Relationship between Modern Management Accounting Techniques and Organizational Performance of Industrial Sector Listed in Amman Stock Exchange

Document Type: Original Research

Authors

Faculty of Economics and Management Sciences, Universiti Sultan Zainal Abidin, Terengganu, Malaysia

Abstract

This research examined relationship between modern management accounting techniques and industrial companies listed in Amman Stock Exchange (ASE). The questionnaire was used to collect data from 46 companies operating in industrial activities, a total of 152 questionnaires were distributed to employees in the financial business units (FBUs) in the companies, data of 116 questionnaires were used in the analysis process through Smart- PLS software. The results showed that reveals that MMATs had a strongly positive and significant effect on OP.

Keywords


Abagissa, J. A. (2018). Review of Balanced Scorecard Implementation in Selected Offices of Addis Ababa City, Ethiopia. Journal of Public Administration, Finance and Law. 14, 7-26.
Abdel-Kader, M., & Luther, R. (2007). Management accounting practices in the British food and drinks industry. British Food Journal, 108(5), 336-357.
Abdel-Kader, M., & Luther, R. (2008). The impact of firm characteristics on management accounting practices: A UK-based empirical analysis. The British Accounting Review40(1), 2-27.
Abdel-Maksoud, A., Abdallah, W. and Youssef, M. (2012). An empirical study of the influence of intensity of competition on the deployment of contemporary management accounting practices and managerial techniques in Egyptian firms. Journal of Economic and Administrative Sciences. 28(2), 84-97.
Abdulmouti, H. (2018). Benefits of Kaizen to Business Excellence: Evidence from a Case Study ‘. Industrial Engineering & Management7(2).
Abu-Rumman, A. K., Muslih, I., & Barghash, M. (2017). Life Cycle Costing of PV Generation System. Journal of Applied Research on Industrial Engineering4(4), 252-258.
Agu, C. I., Nweze, A. U., & Enekwe, C. I. (2016). The Use of Strategic Management Accounting Techniques (SMATs) in Sustainability Performance Measurement for Corporate Governance in Nigeria. International Journal of Academic Research in Accounting, Finance and Management Sciences6(3), 262-271.
Ahmad, K., & Mohamed Zabri. (2015). Factors explaining the use of management accounting practices in Malaysian medium-sized firms. Journal of Small Business and Enterprise Development22(4), 762-781.
Ajibolade, S. O. (2013). Management accounting systems design and company performance in Nigerian manufacturing companies : A contingency theory perspective. British Journal of Arts and Social Sciences, 14(Noll), 228–244.
Aladwan, M., ALsinglawi, O., & Alhawatmeh, O. (2018). The applicability of target costing in Jordanian hotels industry. Academy of Accounting and Financial Studies Journal22(3), 1-13.
Al-Damen, R. A. (2017). The Impact of Total Quality Management on organizational performance Case of Jordan Oil Petroleum Company. International Journal of Business and Social Science8(1), 192-202.
Al-Ettayyem, R., & Zu'bi, M. F. (2015). Investigating the effect of total quality management practices on organizational performance in the Jordanian banking sector. International Business Research8(3), 79.
Al-haraisa, Y. (2017). Just-In-Time System and Its Impact on Operational Excellence: An Empirical Study on Jordanian Industrial Companies. International Journal of Business and Management, 12(12): 158- 167.
Alimoradi, A., & Borzoupour, S. (2017). Strategy, Management Accounting Systems, and Performance of Iranian Petrochemical Companies in the Light of Contingency Theory. Iranian Journal of Oil & Gas Science and Technology6(2), 61-74.
Al-Khadash, H. A., & Feridun, M. (2006). Impact of strategic initiatives in management accounting on corporate financial performance: evidence from Amman Stock Exchange. Managing global transitions4(4), 299.
Al-Mawali, H., (2015). Contingent factors of Strategic Management Accounting. Journal of Finance and Accounting, 6(11): 130-138.
Al-Naser, K. H. Y., & Mohamed, R. (2017). The mediating role of balanced scorecard between perceived environmental uncertainty and firm performance: (Iraqi case). Journal of Business Management and Economic Studies2(1), 1-21.
Alnawaiseh, M. A. L. I. (2013). The extent of applying strategic management accounting tools in Jordanian banks. International Journal of Business and Management8(19), 32-44.
