Cost accounting practices in SMEs: liability of age and other factors that hinder or burst its implementation in turbulent years

Abstract

This study aimed to investigate the level of cost accounting (CA) implementation in small- and medium-sized enterprises (SMEs). CA is a management accounting tool whose application in small companies has always been difficult. Nevertheless, academicians and practitioners recommend CA implementation in SMEs, especially because of the deep market instability, competitive pressure, and margin erosion that have occurred following the COVID-19 pandemic and 2022 European war scenario. Company size influences CA implementation; however, it is not the only influencing factor and perhaps not even the most important. To investigate the barriers to the adoption of CA and which conditions or actions can remove these barriers, leveraging from the contingency theory, a questionnaire was sent out in July 2022 to limited liability SMEs operating in the manufacturing, construction, and distribution macro-sectors in Verona and Vicenza provinces (Italy). Respondents answered a set of questions regarding CA implementation in their SMEs as of July 2022. Using a multivariate regression model to analyze data from the 120 questionnaires received, we found that lack of resources, limited training and skills, firm age, and the presence of the founder in the firm had a negative influence on CA implementation in SMEs. The low level of CA implementation was also associated with its supposed inefficiency, uselessness, and unsuitability for business. The effect of company size on CA implementation was not statistically significant. Despite this study’s limitations regarding the sample and period considered, we believe that it contributes to both academic debates and practice by illustrating the limiting factors and ways in which CA implementation can be fostered in SMEs in turbulent years.