Contingent Factors on Business Environment

and its Effect to the Organisational

Performance of Small Enterprises in

Cabadbaran City

In Partial Fulfilment
Of the Course Requirements in RESM 1st Semester,
A.Y. 2022-2023

Submitted to Mr. James Manlangit

CSUCC Accounting Department

Submitted by BSMA 3 BLOCK A

Asino, Richard
Bano, Shenie Lynn
Bolando, Jellah Mae
Dulang, Charis Divine
Mendoza, Alyssa Jean

October 2022
 CHAPTER 1

INTRODUCTION

Numerous companies have changed its

management strategies and measurements system to

ensure that, they are able to reach the change

of their business environment. And business will

vary their decision on the management decision.

Burns & Stalker (1961) discussed why management

accounting practices may be unalike when

Rationale comparing one organization to the other. This

can be related to organizations operating in

different industries or sectors. Otley (1980)

applied contingency theory to management

accounting practices and explained that there is

no single general standard accounting practice

that can be applied to all organizations.

Increasingly, the business environment

of an organisation from which every business

corporation has brought rapid change and

requires them to have a constantly changing

strategies and operations that reflects to this

passive change. With this, every business will

consider a factor that will allow them to have

plans and preparation to all the possibilities.

Hence, the researcher’s intent to know the

effects of these factors to the Organizational

Performance of Small Enterprises here in

Cabadbaran City, Agusan del Norte.

Small enterprises are applying

accounting approach in order to attain a good

decision-making base on the revenues and

expenses they have. It is a tool for them

because, it tracks the financial information

that will be the basis on their decisions. Thus,

accounting has become vital element on every

organization. Cassia, Paleari, and Redondi

(2005) see management accounting as “a set of

tools involving the activities of information

collection, classification and computing in

order to help the strategic decision-making

process” (p. 375).

Burns and Stalker (1961) addressed

the reasons why management accounting procedures

may differ from one organization to the next.

This may be relevant to businesses that operate

in many areas or industries. There isn't a

single general standard accounting practice that

can be applied to all firms, according to Otley

(1980), who applied contingency theory to

 management accounting methods. There is no ideal

accounting system, but for a system to be

functional, it must take into consideration the

unique conditions of a company (Gerdin & Greve,

2004). This indicates that while there is no

ideal accounting system design, you can come up

with the greatest design based on the needs that

each firm has.

In essence, several small businesses are

unaware that the practice they are engaging in

is a Management Accounting Practice that is now

influencing their choices. Anytime a business

makes poor decisions, its profit will drop, its

liabilities will grow, or worst-case scenario,

it will result in bankruptcy. As a result, this

study can also be used as a comparison and

contrast tool between the Small Businesses in

Cabadbaran City that apply this approach and

those who do not.

The main objective of the study is to determine

the Contingent Factors on Business Environment

Statement
and its Effects to the Organisational
of the
Performance of Small Enterprises in Cabadbaran
Problem
City Specifically, this research sought to

answer the following question:

Research Questions Research Objectives

1. What is the To determine the

demographics of demographics of the

the respondents respondents according

according to: to:

1.1 Age 1.1 Age

1.2 Gender 1.2 Gender

1.3 Job title/ 1.3 Job title/

Title Title

1.4 Years in 1.4 Years in

practice practice

1.5 Qualification 1.5 Qualificatio

s and subject ns and

specialism subject

specialism

2. What is the To determine the

organizational organizational profile

profile of the of the respondents in

respondents in terms of:

terms of:
 2.1 Age of 2.1 Age of

company company

2.2 Main 2.2 Main

industrial industrial

sector of sector of your

your company company

2.3 Type of 2.3 Type of

company company

ownership ownership

3. What is the level To determine the level

of contingent of contingent factor

factor on business on business

environment environment

in terms of: in terms of:

3.1 External

Environment 3.1 External

3.2 Business Environment

Strategy 3.2 Business

3.3 Organization Strategy

Structure 3.3 Organization

Structure
3.4 Technology
3.4 Technology
3.5 Characteristi
3.5
 cs of Characteristics

Organization of Organization

4. What is the level To determine the level

of contingent of contingent factor

factor to to organizational

organizational performance of small

performance of enterprises as

small enterprises mediated by management

as mediated by accounting practices.

management

accounting

practices?

5. What is the effect To determine the

of contingent effect of contingent

factor on business factor on business

environment to environment to

organizational organizational

performance of performance of small

small enterprises? enterprises.

6. What is the effect To determine the

of contingent mediating effect of

factor to contingent factor to

organizational organizational

performance of performance of small

 small enterprises enterprises.

as mediated by

management

accounting

practices?

7. What is the effect To determine the

of contingent moderating effect of

factor to demographics and

organizational organizational profile

performance of on the contingent

small enterprises factor on business

as moderated by environment and

demographics and organizational

organizational performance.

profile?

8. What strategic To determine strategic

recommendation can recommendation

be derived from resulting from the

the result of the study.

study?