Alosani, M. S., Al-Dhaafri, H. S., & Yusoff, R. Z. B. (2016). Mechanism of benchmarking and its impact on organizational performance. International Journal of Business and Management11(10), 172-183.
Al-Qudah, L. A. M., & Al-Hroot, Y. A. K. (2017). The Implementing Activity-Based Costing Technique (ABC) and Its impact on Profitability: A Study of Listed Manufacturing Companies in Jordan. International Journal of Economics and Financial Issues7(2), 271-276.
Al-Refa'ee, K. (2012). The Extent of Applying the Activity Based Costing System (ABC) inthe Field of Iron and Steel Industry in Jordan. Interdisciplinary Journal of Contemporary Research in Business, 4(1), 671-695.
Alsoboa, S., Al Khattab, A., & Al-Rawad, M. (2015). The extent to which the Jordanian private industrial companies Use SMA Techniques. European Journal of Business and Management7(7), 456-465.
Altahayneh, Z.L. (2014). Implementation of Total Quality Management in colleges of physical education in Jordan. International Journal of Business and Social Science, 5(3):109- 117.
Angelakis, G., Theriou, N., & Floropoulos, I. (2010). Adoption and benefits of management accounting practices: Evidence from Greece and Finland. Advances in accounting26(1), 87-96.
Atout, A. (2017). Strategic Cost Management: Critical review over the last three decades. Journal of Economic Research, Blida University2(16), 23-44.
Auzair, S. M., Amiruddin, R., Majid, A. A., & Maelah, R. (2013). Linking Business Strategy to Management Accounting: A Study in Malaysian Service Organizations. Jurnal Pengurusan, 37.
Ayedh, A. M. A., Eddine, H., & Oussama, C. (2015). The impact of advance management accounting techniques on performance: The case of Malaysia. Middle East Journal of Business55(2031), 1-11.
Baines, A., & Langfield-Smith, K. (2003). Antecedents to management accounting change: a structural equation approach. Accounting, organizations and society28(7-8), 675-698.
Bhargava, A., Bafna, A., & Shabarisha, N. (2018). A review on value chain analysis as a strategic cost management tool. Acc Financ Manag J3(3), 1386-1393.
Bhimani, A., Horngren, C., Datar, S., & Rajan, M. (2012). Management and Cost Accounting 5th Ed. Harlow: Pearson.
Bogsnes, B. (2009). Implementing beyond budgeting. United States of America: Wiley. Boocock.
Bourmistrov, A., & Kaarboe, K. (2013). From comfort to stretch zones: A field study of two multinational companies applying “beyond budgeting” ideas. Management Accounting Research, 24, 196-211.
Briciu, S., & Căpuşneanu, S. (2013). Pros and cons for the implementation of target costing method in Romanian economic entities. Accounting and Management Information Systems, 12(3), 455- 470.
Burns, J. and J. Vaivio (2001). "Management Accounting Change." Management Accounting Research 12(4): 389-402.
Burns, J., & Scapens, R. W. (2000). Conceptualizing management accounting change: an institutional framework. Management accounting research11(1), 3-25.
Cao, N. and Fowler, C. (2013). A Survey of Factors Influencing the Choice of Cost Systems   in New Zealand. New Zealand Management Accounting Conference. 4-5 November. Queenstown, New Zealand.
Chahal, V., & Narwal, M. (2017). Impact of lean strategies on different industrial lean wastes. International Journal of Theoretical and Applied Mechanics12(2), 275-286.
Chenhall, R. H. (2005). Integrative strategic performance measurement systems, strategic alignment of manufacturing, learning and strategic outcomes: an exploratory study. Accounting, organizations and society30(5), 395-422.
Chenhall, R. H. (2008). Accounting for the horizontal organization: A review essay. Accounting, Organizations and Society, 33, 517–550.
Cravens, K. S., & Guilding, C. (2001). An empirical study of the application of strategic management accounting techniques. Advances in Management Accounting,10, 95–124.
Cuzdriorean, D. D. (2017). The use of management accounting practices by Romanian small and medium-sized enterprises: A field study. Journal of Accounting and Management Information Systems16(2), 291-312.
Dugdale, D., & Jones, T. C. (2002). Battles in the costing war: UK debates, 1950-1975. Accounting, Business and Financial History, 13(3): 305-338.
