An Empirical Investigation of Accounting Outsourcing in Iranian SMEs: Transaction Cost Economics and Resource-Based Views

Abstract

This study aims to identify the factors affect Iranian SME decision to outsource accounting functions in term of transaction cost economics (TCE) and resource-based view (RBV) perspectives in manufacturing sector. Data collected by using a 658 questionnaire survey with SME owner/ managers. Our multiple linear regression analysis shows that higher asset specificity was associated with lower levels of outsourcing of accounting functions. In addition, outsourcing intensity is positively and significantly related to trust in external accountant, degree of competition, and corporate strategy. Besides, when we included control variables such as firm size and firm age, education and experience in our regression equation, the association between outsourcing intensity and four independent variables was remained statistically significant.

Factors Influencing Accounting Outsourcing Practices among SMEs in Pakistan Context: Transaction Cost Economics (TCE) and Resource-Based Views (RBV) Prospective

“…Previous studies confirm that SMEs involved in the outsource of management accounting functions to professional accountants in recent years (Kamyabi & Devi, 2011;Everaert et al, 2010Everaert et al, , 2007Jayabalan et al, 2009;Carey et al, 2006;Gooderham et al, 2004). Moreover, most research has been conducted in developed countries.…”

“…In this context, the association between outsourcing intensity and five independent variables such as frequency of non-routine tasks, asset specificity, opportunism, trust in accountant and competition are examined. This study extends the Kamyabi & Devi (2011) conducted in developing economy, Iran and Everaert et al, (2010) conducted in a developed European economy, Belgium, in three ways. Firstly, this study included two additional variables, frequency of non-routine tasks and opportunism derived from the TCE prospective that is relevant in an emerging economy context.…”

“…The business environment in the world has become volatile and unpredictable as a result of economic globalization, market maturity, increasing customer demands, rapid technological change and fierce competition (Kamyabi & Devi, 2011a). Therefore, business management has become more challenging and complicated (Lamminmaki, 2007;Espino-Rodríguez & Padrón-Robaina, 2004).…”

“…Moreover, most research has been conducted in developed countries. Therefore, the researcher suggested that there is a need for further validation of accounting outsourcing practices in small firms, particularly for emerging economics like Pakistan (Kamyabi & Devi, 2011;Mashayekhi & Mashayekh, 2008;Everaert et al, 2010). A number of researchers have also identified that accounting outsourcing practices in SMEs have not received considerable attention and still remain neglected as comprehensive investigation of management accounting research by applying a combination of TCE and RBV prospective (Kamyabi & Devi, 2011;Brandau & Hoffjan, 2010).…”

“…Hence, the outsourcing of accounting activities is an opportunity for SMEs to stay competitive in the competitive business environment (Jayabalan et al, 2009;Everaert et al, 2010). SMEs generally lack the required resources, skills and expertise to execute accounting practices internally (Kamyabi & Devi, 2011a), the realization of access to knowledge and skills of the external accountant was the main rationale to consider outsourcing choice (Everaert et al, 2007).…”