FACTORS IMPACT TO THE IMPLEMENTING OF MANAGEMENT ACCOUNTING IN SMALL AND MEDIUM ENTERPRISES IN VIETNAM

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MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HO CHI MINH CITY


TRAN NGOC HUNG

FACTORS IMPACT TO THE IMPLEMENTING OF
MANAGEMENT ACCOUNTING
IN SMALL AND MEDIUM ENTERPRISES IN VIETNAM

Major: Accounting
Code: 62.34.03.01

SUMMARY OF DOCTORAL THESIS

HO CHI MINH CITY, 2016


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Thesis research was done at: University of Economics Ho Chi Minh City
Professional advisor:
1. Dr. TRAN VAN THAO
2. Dr. DOAN NGOC QUE

Critic 1: .................................................................................................................
Critic 2: .................................................................................................................
Critic 3: .................................................................................................................
This thesis will be presented to the Thesis Committee at University of Economics Ho Chi

Minh City at ……, the day….. month ……. year 2016
Thesis is available at the library of the University of Economics Ho Chi Minh City


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INTRODUCTION

1.

Research problem
During the global process of integration into “flat world” the traditional business environment have

changed fast, become unpredictable with the participating of more and more powerful competitors
(Friedman, 2005). However, the change not only brings the threats but also the chances for enterprises
and economies. They have two choices: being eliminated or be changed to catch up the development.
Changing in their structures, their business strategies, their management philosophy etc. make the
enterprises adapt better with higher need from customers (Langfied-Smith et al., 2009).
At the first stage of integration, Vietnamese enterprises, especially SMEs, had to face with new
challenges and new opportunities. However, with some disadvantages such as small, being impossible to
borrow from the support capital resources, hiring the low qualification labor force etc. the Vietnamese
SMEs seem to have some disadvantages when competing with powerful competitors in the world such
as multi-national groups. In addition, the Vietnamese enterprises are also not familiar with modern
management techniques such as management accounting techniques. As the general terms when
participating in WTO, ASEAN or recently signed the European Union – Vietnam FTA (EVFTA),
there presents exciting opportunities in a multilateral trading partnership. But not only agreements
slashed tariffs on nearly 99 percent of all Vietnamese exports to the EU, it also means measures have
also been taken to ensure that the FTA stays updated in the face of future agreements on both sides,
and take off almost tariff barriers. It makes the commercial exchanges become easier and more
convenient, but it also means that the competition becomes more drastic.
When business environment has been changed to catch up the global development, Vietnamese

management should implement new management techniques such as management accounting
techniques in order to increase their competitive advantages. But with the history of late conversion
toward market economy, the management accounting subject just has been taught in Vietnam since
beginning of 90 of 20th century. So that almost of Vietnamese enterprises, especially SMEs, seems far
from familiar with the use of management accounting. Through some recent preliminary surveys, we see
that the use of management accounting in Vietnamese SMEs still have a lot of obstacles. And it leads to
the result that when being interviewed, almost manages admitted that they feel reluctant in
implementing management accounting techniques in their business management. Besides, the
implementing of management accounting in Vietnamese SMEs are impacted by some factors such as
size, culture, cost etc. So the study about which factors impact to the use of management accounting in
Vietnamese SMEs will contribute greatly not only academic filed but also practical application among
business communities. So that is the reason we chooses the subject as “Factors impact to the
implementing of management accounting in small and medium enterprises in Vietnam”.
2. Research objectives and research questions


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Thesis aims to identify and measure factors, which impact to the use of management accounting
techniques in Vietnamese SMEs. The findings will be discussed to suggest some solutions in order to
enhance the possibility of implementing management accounting techniques in Vietnamese SMEs. It
will help Vietnamese SMEs improve their competitive capability in the flat world as the trend of
globalization.
To achieve the objectives, there are two questions being raised as below:
Question No.1: The current implementing of management accounting in Vietnamese SMEs?
Question No. 2: Which factors impact to the implementing of management accounting in Vietnamese
SMEs? How measurement is their impacts?
3. Research objects
The thesis researches the Vietnamese SMEs who had implemented, had been implementing or
intend to implement management accounting techniques. Throughout these subjects, we will identify
and measure factors, which impact the implementing of management accounting in Vietnamese

SMEs.
4. Scope of research
Even there are so many factors, which can impact to the use of management accounting
techniques in SMEs in the world, but we focuses on some specific factors, which seem appropriate
with Vietnamese economy characteristics. In addition, due to the limitation of time and recourses, we
just focus the locals including Hochiminh City, Hanoi and other provinces nearby, some small
provinces in Middle etc. This sample will help to diversify the different corporate cultures, size,
qualification of labor force etc. The time to conduct the surveys is from January to December of 2015.
5. Research methodology
Thesis concurrently uses qualitative and quantitative research. Content of the methodology
shall be presented in more detail in chapter 3 of this summary.
6. Contribution of the thesis
The research results of the thesis have contributed at a certain level to theoretical and practical
aspects of public sector accounting include:
(1) Academic contribution: By summarizing cases of the implementing of management accounting
in small and medium enterprises in the world and in Asian area, and from these cases there are
some lessons will be learned for the use of management accounting in Vietnam.
Based on some research models in the prior researches, we have collected some factors, which
are considered to be appropriate with Vietnamese SMEs characteristics. After discussion with
experts through deep interviews, there are some new factors are added and measured with the
results showing that these factors having significant impact on the use of management
accounting in Vietnamese SMEs. And this result should be a reliable source of reference for
related researches in coming future.


