Research Problem and Objectives

In business practice, it is often imperative to optimize performance with an ultimate aim of increasing sustainability and value of the business. At the core of optimizing business performance is the executive of the business which oversees all management and usually takes different forms such as: resource management, accounting management, operation management etcetera.

Since the advent of modern business organizational practices, the executive has been synonymous with decision-making a particular aspect that ensures business operations go according to plan while bringing into play a number of factors such as risk management and efficient resource allocation so as to optimize the business output. Among important aspects of management is the ability to make viable and optimal business decisions. One such aid to making the best business decisions is the management accounting which according to Gwanali (2017) has got among other aims to enable better company management.

As such, business accounting management can be viewed as, “…the process of information gathering and processing.” (Gwanali, 2017) with an objective to provide reliable information to the management so as to facilitate the process of decision making. However, for the management accounting to be productive it has to be timely and be able to minimize resource use.  Another definition by the American Accounting Association is that, accounting management entails the methods and concepts necessary effective planning in the choice of the best alternative business actions as well as enable business control by evaluating and interpreting business performance. Generally, the concept of management accounting is to enable the executive to make better decisions regarding optimization of business performance.

The use of accounting management in business has been in the past been limited to large firms due to the complexity of decision-making process embed in the business organization. As such small business organization especially retailers have been left to majorly make decisions without proper decision-making framework. The paper therefore aims to examine the influence of the customization on management accounting system among retailers in New South Wales, Australia.   

The research will enable the determination of the role of accounting management system among retailer and how it does influence decision-making in an endeavor to improve performance among players in the Retail industry.

The research proposal is divided into an executive summary which outlines the main points addressed in the paper, an introduction section introducing what the paper is all about. The fourth part is the research problem and the research objectives provides the general statement of the problem to be addressed in the research, it also includes all the aims that the research is designed to fulfill upon completion. The literature review which is the fifth section shows how the research is related with previous research as well as identifies the research gap and how the research will fill it. The last section is the research design and methodology which provides information of how the research will be conducted, who will be involved in it and what research type it is.

Literature Review

With the retail industry in New South Wales growing rapidly over the past decade, so has the problem of decision making due to more and more factors that influence business performance. The research problem is to determine how customization of Management Accounting System in Retail Industry in NSW has influenced performance in the retail industry.

The main objectives of this research include:

1. Analyze the process of adoption of management accounting systems among retailers in NSW
2. Explore the performance of businesses before and after adoption of management accounting system

• To determine the role of management accounting systems in decision-making among retailers in NSW

To enable achievement of the research objectives and addressing of the research problem, the following questions are to be answered:

1. What is the proportion of retailers in NSW who have adopted management accounting systems?
2. Is there a difference in performance of retail businesses before and after adoption of management accounting systems?

• What is the relationship between management accounting system and decision making among retailers?

The research adopts contingency theory in order to examine the relationship between management accounting systems, its role and influence on performance among retailers in the NSW. The contingency approach towards decision making by Vroom and Yetton argue that for a decision to be effective it is dependent on several factors at that moment of decision making such as: importance of the decision to be made, available information used by the management accounting system to process information for use in decision making, the probability of other decision-makers to adopt a decision and the percentage of disagreement arising when figuring out a particular decision.

Moreover, given that the study is concerned with the aspect of management, the contingency theory on management accounting fulfills the argument that in accounting systems, there are different accounting systems which apply equally to different organizations and that it is not possible to have a universal accounting system applicable to all businesses at the same time (Ismail and Isa, 2011). As such, an appropriate accounting management system conforms to specifically to conditions prevailing in the business firm at the moment. Therefore, a contingency theory should outline clear features of the accounting system under specified scenarios as well as ensure exclusive matching to the circumstances.

It is therefore suggested that particular features of an appropriate accounting system will depend upon the

specific circumstances of an organization. For an accounting system to be appropriate, it should be designed in such a way that it is flexible given variation of external and internal factors.  Given the different setting of retailer businesses, various factors affect different business simultaneously hence there cannot be a universal accounting system for all the players in the retail industry in NSW. Contingency-based approach makes an assumption that the aim of the management accounting systems is to provide decision making help to the retailers so as to improve business performance since the aim of businesses is to ensure sustainability. To foresee this, each business has its own performance goals based on its objectives and available resources. Hence, the contingency theory is suitable to examine the relationship among customization of MAS and retailer performance. Consequently, this research’s framework is structured from a basis of the contingency theory framework. The theoretical frame work is given in figure 1.

