Factors Influencing Accounting Outsourcing Practices among SMEs in Pakistan Context: Transaction Cost Economics (TCE) and Resource-Based Views (RBV) Prospective

Abstract

The present study was conducted to identify factors that affect Pakistani manufacturing SMEs decisions to outsource management accounting practices in terms of transaction cost economics (TCE) and resource-based view (RBV). A survey of 302 SMEs was carried out using convenience sampling, a personal interview owners/managers/CFOs located in 9 major cities of Pakistan. Our multiple regression analysis revealed that the frequency of non-routine tasks, asset specificity, opportunism, trust in accountant and competition has a significant impact on accounting outsourcing. Furthermore, whilst we include control variables like gender, executive education, experience, firm size and firm age in our linear regression equation, the relationship among five variables and outsourcing intensity was remain statistically significant. The findings imply that SMEs with resource constraint should shift their traditional in-house accounting practices to the external knowledgeable professional accountant. Finally, this study contributes to the body of knowledge with respect to management accounting outsourcing, TCE and RBV in the emerging economics context.