Adoption of conventional management accounting practices by small and medium enterprises operating in the hotel sector of the Cape Metropole

Abstract

Small and Medium Enterprises (SMEs) operating in hotel sector are perceived to be underperforming partly due to their failure to adopt Conventional Management Accounting Practices (CMAPs). This study sought to determine the extent to which SMEs operating in the hotel sector of the Cape Metropole have adopted CMAPs. Specifically, the study aimed to assess the suitability of CMAPs to SMEs, the extent for which SMEs have adopted CMAPs, the perceived usefulness of the CMAPs adopted, and the factors that inhibit SMEs from adopting CMAPs. The study was motivated by a lack of research on the adoption of CMAPs by SMEs operating in the hotel sector. Data was collected by means of a self-administered questionnaire survey. Purposeful sampling method was employed to draw the sample of 100 respondents. The findings of the study revealed that CMAPs are perceived to be suitable for the sampled SMEs as most of these entities need accounting information to: analyse their risks and uncertainty, optimise on their utilisation of scarce resources and require accurate data on costs of various products. As far as the extent of adoption of CMAPs is concerned, the study revealed that although most of the sampled SMEs had adopted some of the CMAPs, budgeting was the only CMAP that was used to great extent by a majority of the sampled SMEs. Other CMAPs, such as variance analysis, and cost, volume and profit analysis were only used by a minority of the sampled SMEs. Concerning the perceived usefulness of the CMAPs adopted, the findings of the study also revealed that only budgeting and forecasting were perceived to be useful by a majority of the sampled SMEs. Other CMAPs such as variance analysis were only perceived to be useful by only a minority of the sampled SMEs. The findings further revealed that most of the sampled SMEs faced various factors that inhibited them from adopting CMAPs. Key among the factors were a lack of skills to adopt CMAPs as well as a lack of resources. This study does not only contribute significantly to the literature on the adoption of CMAPs by filling in the gap in the literature in the South African context. The study also provides invaluable insights on the adoption of CMAPs which should be of value to t the Department of Small Business Development and Small Enterprises Development agency (SEDA), as the findings can inform their interventions aimed at reducing the high failure rate of SMEs in South Africa, by for instance developing a CMAPs training programme for SMEs. The findings may also assist SMEs to improve their adoption of CMAPs with a view to optimising the benefits derived, as well as overcoming the factors that inhibit them from adopting CMAPs.