The researchers are able to predict the

following using the conceptual framework:

Hypothesis 1. H0: There is no significant relationship

 between external environment and

organizational performance.

2. H0: There is no significant relationship

between business strategy and

organisational performance.

3. H0: There is no significant relationship

between organization structure and

organizational performance.

4. H0: There is no significant relationship

between technology and organizational

performance.

5. H0: There is no significant relationship

between characteristics of organization and

organizational performance.

6. H0: There is no significance in determining

the strategic recommendation resulting from

 the study.

This chapter presents the relevant and studies

that the researcher considered in strengthening

the importance of the present study.

Review of External Environment Factor

Related External Environment factor is analyzed by

Literature Himawan (2021) as essential components in the

formulation of strategies for improving the

performance of health organizations. Although

the variable is outside in a company and cannot

be controlled by a company but must be analyzed

to adjust the company’s strategy to changes in

the business environment and that is Macro

Environmental condition. The main strengths of

the macro environment are political, economic,

social, technological, legal, ecological,

demographic, ethical and regulatory aspects.

Macro environment analyzed method of PEST is an

external environmental analysis using approaches

political, economic, social, and technological.

The conclusions are discussed in researchers,

the organizational function in advancing the

quality of medical care is very dominant. The

development of the contemporary culture industry

depends on digitalization. However, current

studies have not clarified the process through

whereby the digitalization of cultural

industries is impacted by the external

environment by Hao Ji (2022). Examined using

structural equation modeling using data from 295

cultural firms in Beijing, the model was

empirically tested. The researcher conclusion

explains how technological components of

digitalization compatibility and capacity

benefits seen by individuals and organizations

act as a mediator between the external

environment and the digitization of cultural

enterprises. Zhou and Yan (2021) discussed

organizational effects of external environmental

changes. The number of businesses will change

over time. The population [1] by arriving or

leaving, which will alter the survivability,

environmental capacity, and population density

the method of organizing. Analyzes the nonlinear

variation of external environmental factors with

time, and gives the estimation method.

Factors on affecting the marketing channel

(including external environment) choices of rice

farmers by Antonio (2021) argued that there’s

weak market participation, although there is

little evidence to support this information

about the buying process used by farmers. Given

that decisions made by producers, consumers, and

workers cannot be separated, it was discovered

that a variety of internal, external, social,

and cultural elements contributed to the

problem. environmental variables. Farmers who

used random-effects logistic regression

discovered that younger, unemployed, landowners,

or those who reside near trader-millers or in

communities with Regions with lesser production

and higher wealth classes are more likely to

select direct trader-millers, cooperatives,

wholesalers, retailers, and consumers are

examples of marketing channels. The results of

the movement analysis also demonstrate that the

majority of farmers stick with the same buyer

because of credit and its cultural implications,

risk-aversion, and personal alliance system.

Business Strategy Factor

The second category of contingency variable is

Business Strategy. Arieftiara, Utama, and

Wardhani (2017) is defined business strategy is

crucial to achieve a company’s goals and, as a

form of guidance, it should be decided prudently

by management. In this study, a contingent

element of corporate strategy choices is

examined, namely uncertainty in the environment.

The study uses secondary data as a substitute

approach to analysis. Environmental uncertainty

includes technical uncertainty. investigate

environmental This research creates an

Environmental Uncertainty Index (EUI). Companies

constantly confront environmental uncertainty,

consisting of three components, namely

competitive uncertainty, market uncertainty and

technological uncertainty (Bourgeois, 1985;

Homburg, 2002; Kreiser and Marino, 2002; Davies

and Walters, 2004; Gils et al., 2004; DeSarbo et

al., 2005). This study transforms those three

components into a single index of environmental

uncertainty in order to measure uncertainty more

objectively. The study falls short of

demonstrating that choosing a defensive strategy

is more likely for a corporation than a method

of analysis. The results indicate that the new

technical compared to the other available

measurements, uncertainty is more applicable.

Dynamic environment refers to the rate of

turbulence, the expanding changes, fluctuation,

unpredictability of environmental events and

innovation in the industry. Information about

such an environment is difficult to get and is

sometimes contradictory and unreliable. It is an

environment in which the ability to take

calculated risks in the face of uncertainty is

always implemented. Many occurrences can be the

source of perceived dynamism such as consumer

tastes, new technologies, sources of supply,

competitors’ products and government regulation.

When the environment is highly turbulent, the

importance of information about the position of

the market, crucial prospective changes, and the

like in the future will be of great importance.

Abulgaya; Khandawalla (1972) argues that

managements of organisations that operate in a

turbulent environment need to be flexible to

cope with high turbulence (Abugalya; Duncan,

1972; Lawrence & Lorsch, 1967).

