LITERATURE REVIEW
Oversea key research
Some research about management accounting in different types of businesses
Research by Juha-Pekka Kallunki (2008) indicates that while many Russian firms have implemented performance measurement and formal control systems, their adoption rates lag behind those in Western countries Various studies across Europe have explored the application of management accounting in different contexts For instance, Szychta (2002) highlights that since the early 1990s, Polish companies have increasingly adopted operational management accounting methods, with short-term budgeting being the most prevalent Key drivers of change in Polish cost and management accounting include heightened competition and shifts in ownership structures Additionally, a 2010 study by Ali reveals that in Istanbul's manufacturing sector, costing information plays a crucial role in pricing decisions, with budgeting, planning and control, and cost-volume-profit analysis identified as the top three management accounting practices.
Decreasing profitability, rising costs, and heightened competition underscore the growing significance of cost accounting, particularly in Turkey, where companies must enhance their practices Recent research by Cadez & Guilding (2008) highlights the importance of strategic management accounting (SMA) over traditional methods, examining the impact of strategic choices, market orientation, and company size on SMA and its subsequent effect on performance Utilizing structural equation modeling and qualitative interviews with 193 large Slovenian firms, the study identifies four key factors related to SMA: business strategy, deliberate strategy formulation orientation, market orientation, and firm size, while also revealing competition intensity as an additional factor However, the study acknowledges limitations, including an incomplete model that may overlook other significant contingency factors and the reliance on a single-item measure of business strategy.
Research by Duh et al (2009) highlights that Chinese companies in Asia continue to utilize traditional management accounting and control practices, including responsibility accounting and cost-volume-profit analysis However, the study also reveals a shift towards newer techniques, indicating an evolution in management accounting practices Additionally, various authors have explored the application of management accounting across different sectors in Asia, further enriching the understanding of this field.
Research on Han Dan Iron and Steel Company in China reveals the successful implementation of various management accounting techniques, such as target costing, responsibility accounting, and variance analysis, within its cost control system This integrated approach has effectively reduced production costs and enhanced profitability by incorporating market mechanisms The Han Dan experience highlights the significant role of management accounting in improving business management and profitability in developing countries Similarly, a study by Nimtrakoon & Tayles (2010) examined management accounting practices (MAPs) among Thai companies, finding that perceived environmental uncertainty (PEU), competitive strategy, and firm size influence the effectiveness of these practices Companies operating in high PEU environments benefit more from both contemporary and traditional MAPs, while firms with prospector strategies gain greater advantages from contemporary MAPs compared to defender strategy firms Additionally, larger firms experience greater benefits from MAPs than smaller ones These findings underscore the importance of aligning management accounting systems with a firm's characteristics and strategies, suggesting that organizations facing high environmental uncertainty should adopt contemporary MAPs while acknowledging the ongoing relevance of traditional practices.
Some research about management accounting in Small and Medium-sized Enterprises (SMEs)
Azudin & Mansor (2017) conducted a study examining the impact of three factors—organizational DNA, business potential, and operational technology—on the management accounting practices (MAPs) of small and medium enterprises (SMEs) in Malaysia Out of 310 questionnaires distributed to SMEs on the east coast, 110 responses were received, but only 102 were included in the final analysis due to incomplete submissions The authors concluded that SMEs can select any stage of MAPs that aligns with their business operations The regression analysis revealed that operational technology, which includes the complexity of processing systems, advanced manufacturing technology, and total quality management, has a significant positive effect on MAPs (p-value = 0.005) In contrast, organizational DNA and business potential did not show a significant influence on MAPs These results differ from those found in larger companies, indicating a need for further research into MAP issues in SMEs.
Some research about management accounting in startup
In her 2007 study, Sandino utilized a survey-based research design to investigate the adoption of Management Control Systems (MCSs) among 97 startups in the retail sector, revealing that all companies implemented fundamental MCS elements such as budgets, pricing, and inventory control She noted that firms pursuing a cost strategy primarily focused on improving efficiencies, while those with a differentiation strategy emphasized tools for gathering customer insights Similarly, Bustamante (2018) explored the motivating factors behind management decisions by analyzing 261 startups from 51 countries that participated in a Chilean conference program between 2010 and 2014 The study identified internal forces and institutional gaps as key influences on management decisions at both national and enterprise levels, highlighting notable differences in how these factors affect domestic versus foreign enterprises Additionally, Bustamante emphasized the significance of government-related costs in shaping strategic management decisions.
9 reasonable costs for evaluating strategic management decision Crespo, et al
A 2018 study explored the influence of internal factors and contextual elements on the adoption of various types of Management Control Systems (MCSs) in Norwegian and Portuguese startups, analyzing 102 valid responses The research identified key factors impacting the implementation of financial MCSs, including cultural influences, international strategy, and structural decentralization Additionally, the study by Crespo et al further examined these dynamics.
