Accounting & Accountability in Small to Medium-Sized Enterprises (SMEs)
Small to medium-sized enterprises (SMEs) are the backbone of our economy. They are widely acknowledged to be key drivers of both employment and innovation (cf. McKinsey.com, 2022). For example, in OECD countries, SMEs account for about 99 percent of firms and 70 percent of all jobs (OECD, 2017). Therefore, ensuring their continued profitability and successful corporate governance can be key to our future prosperity. However, recent events worldwide, including the COVID pandemic, war in Ukraine and rise of inflation, have had a significant and detrimental effect on the expected longevity of these small firms, with many falling by the wayside as these events have had their impact across the globe. Now is the time to strengthen research on SMEs, with the hope of rebirth and prosperity for future generations. Accounting and accountability together have a role to play in nurturing these organisations. This special issue therefore wishes to address the key issues of how SMEs use accounting and accountability to measure, manage and answer for their actions, whilst serving the needs of multiple stakeholders, all with different claims.
The editors welcome submissions to this special issue, in the areas of accounting and/or accountability, broadly conceived, as applied to small-to-medium-sized firms (SMEs). These might include, but are not restricted to, the following areas:
- Fieldwork-based evidence of the use of management accounting in managing and measuring performance
- Financial accounting being used as a tool for discharging accountability
- Explorations of stakeholder identification and needs, and the ways in which these are addressed
- Challenges faced by SMEs in the post-COVID era, and how they are using accounting to help them overcome difficulties
- The use of new technologies to assist internal governance and control, or to create new strategic outreach or internationalisation opportunities
- Commitments to sustainable business practices and accountability thereof
We are open to new ideas that are based on different research methodologies, including:
- Qualitative or quantitative evidence
- Illustrative case studies or inductive reasoning, based on grounded empirical evidence
- Theoretical conceptions of new pathways for SMEs
Submissions may be from anywhere in the world, but must clearly make the case for inclusion on the specific topic of accounting or accountability in SMEs. Ideally, papers should show a broader applicability across differing nations or organisational forms.
SMEs cover nearly every sector of the economy, and research into their practices is diverse. For example, Li et al. (2021) explored corporate governance and accountability in managing performance in an ambitious entrepreneurial firm in China, focusing on principal-agent relationships and hierarchical accountability to examine how western ideas can influence behaviour in a developing country. Kusumaningtias et al. (2021) explored a similar theme of accountability in SME Islamic entrepreneurship during the Covid-19 pandemic, showing how the elements of responsiveness, responsibility, appropriateness and effectiveness can encourage both horizontal and vertical accountability in SMEs.
Some of the key challenges facing SMEs today give rise to new opportunities, which entrepreneurial ventures are well-placed to exploit. For example, it is almost without question that firms need to keep pace with digitalisation if they are to survive. SMEs are better able than most to move quickly; witness the proliferation of on-line food deliveries (often from tiny micro firms) during the pandemic. This increasing need for online service delivery requires accounting systems to be in place to handle job orders, costings, customer details, and so on. Having strong internal control mechanisms can help SMEs to avoid accusations of fraud (Siti et al., 2021). In addition, integrating corporate social responsibility (CSR) into the management control systems (MCS) of small and medium-sized enterprises has been found to play a role in the relationship between CSR initiatives and organisational performance (Cheffi et al., 2021). Realistically, very often management accounting practice in SMEs is naïve, at best (Jaradat et al., 2021; Dlamini & Schutte, 2021; Eugine & Mapuranga, 2017), and seeking remedies of this is both a theoretical and practical agenda.
Another key opportunity for SMEs is the strategic goal of internationalisation. This has potential advantages of both diversification and of the exploitation of economy of scale. Clearly this could help their growth, as they expand beyond their home and local markets. However, in order to upscale on this level, they require resources, from sponsors, lenders, investors, and Government, as well as new orders from overseas customers. These multiple stakeholders require accountability reports on activity and performance, which the SME must address if they are to receive such support (cf. Ma et al., 2022). From a financial accounting standpoint, Wijekoon et al. (2021) report on the institutional pressures that drove the adoption of the IFRS for SMEs in Sri Lanka. Their findings reveal that the decision was in response to institutional pressures, rather than to any alleged benefits from internationally comparable financial information (cf. Güngörmüş’s, 2020). Further, the standardisation of non-financial reporting for SMEs is expected to increase in importance when this becomes obligatory for smaller entities (cf. Krawczyk, 2021; Gholami et al., 2022).
Nevertheless, whilst trying to enhance their business opportunities through international growth, SMEs must also be aware of other issues facing business today, including Government commitments to decarbonisation, by reducing greenhouse gasses, for example, and making promises to become more sustainable. Most SMEs will have little resources to divert towards sustainability (cf. Johnstone, 2021), when they are focusing on restarting their business after a period of dormancy, as in the COVID era.