El-Dalahmeh, S. M. (2018) Extent of Implementing Target Costing and Value Engineering Approach to Reducing Costs: A Survey in Jordanian Shareholding Companies for Food Industries.
Ezzamel, M., Lilley, S., & Willmott, H. (1997). Accounting for management and managing accounting: reflections on recent changes in the UK. Journal of Management Studies, 34(3), 439-463.
Ghasemi, R., Azmi Mohamad, N., Karami, M., Hafiz Bajuri, N., & Asgharizade, E. (2015). The mediating effect of management accounting system on the relationship between competition and managerial performance. International Journal of Accounting and Information Management24(3), 272-295.
Gosselin, M. (1997). The effect of strategy and organizational structure on the adoption and implementation of activity-based costing. Accounting, organizations and society22(2), 105-122.
Grzyl, B., & Siemaszko, A. (2018). The Life Cycle Assessment and Life Cycle Cost in public works contracts. In E3S Web of Conferences (Vol. 44, p. 00047). EDP Sciences.
Guilding, C. & McManus, L.(2002), “The incidence, perceived merit and antecedents of customer accounting: An exploratory note”, Accounting, Organizations and Society Vol.27, 45-59.
Hair Jr, J. F., Black, W. C., Babin, B. J., & Andersen, R. E. (2010). Mutilvariate  data analysis (7th ed). Upper Saddle River, NJ: Pearson Prentice Hall.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (PLS-SEM). Thousand Oaks: Sage Publications.
Hamdy, A. (2018). Balance scorecard role in competitive advantage of Egyptian banking sector. The Business & Management Review9(3), 424-434.
Hardan, A. S., & Shatnawi, T. M. (2013). Impact of applying the ABC on improving the financial performance in telecom companies. International Journal of Business and Management8(12), 48.
Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The Use of Partial Least Squares Path Modeling in International Marketing. Advances in International Marketing, 20(1), 277-320
Hilmola, O. P., & Gupta, M. (2015). Throughput accounting and performance of a manufacturing company under stochastic demand and scrap rates. Expert Systems with Applications42(22), 8423-8431.
Hoque, Z. (2001). Strategic Management Accounting: Concepts, Processes and Issues, Oxford: Chandos Publishing.
Hoque, Z. (2011), “The relations among competition, delegation, management accounting systems change and performance: A path model”, Advances in Accounting, .27 (2), 266-277.
Horngren, C. T., Bhimani, A., Datar, S. M., Foster, G., & Horngren, C. T. (2002). Management and cost accounting. Harlow: Financial Times/Prentice Hall.
Hubbard, G. (2009). Measuring organizational performance: beyond the triple bottom line. Business strategy and the environment18(3), 177-191.
Hutchinson, R. (2007). Linking Manufacturing Strategy to Product Cost: Toward Time-Based Accounting. Management Accounting Quarterly, 9 (1), 31.
Ittner, C.D., Larcker, D.F., (2001). Assessing empirical research in managerial accounting: a value-based management perspective. Journal of Accounting and Economics 32, 349–410.
Jagtap, K.N., (2013). Life Cycle Costing–A tool for Strategic Management Accounting–A Case Study, Tactful Management Research Journal, 1(11),Aug 2013.
Jariwala, S. (2015). Value Chain Analysis - Tool of Strategic Cost Management. International Journal for Research in Management and Pharmacy, 4(2): 14–17.
Jensen, M.C. (2001), “Corporate budgeting is broken - let’s fix it”, Harvard Business Review, 79 (10), 94-101.
Johnson, T. H., & Kaplan, R. S. (1987). Relevance lost: The rise and fall of management accounting. Harvard Business School Press, Boston, MA.
Jusoh, R. (2008). Environmental uncertainty, performance, and the mediating role of balanced scorecard measures use: evidence from Malaysia. International Review of Business Research Papers4(2), 116-135.
Kaming, P. F. (2017). Implementation of life cycle costing for a commercial building: case of a residential apartment at Yogyakarta. In MATEC Web of Conferences (Vol. 138, p. 05008). EDP Sciences.
Kaplan, R. S., & Norton, D. P. (1996). Translating strategy into action: The balanced scorecard. Boston: Harvard Business School Press.
Khodadadzadeh, T. (2015). A state-of-art review on activity-based costing. Accounting1(2), 89-94.