A 2018 study investigated Management Control Systems (MCSs) in Portuguese high-tech startups using 54 usable responses The research aimed to understand how various internal and external contingency factors influence the adoption of MCSs, particularly focusing on the differences between planning and evaluation MCSs Through cluster analysis and fuzzy-set Qualitative Comparative Analysis (fsQCA), the authors identified the impact of external factors, such as traditional and entrepreneurial investors and environmental heterogeneity, alongside internal factors like cost leadership strategy, differentiation strategy, and structural decentralization, on the overall adoption of MCSs, as well as on planning and evaluation MCSs within startups.
Some research about factors that impact to the implementing of management accounting in startup
Reid & Smith (2000) conducted a comprehensive study involving interviews with 150 Scottish microfirms from 1994 to 1998, examining the relationship between the timing of contingent events—such as cash flow crises and finance shortfalls—and the adoption of management accounting systems Their correlation analysis revealed significant associations between these events and changes in accounting practices Similarly, Granlund & Taipaleenmaki (2005) explored management accounting systems in new economy firms through a qualitative case study involving interviews and emails Their findings indicated that budgeting is typically the first accounting system adopted, with additional systems implemented subsequently.
Ten firms exhibit a strong confidence in their future success, as explored by Davila & Foster (2005, 2007) in their examination of Management Accounting Systems (MAS) and budgeting practices Through a survey of 78 startups, they discovered that factors such as company size, the involvement of venture capital (VC) funding, and the experience of the Chief Executive Officer (CEO) significantly influence the adoption of these systems Additionally, the CEO's interpretation of management accounting systems plays a crucial role in shaping the firm's financial strategies and overall success.
The requirements set by third parties are linked to the quicker implementation of operating budgets, which are identified as the initial managerial accounting system adopted by organizations Additionally, there is a notable correlation between the adoption of operating budgets and the growth of companies, supported by descriptive statistics on sequencing.
Research indicates that the evolution of management accounting is crucial for addressing the diverse needs of modern businesses Despite limited interest from researchers in the application of management accounting within startups, the rise of competition in the Industry 4.0 era has spurred an increase in studies focused on management control systems These systems are essential for helping businesses not only survive but also thrive in a competitive landscape.
Vietnam key research
Some research about factors affecting the application of management accounting in different types of businesses
In a study aimed at enhancing the competitive advantage of small and medium enterprises in Vietnam, T Hung (2016) analyzed the impact of various factors on accounting management practices Utilizing 290 valid questionnaires, the research identified seven key factors influencing these practices: state ownership levels, market competition intensity, corporate culture, the perceptions of business owners/operators, and the size of the enterprise.
11 expenses for organizing management accounting and enterprise strategy have an impact on the application of management accounting with details as follows:
When state ownership in an enterprise is below 49% and does not include key positions like director or chief accountant, the likelihood of successfully implementing management accounting practices within the organization significantly increases.
- The higher the level of market competition of small and medium enterprises, the higher the feasibility of applying management accounting at enterprises
- Enterprises have the characteristics of supporting corporate culture or business-oriented culture that will increase the feasibility of applying management accounting
- The larger the enterprise scale, the greater the feasibility of applying management accounting
When company managers and owners recognize the value of management accounting tools and possess knowledge about them, the likelihood of effectively implementing these tools significantly increases Understanding and appreciating the benefits of management accounting enhances their practical application within the organization.
- When the cost of technology investment for organization of management accounting or consulting costs from low experts will increase the feasibility of applying management accounting
Implementing strategies like producing customized goods and services based on customer requests, offering after-sales support, and maintaining flexibility in production output enhances the effectiveness of management accounting within an enterprise.
V.Tam (2017) research on factors affecting cost management and cost accounting in small and medium-sized manufacturing enterprises in Hanoi Through the survey,
The author identifies five key factors influencing management accounting in small and medium manufacturing enterprises: the management requirements of the businesses, the organization of accounting systems, the qualifications of accounting staff in cost management, the technological processes in place, and relevant laws and policies.
In 2017, T Yen conducted a quantitative study on the factors influencing the use of management accounting in enterprises in Binh Dinh province, utilizing 75 completed questionnaires The research identified three key factors impacting the application of management accounting: enterprise size, accountant qualifications, and the owner/operator's perception Findings revealed that larger enterprises, characterized by higher revenue, more departments, and a greater number of employees, demonstrate a greater capacity for applying management accounting Additionally, accountants with qualifications ranging from intermediate to a Bachelor's degree significantly enhance the feasibility of implementing management accounting practices Furthermore, the study highlighted that a strong understanding and appreciation of management accounting tools by owners/operators, along with a willingness to invest in these systems, positively influences their application in enterprises.
T Tuan (2018) studied the factors affecting the application of management accounting in firms The author relies on random theory to explore and explain the influence of factors on the application of management accounting in Vietnam firms Factors include competitive pressure, decentralization, firm size, professional members 'ownership, information technology, production technology, managers' interest in accounting, government and qualifications of management accounting staff
Some research about the application of management accounting in startup
Research by N Hien (2018) highlights that certain management accounting factors, such as enterprise size, leadership perspective, management capacity, and human resources, remain underutilized in Vietnamese startups However, the study lacks empirical evidence to confirm the impact of these factors on the implementation of managerial accounting in this context.