The rapid progress of technology and skill lead

the synchronous progress of manufacturing

process that causes the usage of automated

production equipment widespread. The labor-

intensive manufacturing process is changed Yueh

Lu (2017). The specialized item causes various

manufacturing processes that lead to resource

exhaustion and a variable cost structure. a

challenging cost structure may have an impact on

pricing strategy; hence this study investigates

cost calculation methodologies for more precise

cost information than the standard volume-based

pricing (VBC). In conclusion, overlapping

subsidies among

structure of manufacturing costs for various

products. Second, the ABC technique offers more

precise cost data that will assist in

establishing competitive pricing of the product

makes a significant contribution to the

profitability and competitiveness of the

business. The paper appears moving toward

implementing activity-Based Costing, despite the

fact that the product is variable and the

production process is complex business and

industry.

Organizational Structure Factor

A changing organizational structure is probably

the most apparent indicator and clear evidence

of organizational change Kral (2016) consultancy

companies, or individual consultants in academic

and professional journals, and professional

websites discuss a change in organizational

structure. Many theoretical frameworks of

organizational change, organizational design, or

organizational development apply to changing

organizational structure Kral (2016). This

study's goal is to investigate connections

between the steps in the process of

restructuring an organization. The study is

guided by two intricate research questions: 1)

How are the various organizational change

components related to one another? 2) Describe

the links between the causes of change, its

elements, communication, and its results? A case

study methodology is used in the analysis, and

examines four firms' shifting organizational

structures. The results derive approaches to

changing organizational structure. Those

approaches' characteristics are a) an emphasis

on external or internal drivers of the change,

and b) the prevalence of formal or non-formal

communication on the change.

According to Kang (2021) that the culture in an

environment of various organizations affects the

performance of its employees. Organizational

culture is mainly discussed in most entities

without reaching a consensus of what the term

means. Multiple scholars have researched how

culture has either negative or positive effect

on the behavior of all the stakeholders of the

organizations and how managers can influence it

accordingly (Maamari, & Saheb, 2018; Cho & Mor

Barak, 2008). The purpose of the current

research is to investigate the impact of

organizational culture on employee performance.

The present study's research findings suggested

five solutions to the issues that were the

effectiveness of organizational culture as it

relates to employee performance is dependent on

how well culture is executed. Thus, It is

understood that culture strengthens structure

because an organization's framework enhances

employees' conduct organization.

Organizational structure is a collection of

principle that support individuals

(Batugal,2017; Cameron,2008). Organizational

culture comprises the attitudes, experiences,

beliefs and values of an organization which are

shared by people and groups in an organization

and that control the way they interact with each

other and with stakeholders outside the

organization (Cameron & Quinn, 1999; Hartnell,

Ou, & Kinicki, 2011; Batugan,2017). This study

examines the influence of organizational culture

on the organizational commitment and job

satisfaction of teachers in the context of

Catholic higher education institutions in the

Philippines. Results demonstrate that clan is

the most prevalent sort of culture.in the

Philippines, Catholic HEIs. Additionally,

educators extremely delighted with their

organization's performance and job.

Technology Factor

The concept of technology refers to the

production, knowledge, and application of the

methods, processes, or systems employed by the

business organizations. Technology as a

contingent factor can be related to production

or information. The contingency approach

highlights technology as a crucial contingent

aspect that influences how organizations are

designed in general and how the operating core

is designed in particular (Otlet,1980). As

technology, particularly the internet, continues

to dominate the 21 st century global business

environment, understanding options available in

raising funds using technology applications is

creating challenges for the small business owner

(Barringer and Ireland, 2010). New sources of

outside financing create the need for

information about technology’s effect on small

business funding as well as accessing finance

for cost reducing initiative, profitability, and

sustainability. Moreover, Rousseau and Cooke

(1984) says, technology involved knowledge and

capabilities (such as those found in

organizational members and machines), the

techniques and procedures available for

transforming inputs into outputs, and the

processes or activities associated with the

application of these technologies. Robbins

(1996) defined technology as the process by

which an organization converts its inputs (such

as materials and information) into outputs

(products and services). It is one of the

internal contingency variables that also

influences an organization's structure.

Technology's significance in deciding how

organizations are formed has been discussed

extensively by organizational theorists.

According to, Woodward (1965) and Perrow (1967)

are considered as having conducted major early

studies concerning the impact of an

organization’s technology on its organizational

structure. They recommended that organizational

structure should be designed to fit production

technology, which has come to be called

“technological imperative”. Technology is

defined by Chenhall (2003; 2007) as the

hardware, software, materials, people, and

knowledge used in an organization's work

operations. He further divides technology into

general and current categories. While generic

technology refers to less sophisticated

technology, current technology relates to

complexity, interdependence, and task ambiguity.

Due to production complexity, task uncertainty

with high variability, output measurement, as

well as process interdependencies, technologies

provide significant contingencies for companies.