King, R., Clarkson, P.M. and Wallace, S. (2010) 'Budgeting practices and performance in small healthcare businesses', Management Accounting Research, 21(1), 40-55.
Kirli, M. (2016). Throughput Accounting in Strategic Cost Management: An Application. Annals of “Dunarea de Jos” University of Galati Fascicle I. Economics and Applied Informatics
Kshatriya, A., Dharmadhikari, V., Srivastava, D. and Basak, P.C. (2017). ‘Strategic Performance Measurement Using Balanced Scorecard: A Case of Machine Tool Industry’. Foundations of Management, 9(1), 75-86.
Lay, A. Tan (2014). Effects of Strategy, Competition, Decentralization and Organizational Capabilites on Firm Performance: The Mediating Role of Strategic Management Accounting, (April, 2014).
Lee, C. L., & Yang, H. J. (2011). Organization structure, competition and performance measurement systems and their joint effects on performance. Management accounting research22(2), 84-104.
Libby, T., and Lindsay, R.M. (2010). Beyond budgeting or budgeting reconsidered? A survey of North-American budgeting practice. Management Accounting Research. 21, 56–75.
Lucianetti, L., Jabbour, C. J. C., Gunasekaran, A., & Latan, H. (2018). Contingency factors and complementary effects of adopting advanced manufacturing tools and managerial practices: Effects on organizational measurement systems and firms' performance. International Journal of Production Economics200, 318-328.
Lutilsky, I. D., Liović, D., & Marković, M. (2018). Throughput Accounting: Profit-Focused Cost Accounting Method. In International Conference Interdisciplinary Management Research XIV, Opatija–Croatia, 18–20 May 2018.
Madanhire, I., Kagande, L., & Chidziva, C. (2013). Application of Just In Time (JIT) Manufacturing Concept in Aluminium Foundry Industry in Zimbabwe. International Journal of Science and Research (IJSR), India Online ISSN, 2319-7064.
Mahfar, R., & Omar, N. H. (2004). The current state of management accounting practice in selected Malaysian companies. Universiti Tenaga Nasional International Business Management Conference.
Marković, L., Dutina, V., & Kovačević, M. (2011). Application of benchmarking method in the construction companies. Facta universitatis-series: Architecture and Civil Engineering9(2), 301-314.
Marodin, G. A., Frank, A. G., Tortorella, G. L., & Fetterman, D. C. (2017). Lean production and operational performance in the Brazilian automotive supply chain. Total Quality Management & Business Excellence30(3-4), 370-385.
Mclellan, J. D., & Moustafa, E. (2013). An exploratory analysis of management accounting practices in the Arab Gulf Cooperative countries. Journal of Islamic Accounting and Business Research.
Murphy, G. B., Trailer, J. W., & Hill, R. C. (1996). Measuring performance in entrepreneurship research. Journal of business research36(1), 15-23.
Nassar, M., Aldeen Al-Khadash, H., Sangster, A., & Mah’d, O. (2014). Factors that catalyse, facilitate and motivate the decision to implement activity-based costing in Jordanian industrial companies. Journal of applied accounting research14(1), 18-36.
Ndubuisi, A. N., Uche, E. P., Leonard, N. C., & Chinyere, O. J. (2018). Capital Structure Determinants: Empirical Evidence from Quoted Deposit Money Banks in Nigeria. International Journal of Research in Business, Economics and Management, 2(4), 70-85.
Neely, A. D., Adams, C., & Kennerley, M. (2002). The performance prism: The scorecard for measuring and managing business success. London: Prentice Hall Financial Times.
Nguyen, T. L. (2019). STEAM-ME: A Novel Model for Successful Kaizen Implementation and Sustainable Performance of SMEs in Vietnam. Complexity2019.
Nimtrakoon, S and Tayles, M (2010). Contingency Factors of Management Accounting Practices in Thailand: A Selection Approach.  Asian Journal of Accounting and Governance, Vol. 1, 51-78.
Nuhu, N. A., Baird, K., & Appuhami, R. (2016). The association between the use of management accounting practices with organizational change and organizational performance. Advances in Management Accounting26, 67-98.
Ogungbade, O., Idode, P., & Ezekiel, A. (2016). An Empirical Investigation of the Adoption Status of New Cost and Management Accounting Techniques Among Kenyan Manufacturing Companies. Available at SSRN 2798037. V (10), 46–66.
