The Importance Of Organizational Accounting System

781 Words 4 Pages
In the Philippines, MSMEs can be considered as the backbone of our economy as they are a major contributor of job creation and play a vital role as providers of goods and services to large firms. In fact, 99.6% out of 941,174 establishments in 2013 are micro, small, and medium enterprises. However, the attrition rates for startup MSMEs in the country can go as high as 50 percent, which means that many MSMEs are having a difficult time staying in the business. According to Fatoki (2014), one of the key reasons why startup businesses fail is the lack of management control that leads to poor use of accounting information to manage finances and cash flow. Coincidentally, the often neglected area is the accounting and finance function of the MSMEs, …show more content…
The author conducted a survey to small to medium-sized manufacturing firms operating in eight diverse industry groups. Only 141 survey forms are deemed usable for the study, and with this, a binary logistic regression was done to perform an analysis. The study concluded that the need to keep formal accounting system is driven by the presence of outsides parties and nonfamily members in decision-making. It is also found that internal factors affecting the failure of SMEs includes inadequate management control of people making crucial decisions financial skills and knowledge that are required to create important key financial indicators and monitoring …show more content…
This study aims to examine the extent in which family businesses use management control systems and how their use of it enables them to gain competitive advantages relative to non-family businesses. A sample 106 SMEs, which are mostly coming from the manufacturing sector, was used. Half of this sample is family-owned, while the other half is the opposite. A mediated regression analysis was conducted in this study, which arrived to the conclusion that both type of businesses match the appropriate management control system to a given business strategy. It also found that having a good management control system indirectly affects family businesses stronger than non-family. This shows the importance of management control systems in family businesses to create competitive advantage and perform successful business

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