Characteristics of Organizational Factor

The concept of organizational characteristics

are traits that come from the organization’s

management model, as expressed in its structure

or strategy, as well as from the business

culture, which is reflected in the nature of its

membership and relationships. It follows that

these aforementioned organizational

characteristics could also be broadly referred

as organizational influences (Simon,1976). The

life-cycle stages of birth, growth, maturity,

and decline are when organizational traits

typically vary and adapt (Perényi &

Trpczyski, 2020). Each stage of the life cycle

has its own opportunities and difficulties

(Lynall et al., 2003). A company's age and

size are two frequent traits (Turkcan et al.,

2022). Whereas size is consistent with the

number of employees and the annual turnover, age

is typically associated to later life cycles

(Pundziene et al., 2006). Additional

organizational characteristics such as growth

rate and level of growth represent changes in

organizational sales (Pundziene et al., 2006).

Another characteristic of organizations that is

frequently discussed is formalization.

Flexibility is impacted by excessive

formalization, whereas growth is hampered by

insufficient formalization (Pundziene et al.,

2006). Top management and organizational traits,

such as flexibility (responsiveness), expertise,

market, differentiation, and partnerships, are

seen as essential organizational features,

particularly during start-ups (Pundziene et al.,

2006). These changes can be radical or gradual

as organizations move through the various life-

cycle stages of birth, growth, maturity, and

decline (Perényi & Trpczyski, 2020).

Organizations that change slowly are the same as

organizations that have stagnated. On the other

hand, organizations going through dramatic

transition tend to have traits like team-based

decision-making and an information system that

works well with the current organizational

structure (Perényi & Trpczyski, 2020). The

term "organization," in the words of

Simon (1976), refers to the complex pattern of

communication relationships in a group of human

beings and is more than a chart and manuals with

job descriptions. The acquisition of knowledge

in the organization will greatly depend on its

structure knowledge storage on its membership

attribute, knowledge diffusion on its

relationship, pattern and knowledge

implementation on its strategy. In the course of

conducting business research, one aspect that is

examined is the organizational structure. A

company would have a history, as well as

strengths and limitations (Ireland et al.,

1987). The organization's resources were the

first thing researchers looked at when they

thought an organizational feature would affect a

business's ability to survive. Chrisman et

al. (1998, p. 17) emphasized how crucial it is

for any organization to be able to obtain

physical resources. According to Gaskill et al.

(1993), a major cause of business failure,

particularly for smaller businesses, is the

inability to source essential production inputs.

Furthermore, according to (Kral and Kralova,

2016), an organization's process, strategy,

people, technology, culture, and environment all

interact to form its organizational structure.

The information-sharing and decision-making

processes are also included in an

organization's structure it is said by

(Lianghua Kong et al.,2009 ; Walheiser et.

al.,2021). It is a formal arrangement of the

constituting work responsibilities, the bridge

mechanism, integrating inter-organizational

activities, as well as a tool to achieve

corporate goals, according to Bai et al. (2017)

and Ahmady et al. (2016). The company's

objectives, business strategy, environment,

technology, and organization size are some

factors that may have an impact on

organizational structure (Almady et.al., 2016).

Organizational transformation factors can come

from both internal and external sources (Kral

& Kralova, 2016). Besides, the idea of

organizational culture was adapted from

anthropology for organization management

research. Nearly all academics have their own

unique perspectives on culture, and various

academics have varied conceptions of

organizational culture (Bali et al., 1999).

According to Douglas (1985), the

organization's culture emerged as a result

of ongoing discussions among its members

regarding the organization's values,

meanings, and proprieties. Quinn and Spreitzer

(1991) created a typology for identifying and

categorizing organizational culture into four

types: group culture, developmental culture,

hierarchical culture, and rational culture. This

typology was based on two fundamental

categorizing dimensions, including the

internal/external orientation and the

flexibility/control orientation. They also made

the crucial point that all four forms of

organizational culture are typically represented

in the characteristics and values of

 organizations. Other studies have emphasized the

significance of organizational culture in

corporate performance (Acar & Winfrey, 1994;

Barney, 1986). A complex combination of values,

attitudes, assumptions, and symbols that shape

how a firm does its business is the conventional

definition of organizational culture (Barney, p.

657). According to this theory, organizational

culture affects how decisions are made in the

workplace and can result in above-average or

below-average corporate performance. The more an

organization can "live" its

principles, especially those that "promote

innovation and adaptability," the more

probable it is that it will outperform other

companies. This does not mean, however, that

companies may perform better after changing

their culture

Conceptual
Framework Figure 1.1

Conceptual Mediation Forms of

Framework

As illustrated in the figure 1.1, the conceptual

framework is split into three sections: the

external factor, technology, and business

 strategy which represent the independent

variables in the research. The second section is

concerned with existing MAPs, specifically

costing Practices, budgeting Practices, and

Performance Measurement Practices, as a

mediating variable. The third section is

concerned with the result of the interaction

between contingent factors and MAPs.

Figure 1.2 shows that MAP serves as the

mediating variable which explains the

relationship between the contingent factor and

the small enterprises performance.