L.Huyen (2018) studies the issue of financial management for startup with the desire to help these businesses overcome the difficult start The author once again reaffirmed the important role of financial management in the survival problem of an enterprise: "Starting a small start even needs the smallest financial management." The author also mentioned some mistakes that startup may encounter in the process of financial management such as: Over reliance on credit, confusion between personal finance and corporate finance, taking personal finance to make up for losses, there is no clear revenue and expenditure system and not enough cash reserves Based on these mistakes, the author proposes some recommendations to limit mistakes However, to implement the above proposals, there is a support tool to help businesses make reasonable and timely decisions
N Suong (2018) conducted a study with a view to deepening the understanding of the current situation and orienting to apply management accounting in Vietnam enterprises in the coming time Based on the theory and inheritance of previous studies, the author stated that the organization of management accounting in Vietnamese enterprises is still inadequate and does not meet the demand for information to support manager decision making For management accounting to operate in Vietnam, the author calls for the support and coordination of cooperation between the State, training and research and management accounting units
In Vietnam, the authors study the history and development of management accounting in Vietnam, offer some models of adoption management accounting for
This article explores 14 distinct types of businesses across various industries, highlighting the scarcity of both qualitative and quantitative research on the factors affecting the implementation of management accounting in startups It also proposes solutions to enhance the effectiveness of management accounting practices within these emerging companies.
Gap research and the aim of study
Implementing management accounting in Vietnamese SMEs is crucial for effective management, as highlighted by prior research both locally and globally (T Hung, 2016) While it has the potential to significantly improve management capabilities in Vietnamese startups, the actual utilization of management accounting practices remains alarmingly low, particularly among new enterprises.
Recent studies in Vietnam have explored the application of management accounting in startups; however, they often lack quantitative and objective methodologies As a result, the recommendations provided are limited by the subjective perspectives and experiences of the researchers involved.
The author identifies a research gap and explores the factors influencing the implementation of management accounting in startups in Ho Chi Minh City This study aims to quantitatively assess the impact of each factor using reliable methods The research will follow a structured approach to achieve its objectives.
1 st step: conducting research about current situation of the used of management accounting in startup in Ho Chi Minh City
2nd step: surveying and identified factors impact to the implementing of management accounting in startup in Ho Chi Minh City
3rd step: measuring the level of factors that impact to the implementing of management accounting in startup in Ho Chi Minh City
4th step: recommendations and suggestions will be made to enhance the possibility of the implementing of management accounting in startup in Ho Chi Minh City
THEORETICAL FOUNDATIONS ABOUT MANAGEMENT
Management accounting overview
Management accounting refers to any accounting system that enhances the efficiency of management functions According to the Institute of Chartered Accountants of England and Wales, it encompasses any form of accounting that facilitates more effective business operations.
Management accounting focuses on providing accounting information that is valuable for decision-making by management While definitions of management accounting can be broad, there are several specific interpretations that highlight its essential role in supporting managerial functions.
Management accounting, as defined by the Institute of Cost and Management Accountants (ICMA) in London, involves the application of professional knowledge to prepare accounting information that aids management in policy formation and operational planning The American Accounting Association (AAA) describes it as utilizing techniques and concepts to process historical and projected economic data, assisting management in setting realistic economic objectives for rational decision-making In 2008, the Institute of Management Accountants (IMA) refined this definition, highlighting management accounting as a profession that supports management decision-making, develops planning and performance management systems, and provides financial reporting and control expertise to help formulate and implement organizational strategies.
Management accounting is a vital profession focused on aiding managers in making informed economic decisions It involves analyzing historical data to facilitate planning, performance evaluation, and operational control, ultimately supporting the development and execution of an organization's strategic goals.
2.1.2 The role and function of management accounting
The International Federation of Accountants (IFAC) defines management accounting as a specialized branch of accounting that provides crucial information for managerial planning, evaluation, and control within organizations It encompasses tools and techniques specifically designed to assist managers in overseeing firm activities, making decisions on product offerings, determining sales locations, sourcing products, and selecting the right managers to handle company resources.
2006) Management accounting literatures continue to suggest the benefits of adopting management accounting in improving business sustainability (Azudin,
2018) by provide various tools, techniques and valuable internal information including for budgeting, profit planning and performance evaluation and operational control
Effective planning involves making critical decisions regarding product development, including selection, production timing, and location It also encompasses identifying necessary materials, labor, and resources to achieve the desired outcomes In not-for-profit organizations, management accounting plays a vital role in determining which programs receive funding, ensuring that resources are allocated efficiently to maximize impact.
Performance evaluation is essential for assessing the profitability of individual products and product lines, as well as determining the contributions of various managers and organizational segments In the context of not-for-profit organizations, management accounting plays a crucial role in evaluating the effectiveness of managers, departments, and programs.