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(2) Practical contribution: By using quantitative methodology, we have identified and measured
factors, which impact to the use of management accounting in small and medium enterprises in
Vietnam. Through the findings, results have been discussed and recommendations have been
suggested to contribute some comprehensive solutions to increase the possibility of the use of

management accounting in small and medium enterprises in Vietnam.
7. Structure of thesis
The thesis includes 5 chapters in addition to introduction and appendix:
 Chapter 1: Overview of the use management accounting and issues related to
 Chapter 2: Theoretical foundations of management accounting and factors impact to the use
of management accounting
 Chapter 3: Research methodology
 Chapter 4: Findings and discussion
 Chapter 5: Conclusions and recommendations

CHAPTER 1- LITERATURE REVIEW AND KEY RESEARCH AREA

1.1. OVERSEA KEY RESEARCHES
1.1.1. Overview
Small and medium-sized enterprises (SMEs) play the vital role of the business population in most
countries in the world therefore they constitute a vital force in modern information-based
economies. Anyway, it was considered that there was a lack of study about management accounting
practice in SMEs (Marriott & Marriott, 2000; Mitchell & Reid, 2000). These key researches
concerning to this issue can be summarized as below:
- The first one, there were researches about the changes and the cause leading to changes of
management accounting throughout the development stages.
- The second one, there were researches about the use of management accounting practices in SMEs.
- The third one, there were researches about the factor which can impact to the use of management
accounting practices in SMEs.
1.1.2. Consideration
By summarizing the prior related researches in the world, we has summarized the trend and the
process of management accounting from beginning to now: implementing traditional simple
management accounting techniques at beginning stage to the complicated system nowadays; the
change of management accounting in order to meet the diversified requirement of enterprises; the
reasons leading to the change of management accounting. Besides, at early stage researches had not

paid much attention on implementing management accounting in SMEs, but nowadays they begin to
focus on researching the use of management accounting on SMEs in both of developed and


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developing countries, because of strong globalization, increasing global competition and flattingworld process. The prior researches, by both of qualitative and quantitative methods, have shown how
complicated the management accounting systems were, which kind of management accounting
techniques, which factors impact to the use of management accounting in enterprises.
1.2. 1.1. KEY RESEARCHES IN VIETNAM
1.2.1. Overview
Almost researches about the use of management accounting in Vietnamese enterprises, including
SMEs, in the stage of 1997 to 2010 concluded that Vietnamese enterprises had not paid enough
attention on implementing management accounting techniques. And in some cases, they really do not
have a concept about management accounting practices, and almost of them had not had an
independent management accounting segment (Pham Van Dưoc, 1997; Tran Anh Hoa, 2003; Pham
Ngoc Toan, 2010).
1.2.2. Consideration
In Vietnam, the management accounting had been taught since 90s of 20th century and there have
been some prior researches such as:
+ Research about the direction about implementation and building the management accounting in
Vietnamese enterprises.
+ Analyzed and suggested the model of management accounting for different kind of Vietnamese
enterprises such as manufacturing enterprises, commercial enterprises, for different size etc.
Anyway, until now in Vietnam there had been lack of researches about the use of management
accounting in SMEs but only in medium and large enterprises. On other hand, almost of researches
concerning about the use of management accounting in Vietnamese SMEs had tended to use the
qualitative method, so the recommendations still have some limitation due to the practical implication.
1.3. GAP RESEARCH AND THE AIM OF STUDY
1.3.1. Determining the gap research
By synthesizing and considering prior researches in Vietnam and in the world, we have considered

that the implementing management accounting in Vietnamese SMEs plays a vital role in the
successful management. It should contribute to enhance the capable management in Vietnamese
SMEs, but in fact the rate of practical use of management accounting in Vietnamese SMEs is still
very low, especially for small and very small enterprises.
Nowadays in Vietnam there had been some researches about the use of management accounting in
SMEs but not use the quantitative and objective methods, so the recommendations still have some
limitation due to subjective thinking basing on viewpoint and experiences of researchers.
1.3.2. The aim of study
By determining the gap research above, we inherit and conduct the research about the factors impact
to the use of management accounting in Vietnamese SMEs. In addition, the study will measure by


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reliable methods about the level of impact of each factor. The study will be conducted with steps as
below:
1st step: conducting research about current situation of the use of management accounting in
Vietnamese SMEs.
2nd step: surveying and synthesizing factors impact to the use of management accounting in
Vietnamese SMEs.
3rd step: measuring the level of impact of factors mentioned above.
4th step: recommendations and suggestions will be made to enhance the possibility of the use of
management accounting in Vietnamese SMEs.
CONCLUSION OF CHAPTER 1

CHAPTER 2 - THEORETICAL FOUNDATIONS ABOUT MANAGEMENT ACCOUNTING
AND FACTORS IMPACT TO THE USE OF MANAGEMENT ACCOUNTING IN SMEs

2.1. MANAGEMENT ACCOUNTING OVERVIEW
2.1.1. Management accounting concepts
The evolution of management accounting will now be explored in terms of the changing definitions

from three major accounting bodies: The Institute of Management Accountants (IMA); the Chartered
Institute of Management Accounting (CIMA); and the International Federation of Accountants
(IFAC).
In 1981, the Institute of Management Accountants (IMA) has provided his initial definitions of
management accounting that reflect changing demands by businesses for accounting information; but
more recently, IMA has redefined management accounting as “ a profession that involves partnering
in management decision making, devising planning and performance management systems, and
providing expertise in financial reporting and control to assist management in the formulation and
implementation of an organization’s strategy” (Anthony A.Atkinson et al., 2012). The new definitions
had reflected the change in the role of management accountants evolving from a transaction and
compliance orientation (as reflected in the prior definition) to one of a strategic business partner that
helps the organizations incorporate performance management, planning and budgeting; corporate
governance processes, risk management, internal control, and financial reporting at a time of great
change; and experts in cost management methods (IMA, 2008).
In 1986, the Chartered Institute of Management Accounting (CIMA) had just declared his definition
of management accounting as the provision of information required by management for such purposes
as: the formulation of policies; planning and controlling activities of the enterprise; decision taking on
alternative courses of action; disclosure to those external to the entity (shareholders and others);
disclosure to employees; and safeguarding assets (CIMA, 1986). Later, in process of CIMA’s revised
version of management accounting terminology, the role of management accounting had moved