Research Design and Methodology

Decision making which is also known as business sense-making is a fundamental aspect of business management. Strahringer, Schäffer and Heidmann (2008) argue that management accounting systems are integral to provision of viable information framework crucial in the sense-making processes. The interpretative view of MAS has been used in the past to examine a number of mechanisms that define functionality of the systems. Chong and Eggleton (2003) on the influence of Locus and task uncertainty note that, whereas in factors affecting decision-making, tasks whose uncertainty level is low the use of MAS systems negatively affects the business performance, “the extent of use of broad scope MAS information has no effect on the performance level of the “external” manager.” (Chong and Eggleton, 2003). Given the fact that different business firms use different management accounting systems, the following hypothesis follows:

A research don by Ismail and Isa on the relationship between MAS and manufacturing, there is a direct relationship between advanced manufacturing technology (AMT) and MAS. Before 2010, the application of management accounting information was scarce. Isa and Foong (2005) note that, “…AMT adoption requires changes in the operations of the organizations in terms of cost structures and information needs of managers.” Previous studies show that manufacturing companies emphasize more on performance related to non-financial matters (Chenhall, 2007) such as volume of production, quality etcetera. Markets with stiff competition, application of MAS often has led to improved individual business performance (Abdel-Kader, 2006)

Moreover, the effect of competition in an interactive market and MAS application leads to improved non-financial performance in the hotel business (Patiar and Mia, 2008). Given the role of MAS information in business performance Management accounting system information refers to information made available by MAS in a business firm, the research supposes that there is a positive relationship between management accounting systems and performance in the retail industry in NSW. Hence, the following hypothesis is formulated:

Previous studies are widely based on the role of management systems applied to large organizations (Cassia, Paleari, and Redondi, 2005) and business firms whilst neglecting the role that decision making plays in small businesses. Decision-making is often majorly related to the process of business production such as which product to produce or how many employers to employ. The research seeks to fill this gap through testing the hypothesis:

Hypothesis three mediates between hypotheses one and two which supposes the role of MAS in decision-making and business performance among retailers. Mia (2013) state that an intermediary relationship is possible where the relationship between the response and predictor variable exists at ties partly through a third variable. As such if in this study, hypothesis 1 and 2 are supported, then the use of customized MAS among retailers is an intermediate connector between the role of MAS and performance of retail Industry in NSW.

The research will adopt a causal research method where the relationship between performance among retailers in NSW is assumed to have a relationship with the use of customized management accounting systems. From the literature review, most existing literature on MAS indicate a direct relationship between the response variable (performance) and the predictor variable (MAS). As such, it is sensible to examine whether customized MAS are directly related to business performance.

The Causal research type will therefore adopt correlation and predictive analysis methods whereby, examination of whether there exists a relationship between the independent and dependent variables will be done using correlation analysis and the null hypothesis of existence of a relationship rejected at a confidence interval of 0.05 while predictive analysis will use multiple regression method to determine the relationship between performance and the independent variables.

The multiple regression model used will take the form:

A triangular method which is under a mixed design was adopted for the study. Consequently, the study combines two data collection methods types that is, a questionnaire for quantitative data and a structured interview for collection of qualitative data. One downside of triangular research approach is the cost and time required in collection and preparation of data.  However, despite the downside, data collected using mixed approach method has relatively high correlation hence ensuring there is more confidence in the goodness of fit of data (Cavana, Delahaye and Sekaran, 2009).

Data used in this study will use primary data which will include both qualitative and quantitative data. Whereas secondary data refers data collected by anyone else other than the researcher, primary data refers to data collected particularly first-hand by the researcher or anyone involved in the research. Given the preceding definition and the nature of research approach, it is therefore possible for the research to use primary data which will be collected from the NSW region through use of an appropriate sampling frame and sample size.