Effective operational control involves monitoring the amount of work-in-process on the factory floor and assessing the stages of completion This information aids line managers in identifying bottlenecks and ensuring a smooth production flow.
A management accounting system is an essential information system designed to enhance decision-making, create value, and control resources It integrates both regular and specialized information for the evaluation, measurement, planning, and control of specific products or services However, it is important to note that a management accounting system cannot provide all types of management information; certain information may require external advisory support (Langfield-Smith, 2012).
Management accounting, as defined by the Chartered Certified Accountant (ACCA F5 – 2016), encompasses four key components: specialized cost and management accounting techniques, decision-making methods, budgeting and control processes, and performance measurement and control systems.
2.1.3.1 Specialist cost and management accounting techniques
Specialist cost and management accounting techniques deliver crucial cost information that supports strategic decision-making and marketing efforts, enabling businesses to develop and maintain a sustainable competitive advantage As outlined by ACCA (ACCA F5 – 2016), key management accounting methods include activity-based costing (ABC) and target costing, among others.
Activity-Based Costing (ABC) is a method that allocates costs to activities before assigning them to products and services, reflecting their actual usage of those activities The process involves four key steps, starting with the identification and classification of activities associated with the company's production.
(2) Estimate the cost of activities identified in step 1; (3) Calculate a cost-driver rate for each activity; (4) Assign activities costs to products
Target costing is a strategic pricing approach that improves a company's competitiveness, particularly in new or emerging markets This method involves calculating the maximum allowable cost for a new product and subsequently designing the product to meet this cost, ensuring profitability while remaining competitive.
19 prototype that can be profitably made for that maximum target cost figure The formula used in target costing is as follows:
Target Cost = Target Price – Desired Profit (2-1)
Cost volume profit (CVP) analysis is essential for managers as it clarifies the interplay between cost, volume, and profit This analytical tool examines how profits are influenced by five key factors: selling prices, sales volume, unit variable costs, total fixed costs, and product mix Consequently, CVP analysis plays a crucial role in strategic business decisions, including product and service offerings, pricing strategies, marketing approaches, and cost structure management.
Limiting factors are constraints in production resources, such as labor, machine hours, or materials, that hinder a business from maximizing sales To conduct a limiting factor analysis, follow four steps: first, calculate the contribution per unit for each product by subtracting total variable costs from the selling price Next, determine the contribution per unit of the scarce resource for each product by dividing the contribution per unit by the amount of the limiting factor used Then, rank the products based on their contribution per unit of the scarce resource, prioritizing those that generate the highest contribution Finally, allocate resources according to this ranking to optimize production efficiency.
Characteristics of startup
Many people mistakenly equate startups with small and medium enterprises in their early stages, but not all such businesses qualify as startups According to Neil Blumenthal, CEO of Warby Parker, a startup is defined as a company aiming to solve a problem with an unclear solution and uncertain success Eric Ries, author of "The Lean Startup," describes a startup as a human institution focused on developing new products and services amid extreme uncertainty Startups typically target rapid growth or are already experiencing significant expansion, characterized by turbulent and unpredictable internal and external environments.
In Vietnam, entrepreneurship is widely regarded as the foundation of a successful career The recent Draft Law on Small and Medium Enterprises Support defines startups as the execution of business ideas, encompassing the establishment and operation of businesses within a five-year period from receiving the initial registration certificate, provided they are not listed on the stock market.
Mr Pham Thanh Hung, Vice Chairman of Cen-group Century Group and Vice Chairman of the Board of Directors of Century Real Estate Investment and Development Company (CENNINVEST), emphasized the significance of innovation in new business ventures during the "Cafe Startup" program.
A startup is an innovative business that develops and delivers products or services that are either unavailable or minimally available in the market These ventures typically involve high risk but also possess significant profit potential.
In general, startup in Ho Chi Minh city have some specific characteristics as below:
- There are many startups who stop at bold, passionate, enthusiastic business ideas and knowledgeable about many areas of operation But they lack the knowledge of financial management (L Huyen, 2018)
- Size: in general, startup which are small companies, looking for suitable business models and have not established the organizational structure (Hong N.T et al, 2017)
The capacity of startup is limited (T Chieu, 2016), (L Huyen, 2018)
2.2.3 Current disadvantages, advantages when implementing management in startup
Vietnam's stable political climate has shielded startups from fluctuations in micro and macroeconomic policies, fostering a conducive environment for business growth The nation's active participation in trade associations like APEC and ASEAN opens up numerous opportunities for startups in Ho Chi Minh City With a young and well-trained labor force emerging from universities and colleges, startups can infuse fresh talent into their management teams at competitive costs Mr Giang, Chairman of the Creative Business Working Group of the Private Economic Forum (VPSF), highlights that technology is currently affordable, allowing startups to leverage existing advancements to address various challenges Furthermore, government support has created a favorable legal framework, coupled with numerous creative startup forums that encourage innovation and collaboration among entrepreneurs.