Cavicchi et al. (2022) examine the extent to which sustainability is integrated into conventional accounting practices. Their paper investigates how management control systems (MCSs) and sustainability-specific control systems (SCSs) are mobilised, and how they interact to support the environmental sustainability strategy of a small- and medium-sized entity (SME). The role of multidisciplinary teams, formed by accountants and environmental scientists to support sustainability management control at the SME, enabled interaction, and provided steps for integrated thinking. So what more evidence can one find to suggest that SMES have a conscience, and are willing and able to be held accountable for their actions?
Workshop on ‘Accounting and Accountability in Small Firms: insights from research, teaching and practice’
The guest editors are running a workshop on the above theme from 18-19 May 2023, at the University of Strathclyde in Glasgow, sponsored by the European Council for Small Business and Entrepreneurship. Full academic papers presented at this event may subsequently be considered for the special issue, if the authors wish, by submission in the usual manner. Presentation and attendance at the event is not a necessary perquisite for acceptance in the special issue; nor does acceptance for the workshop confirm acceptance for inclusion in the journal. The website link for those interested in participating in the conference is given below.
Submission to the Journal and logistics
The instructions for submission and guidance for authors are at the Journal’s webpage at:
Submissions to EJMS’s special issue should be made using ScholarOne Manuscripts, the online submission and peer review system.
The deadline for the initial submission is 31 December 2023.
The word count for each paper should not exceed 7000 words (everything included). The word count provided should attribute 280 words per table, figure, illustration or photograph and should include the abstract, references and appendices.
When submitting online, authors should designate their manuscript for this Special Issue (select “Special Issue” as the manuscript type when submitting and then connect the paper to this special issue.) Submissions should be accompanied by an assurance of originality and exclusivity and should adhere to the manuscript guidelines for authors that can be found on the journal’s website.
If you have any questions or suggestions regarding manuscripts, please direct them to the lead guest editor, Dr Julia A Smith, at [email protected].
All submissions will be subject to a rigorous double-blind peer review process, with one or more of the guest editors acting as action editor.
The accepted papers will be published open access in the Journal’s web page, free of charge to authors.
Cavicchi, C., Oppi, C., & Vagnoni, E. (2022). Mobilising management control systems to support sustainability strategy in SMEs: the case of a waste disposal firm. Meditari Accountancy Research, (ahead-of-print).
Cheffi, W, A. Abdel-Maksoud & M. Omer Farooq (2021) CSR initiatives, organizational performance and the mediating role of integrating CSR into management control systems: Testing an inclusive model within SMEs in an emerging economy, Journal of Management Control 32, pp.333–367.
Dlamini, B., & Schutte, D. (2021). The development of a management accounting framework for small and medium enterprises operating in emerging economies. Journal of Accounting, Finance and Auditing Studies, 7(3), 136-157.
Endenich, C. (2022) From digitisation to digital transformation: The role of French and German management accountants in the digital age, CIMA Research Executive Summary Vol. 17 Issue 3, CIMA, London.
Eugine, T. M., & Mapuranga, M. (2017). The impact of management accounting practices (MAPs) on the business performance of small and medium enterprises within the Gauteng province of South Africa. The Journal of Accounting and Management, 7(2).
Gholami, A., Murray, P. A., & Sands, J. (2022). Environmental, social, governance & financial performance disclosure for large firms: Is this different for SME firms? Sustainability, 14(10), 6019.
Güngörmüş, A. H. (2020). The role of independent audit in solving administrative, financial, and accounting problems in small and medium-sized enterprises. Journal of Accounting, Finance and Auditing Studies, 6(2), 87-104.
Jaradat, Z, R Roshaiza, R Mat Zin, WZ Wan Zakaria, R Abdul Aziz (2021) The use and implications of management accounting practices in small and medium-sized enterprises, Asia-Pasific Management Accounting Journal, 16 (1): 5. pp. 250-295.
Johnstone, L. (2021) Facilitating sustainability control in SMEs through the implementation of an environmental management system, Journal of Management Control 32, pp.559–605
Krawczyk, P. (2021) Non-Financial Reporting—Standardization Options for SME Sector, J. Risk Financial Manag 14(9), 417.
Li, J., Smith, J.A. & Reid, G.C. (2021) Using corporate governance and accountability to manage performance in an ambitious entrepreneurial firm, RENT Conference, Turku, Finland.
Ma, L., Chen, X., Zhou, J., & Aldieri, L. (2022). Strategic management accounting in small and medium-sized enterprises in emerging countries and markets: A case study from China. Economies, 10(4), 74.
McKinsey.com (2022) Beyond financials: helping small and medium-size enterprises thrive, https://www.mckinsey.com/industries/public-and-social-sector/our-insigh…
OECD (2017) Enhancing the contributions of SMEs in a Global and Digitalised Economy, June 2017.
SBA (2022) US Small Business Administration: https://www.sba.gov/
Siti, FZ, HA Hashim, AM Ariff, and Z Salleh (2021) Research on fraud: an overview from small medium enterprises (SMEs) Journal of Financial Crime.
Wijekoon, N, G Samkin, and U Sharma (2021) International financial reporting standards for small and medium-sized entities: a new institutional sociology perspective, Meditari Accountancy Research (ahead of print).