Okpala, K. E. (2016). Target costing implementation and competition: A case study of breweries industry. European Journal of Applied Business and Management2(2).
Patel, K., Patel, K., & Sanap, R. (2016). Implementation of Just-In-Time in an Enterprise. International Journal of Advance research, Ideas and Innovations in Technology2(6), 1-5.
Rahmani, K., & Nayebi, M. A. (2014). Effect of JIT Implementation in Iran Automotive Industry (Case Study: Iran Khodro's Assembly Line 2). Indian J. Sci. Res7(1), 001-016.
Ramezani AR, Mahdloo M (2014) Backflush costing and Backflush Accounting. Academic Journal of Research in Business & Accounting, 2(5):1-6.
Ringim, K. J., Razalli, M. R., & Hasnan, N. (2012). A framework of business process re-engineering factors and organizational performance of Nigerian banks. Asian Social Science8(4), 203.
Rof, M. L. (2012). Kaizen costing method and its role in the management of an entity. The Young Economists Journal, 104–109.
Saunders, M., Lewis, P. & Thornhill, A. (2012). Research methods for business students. 6th ed edn. Harlow: Pearson.
Shank, J., & Govindarajan, V. (1992). Strategic cost management: the value chain perspective. Management Accounitng Research, 177-197.
Sharabati, A. A. A., & Fuqaha, S. J. (2014). The Impact of Strategic Management on the Jordanian Pharmaceutical Manufacturing Organizations' Business Performance. International Review of Management and Business Research3(2), 668.
Singh, S., & Garg, D. (2011). JIT System: Concepts, Benefits and Motivation in Indian Industries. International Journal of Management & Business Studies, 1(1).
Sleihat, N., Al-Nimer, M and Almahamid, S. (2012), "An Exploratory Study of the Level of Sophistication of Management Accounting Practices in Jordan", International Business Research, 5 (9), 217- 234.
Soltani, S., Nayebzadeh, S., & Moeinaddin, M. (2014). The Impact Examination of the Techniques of Management Accounting on the Performance of Tile Companies of Yazd. International Journal of Academic Research in Accounting, Finance and Management Sciences4(1), 382-389.
Sulaiman, M. B., Nazli Nik Ahmad, N., & Alwi, N. (2004). Management accounting practices in selected Asian countries: a review of the literature. Managerial Auditing Journal19(4), 493-508.
Sunarni, C. W. (2014). Management Accounting Practices at Hospitality Business in Yogyakarta, Indonesia. Review of Integrative Business and Economics Research, 4(1), 380-396.
Sutarmin,. Jatmiko, D. P. (2016). Value chain analysis to improve corporate performance: a case study of essential oil Export Company in Indonesia. Investment Management & Financial Innovations13(3), 183.
Syduzzaman, S., Rahman, M., Islam, M., Habib, A., & Sharif, A. (2014). Implementing total quality management approach in garments industry. European Scientific Journal10(34).
Talebnia, G., Baghiyan, F., Baghiyan, Z., & Abadi, F. M. N. (2017). Target Costing, the Linkages Between Target Costing and Value Engineering and Expected Profit and Kaizen. International Journal of Engineering1(1), 11-15.
Tanninen, K., Puumalainen, K., & Sandström, J. (2010). The power of TQM: analysis of its effects on profitability, productivity and customer satisfaction. Total Quality Management, 21(2), 171-184.
Tuan Mat, T. Z., & Smith, M. (2014). The Impact of Changes in Environment and AMT on Management Accounting Practices and Organizational Strategy, Structure and Performance. Journal of Applied Management Accounting Research12(1).
Tuanmat, T. Z. and Smith, M. (2011). Changes in management accounting practices in Malaysia. Asian Review of Accounting, 19(3), 221-242.
Uyar, A,. & Bilgin N, (2011), “Budgeting practices in the Turkish hospitability industry: an exploratory survey in Antalya region”, International Journal of Hospitality Management, 30, 398-408.
Uyar, A. (2009). An evaluation of budgeting approaches: traditional budgeting, better budgeting, and beyond budgeting. Journal of Academic Studies. 11(42), 113–130.
Wojakowski, P. (2016). Production economics with the use of theory of constraints. Research in Logistics & Production6(1), 79-88.