Strategic Management Accounting Use in Canada: An Exploratory Study of Key Techniques and Factors

Abstract

This study investigated strategic management accounting (SMA) and SMA techniques and factors usage in Canada. Understanding SMA use is important, as external and competitor accounting information is needed in order for firms to maintain a competitive advantage in an increasingly global environment. A review of literature has shown that several contingency factors have been found to affect a firm’s strategic management accounting usage and performance. Studies done since the early 2000s have provided insight regarding the SMA adoption practices of firms across various industries and different countries. However, there were inconsistent or unsupported findings for some of the contingency factors initially believed to have an influence on SMA practice adoption in various countries. These inconsistencies warrant further investigation of contingency factors such as company size, business strategy, and market orientation as well as additional SMA model development to include contingency factors that have not been previously investigated (e.g., environmental uncertainty, organization culture, organization structure). This research advanced a comprehensive model of SMA usage which incorporated a broad set of contingency factors expected to influence SMA usage and firm performance. This SMA model was validated using structural equation modeling (SEM) techniques with data collected from a sample of Canadian companies. The theoretical contribution of this study is a conceptual framework of SMA adoption capturing the impact of key contingency factors on SMA techniques usage. The study’s applied contribution is quantitative evidence of the extent to which SMA techniques have been adopted in Canada so far, and the implications that these techniques may have on firm performance. Overall, this is believed to be the first theory-based empirical investigation of SMA techniques use in Canada and as such, it opens the door for more complex studies on the outcomes of SMA adoption on firm’s performance in various countries.