Despite the potential of startups, they encounter significant challenges in the global business landscape These difficulties stem not only from external market conditions but also from internal issues, particularly a lack of effective management skills One major challenge is the struggle to organize and connect with high-quality human resources.
Many startups face challenges due to limited capital, which hinders their ability to attract top talent Additionally, many entrepreneurs lack essential skills in communication, marketing, market analysis, organizational structure, and management accounting Without a well-rounded skill set and a robust technological platform, creating successful products and thriving startups becomes increasingly difficult.
2.3 Factor impact to the implementing of management accounting in startup
Management accounting plays a crucial role within Financial Management Control Systems (MCSs) This research aims to identify the factors that influence the implementation of Financial MCSs and to explore how these factors affect management accounting practices By analyzing global startups, the author has synthesized and identified several key factor models that significantly impact the implementation of Financial MCSs.
A study by Samagaioa et al (2018) on management control systems (MCSs) in Portuguese high-tech startups identified five key factors influencing their implementation: traditional investors, entrepreneurial investors, cost leadership strategy, differentiation strategy, and structural decentralization.
Figure 2.1 Figure of factors influencing MCSs according to research by Samagaioa
According to research by Crespo et al (2018) on Norwegian and Portuguese startups, key factors influencing the implementation of financial Management Control Systems (MCSs) include cultural aspects, international strategy, and structural decentralization.
Research by Davila and Foster (2007) involving 78 early-stage startups identified three key factors influencing the implementation of Management Control Systems (MCS): company size, the role of CEOs, and the involvement of venture capital (VC).
Figure 2.2 Figure of factors influencing MCSs according to research by Crespoa et al, (2018) cultural
Figure 2.3 Figure of factors influencing MCSs according to research by Davila and
Management accountants play a crucial role in helping managers develop and implement organizational strategies while ensuring responsible use of resources (IFAC, 1989; IMA, 2008; Atkinson et al., 2012) According to Sirinuch and Michael (2010), the management control system encompasses management accounting systems, management accounting, and other controls like personal or clan controls Consequently, the factors influencing the adoption of financial management control systems (MCSs) also impact the application of management accounting within businesses The author identifies and summarizes key factors affecting the implementation of MCSs and management accounting in startups, supported by global research findings.
Company size plays a crucial role in the adoption of management accounting practices, as larger firms typically possess the resources to implement advanced management accounting techniques, unlike small and medium-sized enterprises (SMEs) Due to limited capital, most startups, which fall within the SME category, often struggle to establish comprehensive accounting systems essential for effective financial management (Hung, 2016).
Startups often face significant challenges in implementing management accounting systems due to the high costs associated with training staff and other related expenses As a result, many startups struggle to invest in these systems, leading them to constantly weigh the costs against the potential benefits of management accounting (N Hien, 2018).
CEOs play a crucial role in the adoption of management accounting practices, as their experience and perceptions significantly influence their decisions on utilizing management accounting techniques However, there is a tendency for CEOs to adopt management accounting less frequently, potentially due to the perception that these practices may be more easily replaced.
RESEARCH METHODOLOGY
Research process
Research process includes two main steps: (1) general research and (2) detailed research
In our research, we employ qualitative methodology to identify the factors influencing the use of management accounting in startups in Ho Chi Minh City We further refine and expand these factors through group discussions and expert interviews.
In the research, all variables were quantitatively measured by collecting data through selected samples and distributing questionnaires The data was analyzed using SPSS 20.0 to evaluate the research model, theoretical framework, and hypotheses through Exploratory Factor Analysis (EFA).
There are some methods, which use to solve the questions as below:
This article summarizes and analyzes the implementation of management accounting in startups, drawing on prior research from around the world and Vietnam By conducting in-depth interviews and discussions, we identify key factors that influence the use of management accounting in startups and tailor these factors to align with the unique characteristics of startups in Ho Chi Minh City.
This study aims to identify the factors influencing the implementation of management accounting in startups located in Ho Chi Minh City and to assess the extent of their impacts To achieve this, the research utilizes findings from the initial phase to test a research model and measures all relevant variables through a regression analysis.
After that, basing on the findings we will recommend and suggest some solutions in order to improve the possibility of implementing management accounting in startup
The frame research of thesis is defined as below:
This research focuses on identifying the key factors that influence the implementation of management accounting in startups It further involves testing and measuring the impact level of each identified factor to understand their significance in the management accounting process.
This study explores the application of management accounting in startups through the lens of grounded research theory and contingent theory It also incorporates insights from previous global research on the implementation of management accounting practices in startup environments.
To develop our research model, we conducted in-depth interviews with experts after defining the research content and summarizing relevant grounded theories and prior studies Based on these discussions, we identified key factors and adjusted the research model to align with the unique characteristics of startups.
To enhance the research model, qualitative methods such as in-depth interviews and expert consultations were employed These techniques informed the development and testing of scales, paving the way for subsequent quantitative analysis.