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forward to a broader one. CIMA had redefined management accounting as the application of the
principles of accounting and financial management to create, protect, preserve and increase value for
the stakeholders of for- profit and non-profit enterprises in the public and private sectors. CIMA
(2005) further elaborated the definition of management accounting to emphasize that management
accounting is an integral part of management, which requires the identification, generation,
presentation, interpretation and use of relevant information. CIMA’s changed definitions show that
management accounting has moved closer to senior management concerns with a focus on efficiency,

strategic planning and value creation. And now since 2015, the new definition about management
account of CIMA is only simple as “Management accounting combines accounting, finance
and management with the leading edge techniques needed to drive successful businesses” (CIMA,
2015).
In 1989, IFAC defined management accounting as “ the process of identification, measurement,
accumulation, analysis, preparation, interpretation, and communication of information (both
financial and operating) used by management to plan, evaluate, and control within an organization
and to assure use of and accountability for its resources …” (IFAC, 1989). This definition was
similar to the one defined by IMA. However, only nine years later the scope had widened
considerably in new definition, in which management accounting was viewed as an activity that is
interwoven in the management processes of all organizations. Management accounting refers to
that part of the management process, which is focused on adding value to organizations by attaining
the effective use of resources by people, in dynamic and competitive contexts. And till to 2002,
management accounting was redefined as “…refers to the process and techniques that focus on
effective and efficient use of organizational resources, to support managers in their task of enhancing
both customer value and shareholder value” (Langfield-Smith et al., 2009, 6).
According to Vietnamese Accounting Law issued in 2003, management accounting is defined as
“…collecting, handling, analyzing and providing information about economic, finance according to
required management/making decision within internal enterprises” (Vietnamese Accounting Law
issued, 2003).
2.1.2. The role and function of management accounting
Nowadays, management accounting plays a vital role in management. According to IFAC, the role of
management accounting plays as a part, which is impossible to take part from process of management.
It provides essential information to control enterprise’s present activities, defines strategy and tactical
plans, maximizes the use of resources, measures and evaluate performances etc. (IFAC, 1999).
Almost theories of management accounting mentioned about planning, controlling, and performance
evaluating, improving and deploying competitive strategy, making decision etc. were major role of
management accounting in order to obtain the enterprise’s objectives (Scapens, 1991; Weetman,
1999; Upchurch, 1998; Atkinson &ctg., 2001). And according to Ernst & Young and IMA
management accountants were considered to become business partners, not as bookkeepers anymore

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like before, and they focused to more and more about main strategy, reaching out of financial
accounting (Ernst & Young and IMA, 2003).
Recently, in their research about modern management accounting, Valančienė and Gimžauskienė
(2007) studied the changes in the role of management accounting. Their conclusion indicated that the
role of modern management accounting has extended from data accumulation to providing
information as to the progress of strategy implementation. And as a result, the role of management
accounting has changed focus from being just directed toward shareholders to delivering customeremployee-shareholder integrated solutions. Those solutions are focused on permanent monitoring,
measurement and management of strategic advantages and future outcomes (translation of strategy
into appropriate set of goals and measures, strategy mapping).
2.1.3. Content of management accounting
Management accounting system is information system, which provides information to enhance
making decisions for creating value and controlling resources. It helps to make a comprehensive
information system including regular information and special information for evaluating, measuring,
planning and controlling one or more specific product or service. So management accounting system
is impossible to provide all kind of information management, instead of, some kinds of information
must be gone seeking advisory from outside parties (Langfield-Smith, 2012, 6-9).
According to ACCA (ACCA F5 – 2014) the content of management accounting can include in four
parts: cost and management accounting techniques, decision techniques, budget and control,
performance evaluation.
2.2. CHARACTERISTICS OF SMEs
2.2.1. SMEs concept
Until now, there still has been no consensus internationally on a definition of what constitutes an
SME. Variations exist between countries and industries. SMEs are defined by a number of criteria
such as location, size, age, structure, organization, number of employees, sales volume, net assets,
ownership structure, innovation and technology (Deros et al., 2006).
In Vietnam, according to the Article No. 56/2009/ND-CP of Government issued June 30th, 2009;
SMEs have been divided by industries, including: agriculture, forestry and aquiculture; industry and

construction, commercial and service. Besides, main criteria used to divide SMEs in Vietnam are
number of employees and capital, but it is not mentioned this number of employees is an average or
concrete number at the time of classification (because this criteria is continually changed in a whole
business year); and the capital is also not mentioned this is registered capital or average working
capital of enterprise.
2.2.2. Characteristics of Vietnamese SMEs
In general, Vietnamese SMEs have some specific characteristics as below: major private enterprises,
low management capability and low qualification labor force, applying mainly backward


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technologies, low productivities, low ability of reaching new market, small size (for number of
employees and financial resources)
2.2.3. Current disadvantages, advantages when implementing management accounting in
Vietnamese SMEs
In general, with stable political regime, almost of Vietnamese SMEs have not been affected by the
change from micro-macro economic policy. In coming future, many FTA will become effective such
as TPP agreements, ASEAN and EU agreements, RCEP agreements, Vietnam – Korea agreements,
Vietnam – Japan agreements etc. This will create so many business opportunities for Vietnamese
SMEs. Besides, Vietnamese labor forces are young, well-trained in universities, colleges. This will
help Vietnamese SMEs will bring new blood in to management board of enterprises with reasonable
prices.
However, there are still some disadvantages due to the global business difficulty, so Vietnamese
SMEs also face to challenges and difficulty. The difficulty not only comes from outside but also from
inside enterprises due to lack of management capability. The social-economic in 2014 in the world the
global business had recovered slowly after the global economic depression. In addition, the foreign
trade turnover between Vietnam and Russia, EU countries etc. had been affected by the unstable
policy situations.
2.3. FACTORS IMPACT TO THE USE OF MANAGEMENT ACCOUNTING IN
ENTERPRISES