The contingent theory will be used in the

research study to support the five independent

variables which are the external environment,

technology, business strategy, organisation

structure,and characteristics of organisation

Theoretical prior to the organisational performance as the

Framework dependent variable. This study acquired the

conceptual framework of “The Influence of

Business Environment on the Effectiveness of

Management Accounting Practices: Evidence from

Libyan Companies”. Contingency theory presently

provides a major framework for organizational

design (Donalson, 2001). Management planning and

control have benefited from contingency theory

beyond identifying contingent variables that

influence organizational and accounting layout

((Gordon & Miller, 1976.In early studies,

contingency-based research is widely used to

explain the effectiveness of MCS by

investigating the designs that best match to

contextual variables (e.g. environment,

technology, structure, strategy, and size).

Contingency-based research does not developed

sufficiently to include all aspects of

accounting. It should be noted that there is no

arrangement on which specific contingent should

have an impact. The appropriate contingent

variable has yet to be identified and requires

investigation more theoretical research.

According to Fisher, he classified prior

management control research into four levels of

analysis complexity. These levels were

classified based on the type of variables

included in the study (ie. contingent variable,

management control system (MCS), and outcome

variable). He contends that, while the

complexity levels (e.g., levels 3 and 4) have

increased, each one has a distinct advantage and

disadvantage. As a result, higher levels of

analysis cannot be said to be superior to lower

 levels.

Management accounting is essential because

it serves as a link between the finance function

and the rest of the business. It aids management

in controlling the entity. These study entails a

thorough survey and explanation of MAPs in

Cabadbaran City to improve understanding of

current MAP use. This study contributes to the

existing gap in management accounting practices

Significanc particularly from the view of a developing a

e of the Small Enterprises by investigating relationships

Study between MAPs and potential influencing factors.

This study adds to knowledge by providing a more

in-depth look and comprehension of the

relationship between various dimensions of the

external environment with various aspects of

MAPs.

CHAPTER 2

METHODOLOGY
 The research design for data collection model

represents the relationships between MAPs and

contingent factors influencing organizational

Research performance. The study will be carried out by

Design reaching small businesses in Cabadbaran City. A

survey will be conducted by using a

questionnaire, supplemented by a limited number

of interviews of businesses. A further goal of

these interviews is to gather information and

explanations about the interaction of

contingent factors and MAPs in relation to the

organisational performance of the business.

Scientific methods such as those in statistical

packages will be used for analysing the data,

and appropriate qualitative data analysis.

Hence, the philosophy underpinning this

research is between two extreme ends of the

philosophical paradigms; however, it is located

much closer to positivism than to

phenomenology. This is still in the mainstream

accounting research and is conducted based on

scientific method and a quantitative approach

supplemented by appropriate qualitative

research methods.
 This study was conducted at Cabadbaran City,

Agusan Del Norte which focuses on the small

enterprises. This study utilized a researcher-

made questionnaire to gather data during break

Research time hours for business owners, managers, and

Locale management personnel in the data gathering

period. The target respondents must be

individuals who have prior knowledge how the

business operates to obtain valid and more

reliable data.

The population of this research are the chosen

small Enterprises based on the list given from

Cabadbaran City LGUs. Excluding very small

businesses, as they are not expected to have

Population formal MAS and only have fewer than 14

and Sample employees such as typically family-owned

businesses (Marriott & Marriott, 2000; Pistoni

& Zoni, 2000). The sampling frame is a list of

all elements of the study population from which

the researcher will draw his sample, but in the

case where no such complete and accurate list

is available, the researcher has to devise his

own sampling frame (Saunders et al., 2009). For

this study, the researchers had acquired a list

of SMEs from the Bureau of Internal Revenue or

 BIR from which they had identify which

businesses in Cabadbaran City are fit to be

their respondents.

The reliability of the multiple items used in

this study has been calculated using Cronbach's

Alpha test. The most widely used form of

internal consistency of a study instrument

(Easterby-Smith et al., 2002). Moreover, the

hypotheses are tested using simple regression

on a series of independent variables as well as

Research multivariable analysis to examine the

Instrument association between each set of independent

variables that fall under one dependent

variable simultaneously. Also, descriptive

statistics will be use, such as frequency and

means in order to achieve descriptive

objectives, to describe the status and purposes

of MAPs within Cabadbaran Small Enterprises,

and to investigate management perceptions of

the relationship between contingent factors and

MAPs as well. In addition, it is used to

describe the characteristics of the study’s

respondents and responding companies.

This research employs a survey to collect data.

The administered questionnaire was used in this

 study because it is possibly the best data

collection method when the survey is limited to

a local area or the researcher wishes to target

specific groups of people. The researchers

explained the study objectives, the importance

of the respondent’s participation in the study

and assurance of confidentiality for the

respondent, and included the researcher’s

Data contact details as well. During an interview,

Collection the researcher aimed to explain to the

respondents the outline of the research's

purpose and objectives, then highly encouraged

them to ask questions if they had any. It is

indicated in the literature, such as Saunders

et al. (2009), that response rate of self-

administered questionnaires is between 30 and

50%. Thus, it can be said that the response

rate of this study was felt to be satisfactory.

