A Proposed Strategic Management Accounting Model for Profitability: An Empirical Study

Doctoral thesis English OPEN
Mohamed, Abeer Abdulmoniem
  • Subject: HF5601_Accounting | HG4001_Finance

This thesis concerns strategic profitability management. The emergence of strategic\ud management accounting has created a growing need for companies to discover the key\ud factors that affect profitability and then to understand how these factors should be\ud managed. To fulfil strategic management accounting requirements necessitates the use\ud of appropriate strategic management accounting techniques. However, the traditional\ud profitability system is inappropriate to meet the task. In addition, there has also been a\ud lack of attention paid by researchers to the study of the integration between the most\ud important drivers affecting profitability (cost, assets, and revenue). Moreover, there has\ud inadequate Investigation of the management of each driver using strategic management\ud accounting techniques. Therefore, this study attempts to create a new model for\ud managing profitability to fulfil the requirements of strategic management and to evaluate\ud the perceptions of managers related to the influence of such a new proposed model on\ud profitability. A broadly positivist View, which utilizes both deductive reasoning coupled\ud with a quantitative approach, was employed to create the profitability model.\ud The creation of profitability model is enacted through an exploratory study. In order to\ud create the profitability model, this thesis proposes three models for managing the key\ud profitability drivers (cost, assets and revenue). The building of these models is based on\ud the determination of the most important factor (driver) and approach that affect\ud profitability in each model's case. In the light of such determination, strategic\ud management accounting techniques were proposed to manage each driver in each\ud model. The comprehensive profitability model is also proposed using the measurement\ud levels of the cost, assets and revenue models. Models were tested in the Egyptian\ud communication and information technology sector. A self-administrated questionnaire\ud delivered and collected by hand was used to examine the hypothesized relationships. A\ud total of 190 valid responses were used for quantitative analysis. The hypotheses related\ud to the components of all the proposed models were examined via non-parametric\ud measure of association, Spearman's rho technique and ordinal regression technique.\ud The study found that there is a positive association between each proposed driver in the\ud cost, assets, and revenue and profitability models. It also found that there is a positive\ud association between each proposed approach in the assets and revenue model, and\ud profitability. The main conclusion of this thesis was that the profitability model, which\ud contains the measurement levels of the cost, assets and revenue models, is the most\ud appropriate model because its predictors are most strongly associated with the profitability. The findings of this study can be generalized to the Egyptian ICT sector's\ud members. In addition, the generalization of findings beyond the Egyptian ICT sector\ud should be made with caution.
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