From the results of prior researches concerning about the implementing management accounting in
the world, there are some factors being synthesized to impact to the implementing management
accounting as below:
Firstly, size of enterprise is significant factor being considered to impact to structure and arrangement
control inside enterprises.
Secondly, many researchers also mention market competition factor, even though the results are
opposite.
Thirdly, decentralization of structure had been tested and indicated that if enterprise have applied
decentralization they always choose the more complicated management accounting techniques
centralized one.
Fourthly, customer power factor was measured and indicated that when enterprise have to face with
more powerful customer resource, enterprise must implement more complicated management
accounting techniques in order to improve the process of making decision and controlling and help
them keep their demanding customers satisfied (Abdel-Kader and Luther, R., 2008).
Fifthly, factor of the rate of foreigner-own in enterprise was measured and indicated that if there is the
participation of foreign shareholder, enterprise will intend to use more management accounting
techniques.


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Sixthly, accordingly to the contingency theory, factors such as advanced manufacturing technology
(AMT), total quality management (TQM); just in time … are important factor which impact to the
implementing management accounting.
Seventhly, factor of perceived environmental uncertainty impact o to the implementing management
accounting in the way that if enterprises perceive a higher degree of environmental uncertainty it will
adopt more sophisticated management accounting techniques than the one that perceives lower
environmental uncertainty.
Eighthly, when studying about the impact of factor organizational culture to the implementing
management accounting, AlperErserim (2012) has pointed out that there were some kinds of
organizational cultures such as supportive organizational culture, innovative organizational culture,

goal-oriented organizational culture which impact to the implementing management accounting.
Ninthly, when studying about the factor of business strategy, many researchers have pointed out that
there was the impact of this factor to the implementing management accounting (Langfield-Smith,
1998b; Baines and Langfield-Smith, 2003; Perera et al., 2007; Tuan Zainun Tuan Mat and Malcolm
Smith, 2014).
Tenthly, in SMEs, the existence of qualified internal accounting staff can be a significant factor,
which impacts to the implementing management accounting.
2.4. GROUNDED THEORY RELATED TO THE FACTORS IMPACT TO THE USE OF
MANAGEMENT ACCOUNTING
During last decades, there had been some researches basing on theories to explained or indicted the
association between factors and the use of management accounting in enterprises. In this study, we
will choose four theories concerning to the purpose of thesis, including cost - benefit theory,
contingent theory, agency theory and social philosophy theory.
2.5. COMPARISON ABOUT CONTENTS, CONDITIONS, FACTORS IMPACT TO THE
USE OF MANAGEMENT ACCOUNTING
In general, when implementing management accounting, SMEs tend to use the simple management
accounting techniques, others such as ABC, variance analysis, market research and other highertechnical techniques are used by few large enterprises (Druty et al., 1993). Almost of SMEs usually
focus on numbers in reports but ignore evaluating; and they use Microsoft Excel instead management
information system. As a result of survey, more than a half of SMEs admit that they not apply the
strategy management or non-financial ration etc. Instead of, they evaluate highly the role of simply
tools such as budget, break-even point, performance rations etc.
As usual SMEs are always lack of resources, so they rarely hire a full-time professional management
accountant. Instead of, this employee usually holds more than one job or he/she is lack of competence
of professional management accountant. According to the CIMA’s research (Michael Lucas et al.,
2013) about the management accounting practices of UK SMEs has indicated that in small enterprises
the management accounting was usually done by owner-manager/entrepreneur. Meanwhile, with their


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power, large enterprises usually organize independent management accounting department, including

specific human resources, so the performance is usually better.
The lack of resource not only impact to the management accounting human resources but also impact
to the data system. It leads to the lack of complicated process in management accounting or lack of
ERP in providing data for accounting activities. As a result, the information provided to managers is
not adequate to make decisions, so its value is low in supportive making-decision for planning and
controlling. Besides, lack of professional advices can lead to making financial decisions basing on
individual experiences (Michael Lucas et al., 2013).
The lack of resource also leads to lack of direction about strategy or following up the process of
deployment strategy. Because of limitation on size, capability so SMEs usually tend to focus on daily
activities and ignore their long-term direction. So it leads to inevitable results that investment
decisions are always made by managers’ experiences. They also ignore long-term budgets, and this
action will cause to damage to long-term survival (Daniela Wiedemann, 2014).
Other problem of implementing management accounting in SMEs is the aware/knowledge of owners
about contribution of management accounting to the success of SMEs. Many owners just want to keep
back their control to their enterprises, so they do not want to hire professional management
accountants. They want to do analysis by themselves because they consider that management
accountant’s report may be so summary and will not reflect the comprehensive business activities of
enterprises. In addition, when implementing management accounting in SMEs, there always exit the
doubt from both managers and employees. It comes from the feeling being loosing control, or
sometimes they feel not happy when receive more jobs without bonus etc. (Michael Lucas et al.,
2013).
CONCLUSION OF CHAPTER 2

CHAPTER 3: RESEARCH DESIGN

3.1. RESEARCH PROCESS
3.1.1. Research design
Research process includes two main steps: (1) general research and (2) detailed research.
Firstly, in general research we apply the qualitative methodology in order to find out factors
(variables) which can impact to the use of management accounting in Vietnamese SMEs, and then

adjust and add more factors by the techniques group discussion and interviewed experts.
Secondly, in detailed research all of variables are measured by quantitative method by collecting data
through choosing samples and sending questionnaires. Using the software SPSS 20.0 to check the
model research, theoretical model and hypothesizes with EFA method.
There are some methods, which use to solve the questions as below:


