
Doran, M. (2006). Bean counter or business adviser? An exploratory study of changing times for the accounting practitioner in Ireland. The Irish Accounting Review, 13(1), 23-46.
Doving, E., & Gooderham, P. N. (2005). Small firm accountancy practices as business advisors: A dynamic capabilities view of the scope of their services (Working Paper, No:65/05). Norway: Norway Institute for research in economics and business administration.
Dyer, L. M., & Ross, C. A. (2008). Seeking advice in a dynamic and complex business environment: Impact on the success of small firms. Journal of Developmental Entrepreneurship, 13(2), 133-149.
Espino-Rodríguez, T. F., & Padrón-Robaina, V. (2004). Outsourcing and its impact on operational objectives and performance: A study of hotels in the Canary Islands. Hospitality Management, 23, 287-306.
Everaert, P., Sarens, G., & Rommel, J. (2006). Outsourcing of Accounting Tasks in SMEs: An extended TCE Model (No. 409).
Everaert, P., Sarens, G., & Rommel, J. (2007). Sourcing strategy of Belgian SMEs: empirical evidence for the accounting services. Production Planning & Control, 18(8), 716-725.
Everaert, P., Sarens, G., & Rommel, J. (2008). Using Transaction Cost Economics to explain Outsourcing of Accounting. Small Bus Econ.
Gilley, K. M., Greer, C. R., & Rasheed, A. A. (2004). Human resource outsourcing and organizational performance in manufacturing firms. Journal of Business Research, 57, 232-240.
Gilley, K. M., & Rasheed, A. (2000). Making more by doing less: An analysis of outsourcing and its effects on firm performance. Journal of Management, 26(4), 763-790.
Gooderham, P. N., Tobiassen, A., Doving, E., & Nordhaug, O. (2004). Accountants as sources of business advice for small firms. International Small Business Journal, 22(1), 5-22.
Hadjimanolis, A. (2000). A resourced-based view of innovativeness in small firms. Tech Anal Strateg Manage, 12(2), 263– 292.
IFAC. (2006). Micro-Entity Financial Reporting: Perspectives of Preparers and Users (No. information Paper): Small and Medium Enterprises Committee (http://www.ifac.org).
Ismail, N. A., & King, M. (2005). Firm performance and AIS alignment in Malaysian SMEs. International Journal of Accounting Information Systems, 6 241– 259.
Ismail, N.A. & King, M. (2006). The alignment of accounting and information systems in SMEs in Malaysia. Journal of Global Information Technology Management, 9(3), 24-42.
Ismail, N. A., & Zin, R. M. (2009). Usage of accounting information among Malaysian bumiputra small and medium non-manufacturing firms. Journal of Enterprise Resource Planning Studies, 1(2), 11-17.
Jayabalan, J., Raman, M., Dorasamy, M., & Ching, N. K. C. (2009). Outsourcing of accounting functions amongst SME companies in Malaysia: An exploratory study. Accountancy Business & the Public Interest, 8(2), 96-114.
Jiang, B., & Qureshi, A. (2006). Research on outsourcing results: Current literature and future opportunities. Management Decision, 44(1), 44-55.
Johnson, S., Smallbone, D., & Froud, M. (1998). Support for new and micro enterprises: The case for selectivity. Proceedings of the Institute of Small Business Affairs Annual Conference. Durham.
Johnson, S., Webber, D. J., & Thomas, W. (2007). Which SMEs use external business advice? A multivariate subregional study. Environment & Planning, 39, 1981 – 1997.
Kim, J., So, S., & Lee, Y. (2007). The effects of trust on the intention of adopting business process outsourcing: An empirical study. International Journal of Computer Science & Network Security, 7(10).
Marlow, S., & Carter, S. (2005). Access to Finance: Women’s Enterprise and the Role of the Accountant (No. 90). London: The Association of Chartered Certified Accountants.
Marriott, N., & Marriott, P. (2000). Professional accountants and the development of a management accounting service for the small firm: Barriers and possibilities. Management Accounting Research, 11, 475-492.
Mashayekhi, B., & Mashayekh, S. (2008). Development of accounting in Iran. The International Journal of Accounting, 43, 66–86.
McIvor, R., Humphreys, P., McKittrick, A., & Wall, T. (2009). Performance management and the outsourcing process: Lessons from a financial services organisation. International Journal of Operations & Production Management, 29(10), 1025-1048.
Mirshekary, S., & Saudagaran, S. M. (2005). Perceptions and characteristics of financial statement users in developing countries: Evidence from Iran. Journal of International Accounting, Auditing & Taxation, 14, 33–54.
Mohan-Neill, S. I. (1995). The influence of firm's age and size on its environmental scanning activities. Journal of Small Business Management, 33(4), 10-21.
Published
2011-02-13
How to Cite
KAMYABI, Yahya; S, Susela Devi.
Accounting Functions Outsourcing and SMEs: Empirical Evidence from Iran.
Terengganu International Finance and Economics Journal (TIFEJ), [S.l.], v. 1, n. 1, p. 1 - 10, feb. 2011.
ISSN 2232-0539.
Available at: <https://myjms.mohe.gov.my/index.php/tifej/article/view/1493>. Date accessed: 02 oct. 2023.
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