+ Quantitative method: basing on suggested model research and scales, we test the reliabilities of scales by SPSS 20.0 with Exploratory Factor Analysis
The research framework of the thesis is follows:
The draft scale is developed through an analysis of theoretical foundations and a review of scales utilized in both international and Vietnamese studies Given that Ho Chi Minh City is undergoing integration while retaining unique management accounting practices, it is crucial to consult with experts to refine the scale appropriately.
Following the initial step, the scales will be reviewed and refined in collaboration with a panel of three experts This process aims to enhance and finalize the scales, ensuring they are ready for implementation in the subsequent phase.
At this step, the author uses the scale obtained in step 2 to conduct surveys, use multiple linear regression models, and set up research models
Process of studying factors which impact to the implementing management accounting in startup in Ho Chi Minh City follow:
Research model of factors impact to the implementing management
Based on existing research both globally and nationally regarding the factors influencing the implementation of management accounting in startups, the author has developed a research model that identifies key factors affecting this process in Ho Chi Minh City These factors include firm size, CEO characteristics, structural decentralization, traditional and entrepreneurial investors, as well as strategic approaches such as cost leadership, differentiation, and international strategies, along with the influence of venture capital (VC) backing.
Qualitative method
To explore the factors influencing the implementation of management accounting in startups, we conducted in-depth interviews with experienced professionals, including university professors, Chief Accountants, CEOs, CFOs, and consulting advisors Their extensive expertise provides valuable insights into the challenges and strategies associated with effective management accounting practices in emerging businesses.
After discussion, the factors were summarized and determined that impacting to the implement of management accounting in startup in Ho Chi Minh City The factors are summarized as follows:
Experts suggest that firm size significantly influences the implementation of management accounting in startups in Ho Chi Minh City As businesses expand, their revenue increases, leading to a higher number of employees and departments, which in turn elevates the need for management tools and data processing to enhance decision-making Consequently, startups can adopt management accounting techniques ranging from simple to complex, facilitating quicker and more informed decisions Key variables that explain the impact of firm size include revenue, employee count, and the number of departments and branches.
Experts suggest that the CEO plays a crucial role in the implementation of management accounting in startups in Ho Chi Minh City Specifically, CEOs with experience in business management and development are more likely to leverage information from management accounting to enhance their decision-making processes This finding aligns with the research conducted by Davila (2007).
Experts indicate that structural decentralization does not impact the implementation of management accounting in startups in Ho Chi Minh City Most small and medium enterprises prefer a centralized management approach based on their specific organizational structures Consequently, experts recommend excluding this factor from the survey model.
Experts suggest that cost leadership, differentiation, and international strategies can be integrated into a comprehensive business strategy Companies adopting these strategies often utilize corporate management accounting to enhance their competitiveness In a highly competitive market, businesses aim to offer optimally priced products tailored to the specific needs of their target customers in terms of quantity, design, and timing Consequently, a flexible business strategy emerges as a vital solution to achieve these objectives, with management accounting serving as a crucial support tool in the implementation of these strategies.
Experts categorize investors into traditional, entrepreneurial, and venture capital-backed groups, highlighting that the involvement of credit institutions, government agencies, business angels, and VC funds significantly influences the feasibility of management accounting plans for startups To attract external investment, startups must develop comprehensive business plans that detail capital allocation strategies Additionally, they require effective tools to monitor and assess project progress As investment amounts increase, so do investor expectations, necessitating that startups adopt robust management accounting practices to align with these heightened demands.
Experts indicate that corporate culture significantly influences the implementation of management accounting A shared understanding and consensus among employees and departments enhance this application Additionally, the willingness to exchange information between employees and between superiors and subordinates plays a crucial role in the effective use of management accounting practices.
The implementation of management accounting in startups in Ho Chi Minh City is crucial, as experts highlight its effectiveness through the application of management accounting concepts and technical tools This factor can be measured by various management accounting practices, including specialized cost and management accounting techniques, performance evaluation, estimation, decision support, and strategic management accounting.
After consulting with experts, the initial research model was revised to incorporate five key factors influencing the implementation of management accounting in startups in Ho Chi Minh City: firm size, CEO characteristics, organizational culture, investor involvement, and business strategy.
Basing on suggested research model above, combining with results of experts’ discussion we suggest hypothesis are:
Hypothesis 1: The large size of startup, the more feasible the application of management accounting in startup in Ho Chi Minh City will be
Hypothesis 2: startups with CEOs who have knowledge of management accounting and have high appreciation for the effectiveness of management accounting, the greater the ability to apply management accounting
Hypothesis 3: startups with a strong corporate culture support the greater the ability to apply management accounting
Hypothesis 4: the more the startup is invested by other sources of capital (credit unions, government institutes, “business angels”, venture capital funds and other external sources), the greater the application of management
Hypothesis 5: startup applies business strategy, the greater the ability to apply management accounting
Based on the hypotheses above, the conceptual framework of this study is depicted in Figure 1.