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(1) To summarize and analyze the current implementing of management accounting in
Vietnamese SMEs, we have summarized prior researches in the world and Vietnam. Through
this summary, we will gather factors which impact to the use of management accounting in
Vietnamese SMEs by in-depth interview method, discussion … And then adjusting these
factors to meet the characteristic of Vietnamese SMEs.
(2) To solve the question “Which factors impact to the implementing of management
accounting in Vietnamese SMEs? How measurement are their impacts?” the study have
based on the finding in the 1st step in general to test the model research, measure all variables
in the model through regression model and exploratory factor analysis (EFA). After that,
basing on the findings we will recommend and suggest some solutions in order to improve
the possibility of implementing management accounting in Vietnamese SMEs.
3.1.2. Frame research
The frame research of thesis is defined as below:
+ Defining the research content: the research content is defining factors, which impact to the
implementing management accounting in Vietnamese SMEs. And then continuing testing, measuring
the level of impact for each factor.
+ Grounded research theory: basing on grounded research theories concerning to the implementing
management accounting in enterprises including cost benefit theory, contingent theory, agency theory
and social philosophy theory. Besides, this study also refers to other prior researches in the world,
which concern to the implementing management accounting in SMEs.
+ Building the research model: since defining the research content and summarizing the grounded
theories, prior researches, we also conducted the in-depth interviews with experts. Basing on

discussion, the factors will be gathered and model research will be adjusted to mat with characteristic
of SMEs, and then continuing the measurement the research model by data collected.
+ Applying qualitative method: some techniques such as in-depth interview, ask experts for their ideas
etc. in order to improve the model research. And then scales were built and tested for conducting the
quantitative method.
+ Quantitative method: basing on suggested model research and scales, we test again the reliabilities
of scales by testing their Cronbach Alpha with software SPSS 2.0 with Exploratory Factor

Analysis.
Process of studying factors which impact to the implementing management accounting
in Vietnamese SMEs

Grounded
theories

Draft
scales

Group discussion
(n = 9)

Formal
scales


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Quantitative (n = 290)
Testing the reliability
Cronbach Alpha

- Testing Cronbach Alpha
- Eliminating variables with
small reliability

Exploratory Factor
Analysis

+ Testing cumulative %.
+ Eliminating variables with
small reliability

Regression analysis

3.2.

RESEARCH

MODEL

OF

FACTORS

IMPACT

TO

THE

IMPLEMENTING

MANAGEMENT ACCOUNTING IN SMEs
Basing on prior researches in the world about factors impact to the implementing management
accounting in SMEs, we build the research model including 10 suggested factors as: decentralization
of structure; customer power; the rate of foreigner-own in enterprise; industry ranges such as
advanced manufacturing technology (AMT), total quality management (TQM), just in time; perceived
environmental uncertainty; organizational culture; business strategy; size of enterprise; qualified
internal accounting staff and market competition.
3.3. QUALITATIVE METHOD
3.3.1. Qualitative method design
To conduct the study, we have made some in-depth interviews with purpose of determining factors
which impacts to the implement management accounting in Vietnamese SMEs. The 09 experts who
join the discussion will be the professors in universities, Chief Accountant, CEO, CFO, consultant
advisor etc. who have long time experiences in implementing management accounting.
3.3.2. Experts’ discussion
After discussion, the factors were summarized and determined that impacting to the implement of
management accounting including: size of enterprise, cost of implementing management accounting,
supportive organizational culture, qualified accountants, business strategy, state-own rate, market
competition and owner/CEO’s perception. In addition, experts also discussed about scales of
possibility of implementing management accounting in Vietnamese SMEs.


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3.3.3. Research hypothesis design
Basing on suggested research model above, combining with results of experts’ discussion we suggest
08 hypothesis concerning to 8 factors size of enterprise, cost of implementing management
accounting, supportive organizational culture, qualified accountants, business strategy, state-own rate,
market competition and owner/CEO’s perception as below:
Hypothesis H1 – SMEs with larger size will have higher possibility of implementing successfully

management accounting.
Hypothesis H2 – The required cost of implementing management accounting in SMEs is low will
lead to higher possibility of implementing successfully management accounting.
Hypothesis H3 – SMEs with strong supportive organizational culture will have higher possibility of
implementing successfully management accounting.
Hypothesis H4 – SMEs with qualified accountants will have higher possibility of implementing
successfully management accounting.
Hypothesis H5 – SMEs with flexible business strategy will have higher possibility of implementing
successfully management accounting.
Hypothesis H6 – SMEs with state represents not 51% of capital or holding key position in SMEs will
have higher possibility of implementing successfully management accounting.
Hypothesis H7 – SMEs operate in higher competition will have higher possibility of implementing
successfully management accounting.
Hypothesis H8 – SMEs with owner/CEO has knowledge and perceive highly about management
accounting will have higher possibility of implementing successfully management accounting.
3.4. QUANTITATIVE METHOD
Basing on discussion with experts, we conduct to making the scales, preparing the questionnaire and
survey. After collected and cleaning data, analysis was conducted with software SPSS 20. The
number of independent variables is 29, so the formal sample sizes of 290 feedbacks are appropriate
for running analysis. The objectives of the survey are financial directors, CEO, Chief accountant or
managers who have involved to the implementing management accounting in SMEs.
The model is as below:
POSSi= α + β1SIZEi + β2COSTi + β3CULTi+ β4QUALi + β5STRAi + β6STATi
+β7COMPi + β8PERCi +ε
With:
- POSSi: the possibility of implementing management accounting of SMEi
- α: constant term
- βi: coefficient of variables