Reliability is regarded as an important aspect

for positivistic studies, and normally survey

research maintains high reliability (Collis &

Hussey, 2009). The most widely used form of

internal consistency of a study instrument is

Cronbach’s Alpha test (Easterby-Smith et al.,

2002). Therefore, it was used to calculate to

the overall reliability of the multiple items

used in this study. The data was gathered

collected for this purpose through a

questionnaire survey and analysed by various

methods statistical methods, such as

descriptive statistics, simple regression, and

multiple regression and mediation regression in

order to achieve adequate and acceptable

results. A number of interviews were conducted

to supplement the quantitative data. Validity

and reliability were established through

relevant tests.

The next parts generated the

data needed to measure the following

variables: external environment, business

strategy, organisational structure, technology

and characteristics of organization.By using a

Likert scale respondents can provide their

answers based on their knowledge and experience

with the business operation.

Table 1- Instrument Scale

 Before initiating data collection for this

study, the researchers ensured the respondents'

confidentiality. Participants have the option

Ethical to opt in or out of the study at any time.

Consideratio Before agreeing or declining to participate,

n participants understand the study's purpose,

benefits, risks, and funding. The researchers

take precautions to keep that information

hidden from others and hide personally

identifiable data so that it cannot be linked

to other data by anyone else.

 The data gathered from the study was carefully

recorded in tables, analyzed and interpreted

accordingly based on the results of the

Statistical statistical treatment. In this, the researcher

Tool used mean, frequency table, standard deviation,

Cronbach’s alpha and Likert scale. To determine

the profile and general information of the

respondent was use to concerning to demographic

of respondent and their general information

about their company. To measure each contingent

factor (Independent variable) was used by the

frequency table to determine the relationship

to the Management Accounting Practices

(Dependent variable).

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Appendix B Research Questionnaire

SECTION A: GENERAL INFORMATION ABOUT YOURSELF

For questions A1 to A3 below, please tick [√ ] all relevant answers.
A1. Job title and position
[ ] Financial Manager [ ] Head of cost department [ ] Financial Accountant
 [ ] Management Accountant [ ] Auditor [ ] Other please specify……….

A2. Less than 5 5 - Less than 10 - Less than 15 years 15 or more

Experience: year 10 years

Post-qualification [] [] [] []
In the current job [] [] [] []
With the current company [ ] [] [] []

A3. Qualifications and subject specialism

[ ] High school in (please mention subject area):
[ ] BA/BSc in (please mention subject area):
[ ] Ph.D. (please mention subject area):
[ ] BA/BSc in (please mention subject area):
[ ] MA/MSc in (please mention subject area):
[ ] Professional qualification (please specify):
[ ] Other (please specify):

SECTION B: GENERAL INFORMATION ABOUT YOUR COMPANY

For questions B1 to B4 below, please tick [√ ] all relevant answers.
B1. Age of company: [ ] Less than 5 years [ ] 5- Less than 10 years
[ ] 10- Less than 20 years [ ] 20 or more
B2. Main industrial sector of your company
[ ] Manufacturing [ ] Retail trade [ ] Financial Services [ ] Oil and Gas
[ ] Agricultural [ ] Transportation [ ] Construction [ ] Tourism
[ ] Other (please specify:

B3. Please provide approximate amounts for the following items relating to your company:
Annual Sales Turnover: [ ] Less than one million [ ] 1- Less than 5 millions (in Libyan
Dinars) [ ] 5 - 10 millions [ ] More than 10 millions
Number of Employees: Less than 100 [ ] 100-500 [ ] 501-1500 [ ] More than 1500 [ ]

B4. Type of company ownership:

State-owned company []
Private company []
Joint venture (shared between State and a foreign partner) [ ] please specify the percentage
of State-owned ….%
Joint venture (shared private sector and a foreign partner) [ ] please specify the percentage
of private sector …..%
Joint venture (shared between State and private sector) [ ] please specify the percentage
of State-owned.
 B5. COMPANY PERFORMANCE
Please indicate, using the 5-point scale below for each of the listed performance dimensions, how well you
believe your company is currently performing relative to your main competitors:
Poor Less than average Average Good Outstanding
1 2 3 4 5
Sales revenue
Net Income(i.e. profit)
Net Cash flow
Return on Investment
Cost reduction
Overall research and development
Market Share
Customer Satisfaction
New Market Development
New product development
Personnel Development
Other (please specify)……………

SECTION C: CHARACTERISTICS OF YOUR COMPANY’S BUSINESS

ENVIRONMENT
Questions C1 to C3 below relate to the external environment of your company during the
last 5 years. Using the 5-point scales below, please check the appropriate number for each
item listed.
C1. Extent of change in the company’s external environment
Not change Slightly changed Moderately Changed Significantly changed
at all changed