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
The possibility of implementing management accounting in Startup in HCM City
Figure 3.3 Summary of factor affecting the application of management accounting in start-ups in Ho Chi Minh City
The study will utilize SPSS 20 software to analyze data from a determined number of independent variables and sample sizes The survey targets financial directors, CEOs, chief accountants, and managers involved in the implementation of management accounting Various scales will be employed in the research to ensure comprehensive analysis.
- Scale 1: From the scale inherited from the research of Dr Hung (2016) and the advice of experts, firm size includes 3 variables: Number of employees, revenue, number of branches, departments
The Scale 2 framework, derived from Dr Hung's 2016 research and expert insights, encompasses five key variables that reflect a CEO's perspective on management accounting These include the CEO's strong appreciation for the effectiveness of management accounting, their knowledge of relevant tools, a high demand for its application, willingness to incur costs for its implementation, and substantial experience in entrepreneurship.
The business strategy of startups, based on the research of Samagaio (2017) and expert insights, encompasses five key variables: first, customers' search for lower prices significantly influences the adoption of a cost leadership strategy; second, the firm's focus on competitive pricing and promotions plays a crucial role in attracting and retaining customers; third, the demand for uniqueness among customers drives the implementation of a differentiation strategy; fourth, offering unique products that are highly valued by target customers further supports the differentiation strategy; and lastly, the persistent search for lower prices by customers reinforces the necessity for a cost leadership approach.
Scale 4, based on Samagaio's (2017) research and expert recommendations, encompasses two key variables: (1) startups funded by credit institutions, government agencies, and other external sources that encourage the application of management accounting, and (2) startups backed by "business angels" and venture capital that also foster the use of management accounting practices.
According to Dr Hung's research (2016) and expert recommendations, the cultural scale consists of three key variables: first, the support provided by managers to employees during the startup process; second, the mutual assistance among employees within various departments and branches; and third, the shared consensus on common goals throughout the startup.
Scale 6: From the scale inherited from the research of Dr Hung (2016) and the advice of experts, the possibility of implementing management accounting in Startup has 5 variables: (1) the possibility of implementing costing system, (2) the possibility of implementing budgeting system, (3) the possibility of implementing performance evaluation system, (4) the possibility of implementing decision support system, (5) the possibility of implementing strategic management system
The author conducted a study on the application of management accounting in startups in Ho Chi Minh City by distributing questionnaires via email to knowledgeable subjects This method facilitated easy access to participants, optimizing both time and cost efficiency Despite an initial target of 350 samples, only 236 valid responses were obtained Following the sample size determination formula by Green (1991) and Tabachnick & Fidell (2007), which states that n ≥ 50 + 8k (where k is the number of independent variables), the required sample size for this study, with 18 independent variables, is calculated to be n ≥ 194, confirming that the collected sample of 236 is adequate for analysis.
The survey participants include directors, department heads, chief accountants, general accountants, management accountants, and individuals directly involved in the management accounting systems of startups.
As mentioned above, the author proposes a linear model to show the correlation between the possibility of implementing management accounting and factors impact
42 to the implementing of management accounting in startup in Ho Chi Minh City as below:
POSSi= α + β1FSi + β2CEi + β3BSi + β4IVi + β5CUi + ε (3-1) With:
- POSSi: the possibility of implementing management accounting in Startup in Ho Chi Minh City
The variables FS, CE, BS, IV, CL are respectively: firm size (FS), CEO (CE), business strategy (BS), investor (IV), cultural (CL)
RESEARCH RESULTS AND DISCUSSION
Quantitative research results
The study uses the model of Exploratory Factor Analysis (EFA), research model has
5 scales with independent variables (including 18 observed variables) and a scale of the dependent variable (including 5 observed variables)
The sample size for the study was calculated using the formula n ≥ 50 + 8k, where k represents the number of independent variables, as outlined by Green (1991) and Tabachnick & Fidell (2007) With 18 independent variables in the model, the required sample size is n = 236, which exceeds the minimum threshold of 50 + 8 × 18, making it suitable for exploratory factor analysis (EFA).
4.1.1 Test the reliabilities of scales
Cronbach Alpha of Firm size (FS)
Table 4.1 Reliability Statistics of Firm size
Table 4.2 Item-Total Statistics of Firm size
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The table indicates that firm size (FS) is assessed using three independent variables, achieving a Cronbach's alpha (α) value of 0.773, which exceeds the acceptable threshold of 0.60 Additionally, the corrected item-total correlations are above 0.3, aligning with the standards set by Nunnally (1978) and Peterson.
(1994) suggest Therefore, they meet the reliability requirements
Cronbach Alpha of CEO (CE)
Table 4.3 Reliability Statistics of CEO
Table 4.4 Item-Total Statistics of CEO
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The table indicates that the CEO (CE) is evaluated using five independent variables, with a Cronbach alpha (α) value of 0.835, exceeding the acceptable threshold of 0.60 Additionally, the corrected item-total correlations are all above 0.3, confirming that the measures meet the necessary reliability standards.
