Management accounting research on farms: what is known and what needs knowing?

Abstract

Purpose-It is difficult to develop an overall picture of the practice of management accounting in farms and farm enterprises because little research has been published on the topic, and these studies are mostly discrete and unconnected to the others. The purpose of this paper is to provide an overview of the available research, develop an explanatory framework for management accounting practices in farming entities and identify some major avenues for future research on the topic. Design/methodology/approach-This paper employs systematic literature review methods. After an extensive database search and an examination of references/citations, 41 empirical 1 Acknowledgements: This paper is based on the second author's master's thesis submitted at the University of Siegen. A previous version of this paper has been presented at the 15 th Annual Conference for Management Accounting Research (ACMAR) in Vallendar, Germany. The authors would like to thank the ACMAR participants and two anonymous reviewers for their valuable comments which have helped to improve the paper.

An Analysis of Investment Decisions in Agribusiness

“…This is a frequent case found in practice when farmers do not distinguish between the business budget and the personal budget which makes it hard to evaluate the real value of the business and to measure its performance, therefore investment decisions need to be carefully analyzed. The use of management accounting practices in farm enterprises face the problem of information and can be reduced to some traditional techniques such as use or recordkeeping, capital budgeting and performance measures [10]. The authors also reveal the factors that dominate management accounting practices in farm enterprises as found in the literature to be familism, government policies, market pressures, technologies and natural factors.…”

“…A different point of view is found in Ndemewah et al regarding the possible uses of managerial accounting for agricultural businesses [10]. They argue the influence of managerial accounting on pricing decisions because market conditions determine prices in a greater manner than internal decisions processes based on cost structures could.…”

“…Their research is focused on management accounting in farms starting from describing the farm enterprises which are an unusual type of business. Most of the small and medium enterprises are family firms in which every member of the family is involved and depends on that business and that makes them semi-economic entities, acting like bridges between formal and informal economies [10]. This is a frequent case found in practice when farmers do not distinguish between the business budget and the personal budget which makes it hard to evaluate the real value of the business and to measure its performance, therefore investment decisions need to be carefully analyzed.…”

“…Environmental risks are significantly important for agriculture and found to be one of the causes that stand in the way of credit growth [5] being inherent for the agriculture business. The uncertainty of natural factors stands in the way of long term plans not only for the banks when analyzing financing possibilities, but also in the way of the farmers who cannot use the management accounting instruments for capital budgeting on long term and controlling measures specific to management accounting cannot be performed [10]. Also, the agricultural industry is not left apart from the digital transformation.…”

Digital Transformation in Small and Medium-Sized Enterprises

“…A novel finding of my study is the consideration of a subsidy funding quota around digitalization in four of the eleven cases under analysis. This aspect so far is only covered by management control literature on farming (Ndemewah, Menges, & Hiebl, 2019), leaving headroom for further investigation in future research. Non-financial measurement systems can be differentiated in a more general category around operational objects of control, and more specific web-based objects of control.…”