1 2 3 4 5
Product/
service technologies
in your industry

Competitor’s actions
Demand for
products/ service
Government
regulations
Labour union’s
actions
C2. Extent to which diversity exists in your industry
No diversity Slightly diversity Moderately Significantly Considerable
diversity diversity diversity
1 2 3 4 5
Customers’
buying habits

Nature of
competition
Product
attributes/
design
Suppliers’
attitudes/
behaviour

C3. Actions of direct competitors have affected the company in term of

Strongly disagree Disagree Neutral Agree Strongly agree

1 2 3 4 5
Creating more
uncertainty

Being visibly
hostile through
aggressive
marketing
Causing
significant loss of
market share and
sales revenue
Making price
competition more
intense
 Question C4 below relates to your company’s business strategy during the last 5 years.
C4. Please indicate, using the 5-point scale below, the extent to which you agree, disagree with each of the
following statements in relation to your company’s business strategy
Totally Slightly Neutral Agree Totally agree
disagree Disagree

1 2 3 4 5
Focus more on increasing
market share and/ or sales
growth rather than maximizing
short-term earnings.
Increase investment (as percent
of sales spent) on research and
development
Increase marketing expenditure
to increase market share
Compete through focusing more
on brand image rather reducing
manufacturing costs.
Focus more on improving
product features rather than
reducing manufacturing cost
Seek to compete with unique
products rather than achieve a
high market share through low
prices.
Complete by seeking access to
new market opportunities than
selling prices, quality, and
customer’s service in current
market
Always seek to introduce new
products rather than focuses on
high production volume.
 Questions C7 and C8 below relate to decision management and organizational structure in
your company during the last 5 years.

C7. Internal operating environment: using the 5-point scale below, please check the appropriate number
relating to the extent to which the following decisions are made by top management:
Never Rarely Sometimes Often Always
1 2 3 4 5
1 2 3 4 5

New product introduction decisions

Capital investment decisions
Pricing policy decisions
Decisions on major changes to processes
(e.g. introduction of new manufacturing technology)
Personnel policy decisions

C8. With regard to rules, routines, job descriptions that guide your company’s workforce, please circle the
appropriate number to indicate their frequency of existence
Never Rarely Sometimes Often Always
1 2 3 4 5
1 2 3 4 5

Whatever situation arises, there are policies and procedures

to follow in dealing with it
When rules and procedures exist here, they are written
The employees here are monitored for compliance with
established procedures
There are strong penalties for failure to comply with established
procedures
 SECTION D: MANAGEMENT ACCOUNTING PRACTICE - COSTING SYSTEMS –

D1. For each of the following costing techniques, please check the appropriate number on the 5-point scales
below to indicate the extent to which a technique

(i) is used by your company and (ii) how well it meets your needs
Not used Moderately Highly Does not meet Moderately Highly
at all used use the needs meet needs meet needs
1 2 3 4 5 1 2 3 4 5

1 2 3 4 5 1 2 3 4 5
Variable (or marginal)
costing
Full (absorption) costing
Standard costing
Activity-based costing (ABC)
Target costing
Life-cycle costing
Quality cost reporting

D2. Please circle the appropriate number on the 5-point scales below to indicate

i)The main purposes of product cost ii) how satisfied you are with your
costing information in your company system for these
purposes
Not used Moderately Highly Very Reasonably Very
at all used use dissatisfied satisfied satisfied
1 2 3 4 5 1 2 3 4 5
1 2 3 4 5 1 2 3 4 5

Determining the cost of products or

services
Budget preparation
Valuing inventory for external
reporting (i.e. preparing financial
statements)
Pricing products or services
Making product / service mix
decisions
Making product cost reduction
decisions
Controlling operations
 Strategic planning
Measuring performance

SECTION E: MANAGEMENT ACCOUNTING PRACTICE - BUDGETING

SYSTEMS –

E1. For the budgets listed below, please circle the appropriate number on the 5-point scales to indicate the
extent to which each of these budgets

(i) is used and (ii) how well it meets your needs

Not used Moderately Highly Does not meet Moderately Highly
at all used use needs meet needs meet needs
1 2 3 4 5 1 2 3 4 5

1 2 3 4 5 Sales budget 1 2 3 4 5
Production budget

Direct materials budget

Direct labour budget
Overheads budget
Master budget
Flexible budget
Capital budget
Cash budget
Administrative expenses budget

E2. Please check the appropriate number on the 5-point scale below, which of the following methods are

used in your company when, preparing budgets.

