Adoption of Management Accounting Practices: Challenges and opportunities for small and medium-scale enterprises in Zimbabwe

Abstract

Prolonged periods of economic recession and the resultant informalisation of the Zimbabwean economy have meant that Small and Medium Enterprises (SMEs) are the new engines of economic growth. The Zimbabwean government's support mechanisms for SMEs and the decision to tax them are an implicit acknowledgement of the economic significance of the sector. However, the entrepreneurial beginnings of most SMEs often mean that their owners and staff lack the requisite business acumen needed to ensure the viability and sustainability of their businesses. SMEs are beset by a plethora of adversities, which lead to the closure of most SMEs. Scholars have advanced the view that the adoption of Management Accounting Practices (MAPs) by SMEs can mitigate the foregoing. MAPs have been shown to promote the efficiency, competitiveness, and viability of corporations. However, there is a paucity of literature that engages the use of MAPs by SMEs in Zimbabwe. Moreover, there is a lack of evidence of an existing management accounting framework that is tailored to the needs of Zimbabwean SMEs. It is against this backdrop that this study explored the use of MAPs by SMEs in Zimbabwe. The study also ascertained the benefits obtained through the use of MAPs among Zimbabwean SMEs. It further identified the factors influencing the adoption of MAPs among SMEs in Zimbabwe. Besides, the study established the role of the Zimbabwean government in the implementation of MAPs. Importantly, the study developed a management accounting framework for Zimbabwean SMEs. Data was gathered using focus group discussions and in-depth face-to-face interviews. This study used qualitative content analysis to interpret the data findings. The study revealed that there is a minimal adoption of MAPs, though there is a relatively high usage of traditional MAPs compared to contemporary MAPs among the SMEs under study. The study also discovered that there are diverse practices in the application of management accounting tools by entities within the same industry. In addition, the study found that among the five categories of MAPs, decision support systems and strategic management accounting are the least used, while budgeting systems and performance evaluation systems are moderately used, with costing systems being the most used of the five components of MAPs. The uneven and limited adoption of MAPs is attributable to an unconducive socio-economic environment, undercapitalisation, lack of knowledge of management accounting by SME owners and staff, organisation size, and the competence of accounting personnel. The study proposed a six-staged systematic implementation method that makes the application of MAPs less cumbersome and easy to implement. The proposed framework further systematises the application of MAPs in the SME sector. It can be applied to other similar contexts in the Global South. It is highly recommended that SMEs should apply management accounting as its use promotes competitive advantage and success for an entity. The study recommends that the Zimbabwean government should popularise MAPs by convening workshops, awareness campaigns, and formulating policies that encourage the use of management accounting