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- εi: Residual
The variables include SIZEi, COSTi, CULTi, QUALi, STRAi, STATi, COMPi and PERCi will
represent for the size of enterprise (SIZE), cost for implementing management accounting in SMEs
(COST), organizational/corporate culture (CULTURE), the qualification of accountant in SMEs
(QUALIFICATION), business strategy (STRATEGY), owning rate of state in SMEs (STATE OWN),
market competition (COMPETITION) and owner/CEO’s perception about management accounting
(PERCEPTION) of SMEi.
CONCLUSION OF CHAPTER 3
CHAPTER 4 - RESEARCH RESULTS AND DISCUSSIONS

4.1. RESEARCH RESULTS
4.1.1. Research results about relation between the use of management accounting and the size of
enterprises
Among 186 Vietnamese SMEs confirming that they have implemented management accounting there
are 149 medium enterprises, equal to 80.1%; 36 small enterprises equal to 19.4% and 1 very small
enterprise equal to 0.5%.
However, among 104 Vietnamese SMEs confirming that they have not implemented management
accounting there are 66 very small enterprises equal to 63.5%, 27 small enterprises equal to 26% and
11 medium enterprises, equal to 10.5%.
As the result, the value of Sig. = 0.00 < 0.01 so the research confirms that the use of management
accounting and factor of size have associated with 99%.
So as the research results, there is a positive association between the size of enterprises and the use of
management accounting. As enterprises' size increases, they are more likely to increase the extent of
usage of management accounting techniques due to their complicated business activities. These are
not surprising results because as usual, larger enterprises are expected to use more than smaller ones.
One for this reason is that larger enterprises are likely to have more financial resources to cover
accounting information's costs than smaller one.
4.1.2. Quantitative research results
The degree of importance of factors

Independent Variables

Value

%

F8

0.940

19.16

F1

0.916

18.67

F5

0.892

18.19

F2

0.843

17.19

F7

0.562

11.46


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F4

0.548

11.17

F3

0.204

4.16

Total

4,905

100

So as a result 07 of factor including owning rate of state in SMEs (STATE OWN), market
competition (COMPETITION), organizational/corporate culture

(CULTURE), owner/CEO’s

perception about management accounting (PERCEPTION), the size of enterprise (SIZE), cost for
implementing management accounting in SMEs (COST), and business strategy (STRATEGY) will
contribute 19.16%, 18.67%, 18.19%, 17.19%, 11.46%, 11.17% and 4.16% on impact of implemented
management accounting in Vietnamese SMEs.
However, due to the limitation of time and resource, the result of this study, with 07 factors, just only
reflect about 34.8% the problem of what impact to implemented management accounting in
Vietnamese SMEs, so there are still some other factors should be found out in coming future research.
4.2. DISCUSSIONS:
4.2.1. For factor of owning rate of state in SMEs (STATE OWN):
The result just proved that SMEs with state-own rate represents not 51% of capital or representative
state is not appointed to hold key position such as CEO/Financial director/Chairman etc. in SMEs will
have higher possibility of implementing successfully management accounting.
4.2.2. For factor of market competition (COMPETITION):
The result just proved that if SMEs operate in higher competition such as competition on market
share, prices or increasing of number of competitors etc. would make the possibility of implementing
successfully management accounting higher.
4.2.3. For factor of organizational/corporate culture (CULTURE):
The result just proved that if there are supports from managers, the support among employees or the
high agreement inside SMEs, it will enhance higher possibility of implementing successfully
management accounting; and they are characteristic of strong supportive organizational culture or
oriented organizational culture.
4.2.4. For factor of owner/CEO’s perception about management accounting (PERCEPTION):
The result just proved that SMEs with owner/CEO who know well and perceive highly about
management accounting will have higher demand about the use of management accounting, and/or
accept the higher cost for implementing management accounting. This will lead to the higher
possibility of implementing successfully management accounting.
4.2.5. For factor of the size of enterprise (SIZE):
The result just proved that SMEs with larger size (with the revenue, number average of employees,
number of independent department) will have higher possibility of implementing successfully

management accounting.


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4.2.6. For factor of cost for implementing management accounting in SMEs (COST):
The result just proved that if cost of implementing management accounting in SMEs (including cost
foe techniques, cots for consultant) is low, it will lead to higher possibility of implementing
successfully management accounting.
4.2.7. For factor of business strategy (STRATEGY):
The result just proved that if SMEs apply business strategies such as producing specific according to
customers’ demand, supply after-sale services, make quick quantity of products etc., it will have
higher possibility of implementing successfully management accounting.
4.3. RECOMMENDATED SOLUTIONS FROM RESEARCH RESULTS:
Basing on findings above, we has suggested these solutions in order to enhance the possibility of
implementing management accounting in Vietnamese SMEs. These solutions will apply to
Vietnamese SMEs according to three groups: very small enterprises, small enterprise and medium
enterprises.
4.3.1. Solutions for very small enterprises:
According to the survey, the implementing management accounting in very small enterprises become
failed or difficult to implement due to some negative impacts as below:
+ The size is so small (number of employees is under 10), as a result it leads to difficulty when
implementing management accounting;
+ The owner/CEO’s perception about management accounting: they always do not perceive highly
about management accounting techniques (as usual the enterprises were built from small sole
enterprises, and the owners always make decision by themselves);
+ Business strategy: they always do not have obvious strategy, or sometimes do not care about
strategy (they only focus on daily business activities).
So instead of implementing formally management accounting, we suggest that owner/CEO should
update knowledge about management accounting in order to run better management. Besides their
traditional business experiences, they should know about some simple management accounting

techniques in order to have plan providing against/ or maybe can act quickly for unexpected business
problems. This can help them to decrease opportunity cost due to untimely decisions or irrelevant
decisions (Michael & Malcolm, 2013). In addition, very small enterprises should focus on their
advantage that the number of employees is small, so if they begin building their supportive
organizational culture they will gain best benefit when they grow and become small or medium
enterprises.
4.3.2. Solutions for small and medium enterprises:
With the number of employees is about 10 to 300, small and medium enterprises should implement
flexibly from traditional management accounting techniques to complex techniques or even strategic