Not used at all Slightly used Moderately used Significantly used Always used
 1 2 3 4 5

1 2 3 4 5

Traditional incremental methods

Zero-based budgeting (ZBB)

Activity-based budgeting (ABB)

E3. Please check the appropriate number on the 5-point scales below to indicate

(i) The extent to which budgets serve various & ii.)how satisfied you are with your budgeting system fo
purposes these purposes
Not used Moderately Highly Very Reasonably Very
at all used use Dissatisfied satisfied satisfied
1 2 3 4 5
1 2 3 4 5

1 2 3 4 5 Planning annual operations 1 2 3 4 5

Forecasting external non-
financial data (e.g.
forecasts of market-demand ,
government
regulations, competitor’s
actions, etc)
Planning financial position;
cash flows
Communicating plans to
managers
Coordinating activities across
the business units
Responsibility reporting:
distinguishing between
controllable and non-
controllable
Motivating managers to strive
to achieve targets
Measuring and evaluating-
managerial performance.
 SECTION F: MANAGEMENT ACCOUNTING PRACTICE – PERFORMANCE

MEASUREMENT

F1. For the performance measurement techniques listed below, Please check the appropriate number on the
5-point scales to indicate the extent to which each of the following techniques

(i) is used and (ii) how well it meets your needs

Not used Moderately Highly Does not meet Moderately Highly
at all used use needs meet needs meet needs
1 2 3 4 5 1 2 3 4 5

1 2 3 4 5 Residual income 1 2 3 4 5
Economic value added (EVA)

Return on investment (or return

on capital employed)
Meeting budget target
Divisional profit
Benchmarking
Customer satisfaction
Market share
Employees’ satisfaction
Balanced scorecard
F1. Please check the appropriate number on the 5-point scales below to indicate:

(i)The extent to which performance measurements & (ii)How satisfy are you with your performance
system serves the following purposes measurements system for these purposes?
Not used Moderately Highly a) Changes in Product Does not meet Moderately Highly
at all used use Costing Practices needs meet needs meet needs
1 2 3 4 5 1 2 3 4 5

1 2 3 4 5 Replacing an existing 1 2 3 4 5
technique
Adding a new technique
Modification of information
output purpose
Operational modification
Reduction in the usage of the
technique
No 1 to 2 3 to 4 5to >6 b) Changes in budgeting Not Moderately Very
Change Changes Changes Changes Changes
1 2 3 4 5 practices Successful Successful Successful
1 2 3 4 5
Replacing an existing
technique
Adding a new technique
Modification of information
output purpose
Operational modification
Reduction in the usage of the
technique
No 1 to 2 3 to 4 5to >6 c) Changes in performance Not Moderately Very
Change Changes Changes Changes Changes
1 2 3 4 5 measurement Practices Successful Successful Successful
 1 2 3 4 5
Replacing an existing
technique
Adding a new technique
Modification of information
output purpose
Operational modification
Reduction in the usage of the
technique

SECTION G: MANAGEMENT ACCOUNTING CHANGE IN YOUR COMPANY

G1. Using the 5-point scales below, please check the frequency of change to a) product costing, b) planning &
budgeting, and c) managing performance in the last 5 years and the degree of success achieved

(i)Number changes in management accounting practices & (ii)Degree of success achieved

No 1 to 2 3 to 4 5 to >6 a)Changes in Product Costing Not Moderately Very
Change Changes Changes Changes Changes Successful Successful Successful
1 2 3 4 5 Practices 1 2 3 4 5
1 2 3 4 5 1 2 3 4 5

Replacing an existing technique

Adding a new technique

Modification of information output
purpose
Operational modification
Reduction in the usage of the technique
No 1 to 2 3 to 4 5 to >6 Not Moderately Very
Change Changes Changes Changes Changes Successful Successful Successful
1 2 3 4 5 b) Changes in budgeting practices 1 2 3 4 5
1 2 3 4 5 1 2 3 4 5

Replacing an existing technique

Adding a new technique

Modification of information output

purpose
Operational modification

Reduction in the usage of the technique

 No 1 to 2 3 to 4 5 to >6 c) Changes in performance Not Moderately Very
Change Changes Changes Changes Changes Successful Successful Successful
1 2 3 4 5 measurement Practices 1 2 3 4 5
1 2 3 4 5 1 2 3 4 5

Replacing an existing technique

Adding a new technique

Modification of information output

purpose
Operational modification

Reduction in the usage of the technique

SECTION H: FACTORS INFLUENCING MANAGEMENT ACCOUNTING PRACTICES

H1. Using the 5-point scales below, please encircle the extent to which you believe the
factors listed below influence change in management accounting practices with respect to
costing, planning & budgeting, and management performance
No Influence Slight Influence Moderate Influence Significant Influence Considerable Influence
1 2 3 4 5
Influencing factors: Costing Budgeting Managing
Practices Practices Performance
Practices
A generally turbulent external 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
environment
When there is variation in product- 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
market and orientation
When there is variation in consumer 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
characteristics
When there is variation in 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
production technologies
When there is variation in raw 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
materials markets
Perceived threat from hostile 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
competition
The level of product customization 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
The level of complexity of the 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
manufacturing (or service)
provision
A strategy based on high levels of 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
product differentiation
A strategy based on low price 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
products
A strategy based on increasing 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
market share
A strategy based on maximizing 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
short-term earnings
A strategy based on new products 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
and market opportunities
A strategy based on a narrow 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
product range with high production
volumes
Centralization in making decisions 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Formalization in following 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
procedures
Age of the company 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Size of the company 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Type of industry 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Type of ownership 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5