Accounting Practices and Organizational Performance: Evidence from Small and Medium Scale Enterprises in Sri Lanka

Keywords: Accounting Practices, Organizational Performance, Record Keeping, Budgeting Practices

Abstract

Over the past few decades, the researchers demonstrate consistent effort in investigating the Small and Medium scale Enterprises (SMEs). This sector plays a crucial role in the economic growth in both developing and developed countries. The research investigated how accounting practices influence the organizational performance of small and medium scale enterprises in Sri Lanka. Accounting practices consists of record keeping, budgeting practices and payroll accounting whereas organizational performance is measured by organizational goal achievement, organizational effectiveness and organizational efficiency records. A structured questionnaire was used to collect the primary data from 75 SMEs which were selected by means of the random sampling technique. The results revealed that among the accounting practices, only record keeping and budgeting practices have significant positive influence on organizational performance of Small and medium enterprises in Sri Lanka. It can be recommended that academic institutions and other bodies which are responsible for SMEs should organize training programmes for those operators who do not have the technical knowhow in the field of accounting to come to grips with it and also provide some SME-specific accounting guidelines and template forms for capturing accounting practices for the operators to use.

JEL Classification: M41.

Downloads

Download data is not yet available.

References

Aremu, M. A., & Adeyemi, S. L. (2011). Small and medium scale enterprises as a survival strategy for employment generation in Nigeria. Journal of sustainable development, 4(1), 200.

Amaoko, G. B. (2013). Accounting practices of SMEs: A case study of Kumasi metropolis in Ghana. International Journal of Business and Management, 8(24), 73-83.

Abeygunasekera, A.W. J. C., & Fonseka, A. T. (2012). Non-compliance with standard accounting practices by small and medium scale enterprises in Sri Lanka.

Postgraduate Institute of Management, University of Sri Jayawardenepura, Sri Lanka.

Cooley, P., & Edwards, C. (1983). Financial objectives of small firms. American Journal of Small Business, 8(1), 28-31.

European Commission. Directorate-General for Economic. (2008). EMU@ 10: successes and challenges after 10 years of Economic and Monetary Union (No. 2). European Communities.

Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., &Tatham, R. L. (1998). Multivariate data analysis, 5(3), 207-219. Upper Saddle River, NJ: Prentice hall.

Karunananda, A., & Jayamaha, A. (2011). Financial practices and performance of small and medium-size enterprises in Sri Lanka. Proceedings of International Conference on Business & Information. Available from: Digital Repository.kln.ac.lk.

Lauridsen, J., & Mur, J. (2006). Multicollinearity in cross-sectional regressions.Journal of Geographical Systems, 8(4), 317-333.

Maseko, N., & Manyani,O. (2011). Accounting Practices of SMEs in Zimbambwe. Journal of Accounting and Taxation, 3(8), 171 – 181.

Ohachosim, C. I., Onwuchekwa, F. C., & Ifeanyi, T. T. (2012). Financial challenges of Small and Medium-Sized Enterprises (SMEs) in Nigeria. The Relevance of Accounting Information. Review of Public Administration and Management, 1(2), 77-99.

Onaolapo, A., & Adegbite, I. (2014). The Analysis of the Impact of Accounting Records Keeping on the Performance of Small Scale Enterprises. International Journal of Academic Research in Business and Social Sciences, 4.http://dx.doi.org.10.6007/IJARBSS/V4-i1/506.

Onaolapo, A. A., Fasina, H. T., Opoola, N. A., &Olatunji, A. (2011). Basic Accounting One. Ogbomosho: Johnny Printing Works.

Tuan ZainunTuanmat and Malcolm Smith (2011). Changes in management accounting practices in Malaysia. Asian Review of Accounting, 19(3), 221-242.

Tzempelikos, N., & Gounaris, S. (2015). Linking key account management practices to performance outcomes. Industrial Marketing Management, 45. 22–34.

Yousef, B. (2013). The use of accounting information by Small and medium enterprises in south district of Jordan (An empirical study). Research journal of finance and accounting, 4(6), 169-175.
Published
2020-03-28
How to Cite
Balagobei, S. (2020). Accounting Practices and Organizational Performance: Evidence from Small and Medium Scale Enterprises in Sri Lanka. Indian Journal of Finance and Banking, 4(1), 69-75. https://doi.org/10.46281/ijfb.v4i1.526