Cronbach Alpha of business strategy (BS)
Table 4.5 Reliability Statistics of business strategy
Table 4.6 Item-Total Statistics of business strategy
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The analysis indicates that the business strategy (BS) is evaluated using five independent variables, with a Cronbach alpha (α) value of 0.717, surpassing the acceptable threshold of 0.60 Additionally, the corrected item-total correlations exceed 0.3, confirming that the variables meet the necessary reliability standards.
Cronbach Alpha of investor (IV)
Table 4.7 Reliability Statistics of investor
Table 4.8 Item-Total Statistics of investor
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The investor (IV) is assessed using two independent variables, with a Cronbach alpha (α) value of 0.714, which exceeds the acceptable threshold of 0.60 Additionally, the corrected item-total correlation is above 0.3, indicating that the reliability requirements are satisfactorily met.
Cronbach Alpha of cultural (CL)
Table 4.9 Reliability Statistics of cultural
Table 4.10 Item-Total Statistics of cultural
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The table indicates that cultural (CL) is assessed using three independent variables, achieving a Cronbach alpha (α) value of 0.813, which exceeds the acceptable threshold of 0.60 Additionally, the corrected item-total correlations are all above 0.3, confirming that the reliability requirements are satisfied.
Cronbach Alpha of the possibility of implementing management accounting in Startup in Ho Chi Minh City (POSS)
Table 4.11 Reliability Statistics of the possibility of implementing management accounting in Startup in Ho Chi Minh City
Table 4.12 Item-Total Statistics of the possibility of implementing management accounting in Startup in Ho Chi Minh City
Scale Mean if Item Deleted
Scale Variance if Item Deleted
Cronbach's Alpha if Item Deleted
The analysis indicates that the potential for implementing management accounting in startups in Ho Chi Minh City (POSS) is evaluated through three independent variables With a Cronbach alpha (α) value of 0.835, exceeding the acceptable threshold of 0.60, and corrected item-total correlations above 0.3, the results confirm the reliability of the measurement.
Conclusion: through analysis 6 scales by Cronbach’s Alpha, all scales meet the reliability requirements
In my study, I utilized a model comprising five independent factor scales and one dependent variable scale, with a sample size ranging from 100 to 350 Based on Hair (2009), I selected a factor loading threshold of 0.55 The results indicated a KMO value of 0.823, which exceeds the acceptable threshold of 0.5, and a significance level of 0.000, confirming that the actual data is suitable for exploratory factor analysis (EFA).
Table 4.13 KMO and Bartlett's Test result
Kaiser-Meyer-Olkin Measure of Sampling Adequacy .823
Bartlett's Test of Sphericity Approx Chi-Square 1431.048 df 136
The rotation sum of squared loadings indicates that 67.771% of the variance is explained by five independent factors, surpassing the 50% threshold Additionally, the eigenvalue for the fifth factor is 1.361, which is greater than 1, confirming that five meaningful factors have been extracted from the exploratory factor analysis (EFA) to effectively summarize the information of the most relevant observed variables.
Table 4.14 Total Variance Explained result
Extraction Sums of Squared Loadings
Extraction Method: Principal Component Analysis
The rotated component matrix results indicate that all variables exhibit factor loadings exceeding 0.55 Five key factors influence the implementation of management accounting in startups in Ho Chi Minh City, with Factor 1 (F1) comprising variables CE1, CE2, CE3, CE4, and CE5.
Factor 2 (F2) have BS1, BS2, BS3, BS5
Factor 3 (F3) have CU1, CU2, CU3
Factor 4 (F4) have FS1, FS2, FS3
Table 4.15 Rotated Component Matrix result
Extraction Method: Principal Component Analysis
Rotation Method: Varimax with Kaiser Normalization a Rotation converged in 6 iterations
We employed Pearson correlation to analyze the statistically significant independent variables, ensuring that the significance level was below 0.05 to maintain constant residual variance The findings indicate that variables F1, F2, F3, F4, and F5 all demonstrated a significance level of 0.000, confirming that the residual variance for these five variables is both constant and significant for the research.
POSS CE FS CU BS IV
** Correlation is significant at the 0.01 level (2-tailed)
Determine the model: we perform regression analysis and have the result as:
Standardi zed Coefficien ts t Sig
The model includes five independent variables (F1, F2, F3, F4, F5) with significance levels below 0.015, confirming the potential for implementing management accounting Additionally, the factor of size is associated with 98.5% of the results With a Variance Inflation Factor (VIF) of less than 2, the model shows no issues with collinearity diagnostics.
POSSi= 0.393CE + 0.105FS + 0.193CU + 0.112BS + 0.490IV (4-1)
Adjusted R Square is 0.674, that mean 67.4% change of the possibility of implementing management accounting in Startup in Ho Chi Minh City was explained by 5 independent variables
Std Error of the Estimate Durbin-Watson
1 825 a 681 674 31836 2.023 a Predictors: (Constant), IV, CE, CU, BS, FS b Dependent Variable: POSS
Aslo the independent variables have Sig = 0.000 (