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management accounting techniques. In order to enhance the possibility of implement management
accounting they should remind about some solutions (concerning to survey results) as below:
+ Market competition
The survey results indicated that even though market competition is external factor, but it impacts
strongly to the possibility of implement management accounting. In fact, since end of 2015
Vietnamese SMEs have already faced with serious competition among ASEAN community, and then
when TPP come true in 2016, it will bring together great business chances and huge competition. So
we suggest that Vietnamese enterprises should propagandize internally to make their employees
understand and sympathize, stay side by side with enterprise when facing with more powerful FDI
enterprises. And competition also becomes motive power to make employees and managers perfect
themselves by updating the modern techniques such as management accounting techniques.
+ Building strong supportive culture (family culture)
The survey results indicated that this factor also impacts strongly to the possibility of implement
management accounting. As mentioned above, if Vietnamese SMEs can build their strong supportive
culture, it will help to them to enhance the possibility of implement management accounting,
especially when they must face with huge stress recently coming from globalization.
A strong supportive culture means that enterprise will have high agreement among employees about
common goal, business strategy, or sharing about short-term goals. Because having high agreement, it

is easier to share about goal, criteria for performance evaluation. And then it will help to implement
successfully management accounting techniques such as budget system, responsibility center (if
having) in order to improve their performances.
+ Change the owner/CEO’s perception about management accounting
With the third range (after two factors mentioned above), this factor also contributes to the impact to
the possibility of implement management accounting. As discussion prior parts, due to history of late
joining to market economy, almost of Vietnamese CEO of SMEs come from small sole enterprises,
individual production etc. so they have limit on management knowledge. It is real barrier to
implement management accounting techniques due to lack of knowledge. So we suggest that they
should improve their management knowledge as their top priority. When the owner/CEO understand
well about management accounting techniques and perceive highly about their benefits, they will
invest and encourage or ask their employees to join during the process of implement management
accounting.
+ Change the size of enterprise
There were so many prior researches in the world had indicated that larger enterprises would enhance
the successful possibility of implementing management accounting. And the results we gained from
this survey once again confirm it: Vietnamese SEMs with larger size will be easier to implement
successfully management accounting than smaller one.


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But the problem here is Vietnamese SMEs cannot grow voluntarily, instead of, they should grow by
M&A or unite together with other similar industry. This M&A will help them to have new size and
meet the financial criteria when doing business with foreign partners or when come to ask to borrow
from banking system (now almost of Vietnamese SMEs have faced with problem that they cannot
borrow from the bank due to so small size, even though they have potential orders).
In addition, recently there was a trend of M&A by powerful multinational group investing into
Vietnam. As a result, Vietnamese SMEs have to face with two options: sell their shares to have
additional capital and learn for their management experiences or looking for the similar Vietnamese
partners to co-operate. This is considerable option because it can help Vietnamese SMEs to avoid

acquired by their partners.
Other thing must be considered is that when small enterprises grow and reach to the size of medium
ones, almost of them have common characteristic such as having some independent branches,
decentralization etc. So they should prepare well from the collecting data stage, processing input data
and provide management reports/information to managers.
+ Implement management accounting with reasonable cost
For the small and medium enterprises, the cost of implementing management accounting is not so
important barrier; anyway, they also should consider about the reasonable cost and the benefit gained.
But the result of survey indicated that if the cost is low could help to motivate Vietnamese SMEs to
choose implementing management accounting. There are two things considered here are cost for
human resources and cost for equipment and consultant fees.
For human resources, it seems no need to require an independent management accounting segment in
accounting department. Instead of, we suggest that they should combine both of financial accounting
and managerial accounting, in which the past data of financial accounting will help and serve for
managerial accounting. But we should have at least one managerial accountant who is in charge of
processing management accounting information. And because this man should contact with almost
departments in enterprises, he/she must have be a vice manager of accounting department. In addition,
the successful implement of management accounting should be gained only if almost of managers of
department come to work together.
For computerizing in accounting system, it seems that application of computers becomes urgent
nowadays due to fast and convenient of computerize systems. It can help to have quick and relevant
information in respond of complex business environment. But it is up to the financial capability;
SMEs can choose the most suitable software for themselves, with the least characteristic as below:
Firstly, ensuring that the cost classification being done conveniently and smoothly. It will help to
collect the data or analyze about performance, calculating sale price etc. … smoothly.
Secondly, besides the data security SMEs should also pay attention on decentralization of information
to make sure the quick access, such as warehouse, accountant, purchasing but also sale and marketing


21

can access this kind of data. This will help information management to go throughout and smoothly
and increase the effective control.
+ Building flexible business strategy:
The survey results indicated that this factor impacts weakly to the possibility of implement
management accounting, This result is reasonable if we consider the fact that almost of Vietnamese
SMEs, especially very small and small one, do not care about business strategy but daily operations.
But nowadays, when facing with huge competition resulting from globalization, Vietnamese SMEs
should change their mind and build themselves appropriate long-term business strategy.
In order to help operations to be gone smoothly in right direction, SMEs should orient clearly their
business strategy basing on their advantages and disadvantages. And one of outstanding advantages of
Vietnamese SMEs is the flexibility, so they can change business activities easily to meet the demand
of niche market. So if SMEs can choose the strategy, which produces specific products as required
demand, improving after sale service etc.… And they will gain advantages than big and enterprises
with cumbersome structures. And with the strategy mentioned above will make pressure implement
more smoothly.
CONCLUSION OF CHAPTER 4
CHAPTER 5 – CONCLUSIONS AND RECOMMENDATIONS