Qualitative data for this study will be collected from interviews which will be conducted by the researcher. The interviews will be aimed at obtaining the general views concerning business performance in regard of how it has been influenced through adoption of MAS. In addition, another factor that will be considered will be the collection of qualitative data regarding the attitude or retailers towards MAS.

Survey questionnaires will be used in collection quantitative data. The research questionnaire will be designed in such a way that it captures the data regarding: financial performance 2 years’ prior adoption of MAS and 5 years after adoption of MAS. For accuracy purposes, the financial data that will be collected will include type of product sold, sales made and expenditures incurred.

Quantitative data obtained from the survey will be analyze using correlation and multiple regression model which is a type of predictive analysis modelling. One particular advantage of the multiple regression model is its ability to examine relationships as well as provide predictive statistics for forecasting. The study will use Statistical package for Social Sciences software as a means of data analysis.

There are a large number of retailers in New South wales which make up the population of this study. However, obtaining data from all the retailers would be cumbersome and therefore requires choice of a sample from the population. In particular, the choice of a sample size will be determined through use of a power analysis so as to determine the most suitable minimum sample size for use in analysis. The sample size will therefore be chosen given a 95% confidence interval and a 0.05 confidence level so as to increase the accuracy of the outcome. According to shopping center council of Australia (2018), there are approximately 65,000 retailers in NSW. The sample size will be given by:

Sample size=(Z-score)²* StdDev* (1-StdDev)/ (margin of error)²

Using the above formula, a sample size of 382 would be sufficient.

Further, the research will adopt a probability sampling method using simple random sampling so as to ensure that each member in population has an equal chance of being included and that the respondents chosen for inclusion are representative of the whole population so as to remove bias from the data. In regard to the sampling frame, it will include all the retail business owners in NSW and the sample will include respondents whose characteristics include:

1. The business falls under the category of retailers i.e. acts as an intermediary between consumers and other suppliers.
2. The business in the New South Wales region.

• The retail business has been in business for more than 7 years so as to be able to provide data for at least the past 7 years.

The research methodology will therefore aid in testing the hypothesis presented in the literature review so as to answer the research questions and address the research objective.

References

Abdel-Kader, M., and Luther, R. (2006). Management accounting practices in the British food and drinks industry. British Food Journal, 108(5), 336-357

Cavana, R., Delahaye, B and Sekaran, U. (2001). Applied Business Research: Qualitative and Quantitative Methods. John Wiley & Sons.

Cassia, L., Paleari, S. and Redondi, R. (2005). Management accounting systems and organizational structure. Small Business Economics, 25(12), pp. 373-391.

Chenhall, R. (2007). Theorizing contingencies in management control systems research. Management Accounting Research, 2(16), pp. 367-378

Eggeleton, I., Chong, V. (2003). The decision facilitating role of management accounting systems on managerial performance: The influence of locus of control and task uncertainty. Advances in Accounting, 20 (1), pp. 165-197. DOI: 10.1016/S0882-6110(03)20008-0

Gnawali, A. (2017). Management Accounting Systems and Organizational Performance of Nepalese Commercial Banks. Nepalese Business Studies,10 (1).

Heidmann, M., Schäffer, U., and Strahringer, S. (2008). Exploring the Role of Management

Accounting Systems in Strategic Sense-making. Information Systems Management, 25(3). Pp. 244-257. DOI: 10.1080/10580530802151194

Isa, C. and Foong, S. (2005). Adoption of advanced manufacturing technology and management

accounting practices: the case of manufacturing firms in Malaysia. World Review of Science, Technology and Sustainable Development, 2(1), pp.35-48.

Ismail, K. and Isa, R. (2011). The Role of Management Accounting Systems In Advanced Manufacturing Environment. Basic and Applied Science, 5(9), pp. 2196-2209.

Mia, L., (2013). The role of MAS information in organizations: An empirical study. British Accounting Review, 25: 269-285.

Patiar, A., and Mia, L. (2008). The interactive effect of market competition and use of MAS information on performance: Evidence from the upscale hotels. Journal of Hospitality and Tourism Research, 32(2), 209-234.