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[Podcast] The Impact of Management Accounting Information on Decision Making in Small and Medium Enterprises in Vietnam: The Regulatory Role of Cloud Computing

12 September, 2024

Keywords: Management accounting information, Decision making, Cloud computing, Small and medium enterprises

Using the theory of the resource-based view of the firm (RBV), this study by the authors from  University of Economics Ho Chi Minh City (UEH) examined the relationship between management accounting information and decision making in small and medium enterprises (SMEs) in Vietnam. Concurrently, it explored the regulatory role of cloud computing in this relationship.

The Need of Management Accounting Information for Decision Making in Small and Medium Enterprises

Small and medium enterprises (SMEs) are the backbone of the Vietnamese economy, accounting for 97.37% of the total number of enterprises nationwide (Ministry of Planning and Investment, 2022). The business environment of SMEs is characterized by hyper-competition, frequent change,s and technological complexity. SMEs have many limitations in the field of capital and human resources as well as the lack of information and application of outdated technology compared to large-scale companies. With these business environment and limitations, having enough information to make important decisions to maximize profits and to survive in a competitive context is of great importance to SMEs.

Management accounting information is a source of information containing both financial and non-financial information. Management accounting information is intended for internal users for the long-term benefit of the organization. It supports the planning, implementation, and evaluation of strategies as well as various purposes in the enterprise, from decision making to being a means to improve the efficiency of the enterprise. Despite the limitations of SMEs being small in size and limited resources, management accounting information is still suitable to improve the effectiveness and efficiency of the business. Therefore, it can be stated that management accounting information is essential for decision making in businesses, including SMEs.

In accordance with the data released at the conference in 2019 on “Overview of Vietnam Information Technology” on planning for future cloud computing use in Vietnamese businesses, 3% of businesses had no plans to deploy cloud computing; 25% were researching the technology but had no plans to use it; 8% planned to use cloud computing in the next 6 months; 39% were using cloud computing; and 19% would continue to use cloud computing. According to a report in 2017 by the National University of Singapore, Vietnam is the fastest growing cloud computing market in Southeast Asia. In 2018, Vietnam scored 41/100 points in terms of cloud service popularity and ranked 14th in Asia on the list of the Asian Cloud Computing Association. Cloud computing is considered a breakthrough in information technology and the Internet as it provides an open environment for online integration and data sharing between users at a distance. Cloud computing plays a huge role in improving access to information and the increase in scale, speed and volume of data processing will improve the speed and quality of decision making throughout the enterprise. Using cloud computing will help SMEs save costs, narrowing the technology gap compared to large enterprises. As a result, cloud computing is expected to help improve the quality of information in enterprises, including management accounting information, which is likely to affect the relationship between management accounting information and decision making in SMEs. Therefore, research on the regulatory role of cloud computing in the impact of management accounting information on decision making in SMEs is significant in practice, especially when applied cloud computing is an unchangeable trend of enterprises including SMEs.

The research scope of the UEH author group was set to 200 SMEs in Ho Chi Minh City, Dong Nai, Binh Duong, Binh Dinh that have applied cloud computing in Vietnam for 01 year or more. The participants were chief accountants at these enterprises. The study used a mix method of both qualitative and quantitative research.

Management accounting information is positively correlated with decision making in enterprises

Vietnamese SMEs find management accounting information useful in helping them make the right decisions based on the information provided. In particular, the scope of management accounting information is considered one of the useful characteristics of management accounting information, which provides financial and non-financial information regarding the internal and external environment of the enterprise, helping managers in the enterprise get more information related to competitors and future events.

The timeliness and the frequency of reporting of management accounting information is determined by speed and regularity, provided as soon as the manager requests. SME managers prefer updated information because it allows SMEs to respond quickly and to make effective decisions as soon as possible. The synthesis of management accounting information involves summarizing information at different stages and departments, allowing managers to have a comprehensive view of the entire enterprise for decision-making. Integration refers to the interdependence and coordination between different departments of the enterprise in sharing information. Managers of SMEs find that the aspect of management accounting information necessary in coordinating departments or dependent units to obtain the necessary information related to their decision-making.

Most Vietnamese SMEs currently do not pay attention to management accounting even though they have to make decisions based on management accounting information in the process of operating the enterprise. The information obtained is processed by the manager’s senses and experience, which is not scientific. Therefore, the results of this study will be evidence and motivation for Vietnamese SMEs to increase the application of management accounting to make optimal management and business decisions.

The impact of management accounting information on decision making at enterprises will be higher when enterprises use cloud computing

It is consistent with the fact that cloud computing technology will help improve the ability to access and share information in real time, while increasing the volume, speed and capacity of data processing at enterprises to improve the timeliness and quality of decision making at SMEs. In addition, applying cloud computing will help improve the competitiveness and business capacity of SMEs by cutting costs related to the application of modern information technology. From this foundation, enterprises can focus more on business as cloud computing is always updated with the latest technical advances. Therefore, enterprises only have to pay periodic usage costs. With the goal set by the Ministry of Information and Communications in the program to support SMEs in digital transformation in early 2021, with cloud computing as one of the effective tools to support businesses to develop faster in the digital transformation process, in the future, the number of SMEs benefiting from cloud computing in general and from accounting in particular will increase.

In short, cloud computing plays a regulatory role in the relationship between management accounting information and decision making in Vietnamese SMEs. The effectiveness of management accounting information on decision making in Vietnamese SMEs will be higher when businesses use cloud computing.

Implications for Vietnamese small and medium enterprises

The study has illustrated the impact of management accounting information on decision making in SMEs. Management accounting is an indispensable part of a business, considered to play a key role in influencing company operations. The information provided by management accounting helps leaders make the right decisions and is consistent with long-term or short-term plans. Management accounting information is especially important in the operation of a business, and at the same time serves to control and evaluate that business. The information that management accounting needs to grasp includes both financial and non-financial information. All four aspects of management accounting information, namely scope, timeliness and frequency of reporting, synthesis and integration, are found to have effects on decision making in SMEs.

In addition, the study indicated that if enterprises use cloud computing, the influence of management accounting information on decision making in SMEs will be higher. In other words, cloud computing plays a regulatory role in the relationship between management accounting information and decision making in enterprises. Cloud computing is an excellent tool for digitalizing business administration and plays an important role in today’s technological progress. Many enterprises have used cloud computing to manage and process large amounts of information. Thanks to cloud computing, management accounting information will be processed faster and more completely, helping business administrators to rely on it to make accurate and timely decisions, improving the competitiveness and survival of enterprises in the current context of globalization. Therefore, SMEs need to plan to apply cloud computing to meet new requirements in the current situation. Cloud computing helps SMEs save costs by eliminating the need to build their own infrastructure, listed as a data center; however, it does not require businesses to maintain a large IT team. Cloud computing also allows businesses to increase and decrease usage needs immediately. In addition, cloud computing is a powerful supportive technology for business owners or those who travel a lot due to the nature of their work. They can easily track and manage their businesses remotely.

The entire paper on The Impact Of Management Accounting Information On Decision Making In Small And Medium-Sized Enterprises In Vietnam: The Regulatory Role Of Cloud Computing can be found HERE.

Authors: Dr. Pham Ngoc Toan – University of Economics Ho Chi Minh City (UEH) , Dr. Dao Nhat Minh – Quy Nhon University.

This article is part of the research series spreading applied knowledge from UEH with the message “Research Contribution For All – Research for the Community”, UEH cordially invites readers to wait for the next UEH Research Insights issue.

News, photos: The Authors, UEH Department of Marketing and Communication

Audio: Khanh Hoa