Implementing the management accounting techniques in enterprises can bring a lot of benefits
concerning about enhancement performance. In the world there have been many researches have
proved this conclusion. Basing on results of study in chapter 4, we will recommend and suggest
solutions in order to enhance the possibility of implementing management accounting in Vietnamese
SMEs.
5.1. CONCLUSION
Throughout summarizing prior researches in the world and in Vietnam, we just confirmed again that
implementing management accounting techniques is very important for Vietnamese SMEs. Because
of important benefit of implementing management accounting so we have conducted analysis to find
out which factors impact to the implementing management accounting, and then recommend solutions
basing on findings. By mixing methods such as qualitative and quantitative method, we have
determined some factors including owning rate of state in SMEs, market competition,

organizational/corporate culture, owner/CEO’s perception about management accounting, the size of
enterprise, cost for implementing management accounting in SMEs, and business strategy.
5.2. RECOMMENDATIONS
5.2.1. Recommendations for related government offices
Until now the process of privatization of state-owned enterprises have been kept continuing, but it not
met the requirement from investors and being far from Government’s guidance. So in coming future,


22
the Government should give some concrete and drastic guidance in order to push harder the
privatization and increase the state-owned enterprises’ performances. In addition, in the late of
integration process, the government should decrease the own-rate in these enterprises below the
control level, cut-off the administrative orders inside management work in these enterprises. This is a
premise for Vietnamese SMEs to have a good chance for speeding up at the stage of late privatization
because of acquiring the modern management techniques in the world.
5.2.2. Recommendations for assistant centers for SMEs
The assistant centers for SMEs such as VCCI should organize classes with supportive fees policy in
order to improve Vietnamese owners/CEOs. Besides, they should invite foreign experts or overseas
compatriots who have good management accounting experiences come to share their practical
experiences about how to implement successfully management accounting. It will help Vietnamese
SMEs management board learn quickly and more easily.
5.2.3. Recommendations for Vietnamese SMEs
For the managers in SMEs, the change of their thinking is very important and necessary. They should
learn and update knowledge by themselves continuously, including management accounting
knowledge. In addition, they should co-ordinate with universities/colleges in order to exchange
concretely about their need concerning to labor forces or qualified accountants. Last but not least, they
should choose and build an appropriate own supportive culture by themselves.
5.2.4. General recommendations for suggested management accounting techniques
Implementing management accounting is always an effective solution to enhance performance of any
enterprises. However, they should consider the appropriation of size, business strategy, qualification

of accountants etc. with appropriate management accounting techniques. Basing on consideration,
they will overcome the philosophy of costly implementing management accounting and choose the
best solutions to improve their performance. In addition, when considering about techniques, they
should consider also about both of short term and long-term development. This will help them to feel
more convenient when grow size in future, because when growing up, the techniques must be changed
appropriately up to enterprises’ development.
5.3. SOME LIMITATIONS AND PROPOSED RESEARCH DIRECTIONS IN THE FUTURE
5.3.1. Limitations
The aim of study is find out factors which affect to the use of management accounting in Vietnamese
SMEs, but as result of research the findings are only representative about 34.8% variables, so the
other as 65.2% variables is still not found out.
Besides, the corporate culture factor is complicated factor, which can be explained by a lot of
variables according to different levels and different types for each enterprise. But for the limitation of
time and scope of research so we have only choose some representative variables of this factor.
5.3.2. Proposed research in coming future


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Continuing running researches with more factors being considered to impact to the use of
management accounting in Vietnamese SMEs. In addition, expanding the scope of research to the
strategic management accounting technique when the process of integrating has been more and more
strained formidably.
CONCLUSION OF CHAPTER 5
CONCLUSION
SMEs in Vietnam have been considered like “a backbone of economy”, and this statement means
enough for how important it contributes to economy. However, with their inherent limitation,
Vietnamese SMEs may meet some serous troubles when Vietnam integrates deeply in global business
community. So in order to improve their competitive advantages, they should improve their capable
management for increasing the business performance. The study findings indicates that there are
seven groups of factors which impact to the use of management accounting in Vietnamese SMEs;

including: (1) sate-own rate in enterprises, (2) market competition, (3) corporate culture, (4)
perception of owners/CEO, (5) size, (6) cot of running management accounting and (7) business
strategy. And basing on findings, some recommendations have been suggested for concerning parties
such as owners/CEO of enterprises, assistant center for SMEs, government offices etc.… refer to have
some appropriate solutions in order to increase the ability of implementing management accounting in
Vietnamese SMEs.


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LIST OF RESEARCH PROJECTS HAVE BEEN PUBLISHED BY AUTHOR RELATED TO
THE THESIS
1. Tran Ngoc Hung, 2011. Contribution to orient building budget for Vietnamese trade and
service enterprises. Asia-Pacific Economic Review, Vol. 331 (6) – 2011
2. Tran Ngoc Hung, 2012. The economic Cooperation between Korea and Vietnam – The reality
and improving solution. Proceeding of International Conference between National ILAN
University and Hochiminh University of Industry, June 2012
3. Tran Phuoc, Tran Ngoc Hung, 2013. Obstacles to successful implementation of Balanced
Scorecard to small and medium enterprises in Vietnam: current situation and solution.
Proceeding of International Conference between Soongsil Academy and Hochiminh
University of Industry, December 2013
4. Tran Ngoc Hung, 2014. Building budget for commercial – service enterprises in Vietnam.
Journal of Industrial University, Vol. 2 (14) – 2014
5. Tran Van Tung, Tran Ngoc Hung, 2014. Accounting information of trade enterprises in
making decision progress. Economy & Forecast Review, Vol. 18 (9) – 2014
6. Tran Phuoc, Tran Ngoc Hung, 2014. Impact of Government policies and regulations on the
development of international retailing and services – case study of Vietnam market.
Proceeding of International Conference in Kasetsart University Bangkok, Thailand.
November 2014