Abstraction: This paper examines the factors act uponing Persian Small Medium Enterprises ( SMEs ) to obtain consultative services provided by external comptrollers and the association between the usage of such external comptrollers ‘ advisory services and SME public presentation. The survey utilises the resource-based position ( RBV ) theorisation theoretical account and conducts a questionnaire study of 658 Persian fabrication SMEs. The consequences of additive arrested development analysis suggest that the usage of external accountantsaˆ? advisory services are positively associated with the cognition of owner/manager, proficient competency of an external comptroller, competitory strength and complexness of market determinations. In add-on, the survey evidences that the usage of advisory services have a positive consequence on SME public presentation. Furthermore, after commanding for age and size of the house, all four independent variables ( cognition, proficient competency, competitory strength and complexness of market determinations ) were found important.
The usage of external comptrollers ‘ advisory services by little and average endeavors ( SMEs ) and its impact on SME public presentation: A resource- based position
In this globalised epoch, as competitory force per unit areas intensify, smaller houses are forced to decrease their costs and make new chances through optimized use of external resources ( Mahmoodzadeh et al. , 2009 ) . Obviously, the new competitory environment is more complex ( Espino Rodriguez and Padron-Robaina, 2004 ) , and moreover, Small Medium Enterprises ( SMEs ) can non command the markets in which they operate ( Bennett, 2008 ) . Consequently, the bulk of SMEs tend to neglect because of the deficiency of planning, selling cognition, or absence of managerial accomplishments and competences ( Dyer and Ross, 2008 ) . Therefore, SMEs are seen as most destitute receivers of concern support and advice as a consequence of both their economic part and their exposure to market imperfectnesss ( Lowe and Talbot, 2000 ) . In this context, many claim a transmutation in professional comptrollers ‘ services to their little concern clients. External comptrollers can help SMEs runing in a competitory environment, to incorporate operational considerations within long-run programs ( Mitchell et al. , 2000 ; Ismail and King, 2005 ) to heighten their sustainability.
Given that SMEs run within unsure environments ( Mole, 2004 ) , the thought behind the concern links was that they must be the entry point for SMEs to seek advisory services and support ( Lowe and Talbot, 2000 ) . In this context, external comptrollers can prehend chances to back up owner/managers of SMEs to turn to sequence issues by utilizing their analytical accomplishments, commercial expertness and broader industry perspectives to knowledge of clients ‘ sequence state of affairss ( Martin, 2005 ) . It is evidenced that the chief beginning of professional and support services for SMEs in the competitory market in the Asiatic concern community are professional comptrollers ( Dhaliwa, 2003 ) . Hence, increasing attending has been given to the external comptroller as concern adviser and to the multidisciplinary pattern construct, a focal point partially precipitated by a downswing in economic activity ( Greenwood et al. , 2002 ; Samujh and Devi, 2008 ; IFAC, 2010 ) . Specialization is a cardinal to success, with many smaller accounting service suppliers concentrating on peculiar services ( Martin, 2005 ) . One signifier of specialisation can be the proviso of incorporate solutions for SMEs, a farther sweetening of the traditional function of the professional comptroller and, perchance, widening into employment and preparation, gross revenues and selling and client attention ( Martin, 2005 ) . Furthermore, in more complex conditions, external comptrollers are in a alone place to supply attacks and assist SME owner/managers to accomplish their concern aims ( Martin, 2005 ; Devi and Samujh, 2010 ) .
Empirical surveies examined the consequence of the usage of comptrollers ‘ advisory services on SME public presentation ( Berry et al. , 2006 ; Robson and Bennet, 2000 ; Bennett and Robson, 1999 ) . However, these are conducted in more developed economic systems wherein the consequence of consultative services on SME public presentation is examined. Furthermore, the consequences are inconclusive. Devi and Samujh ( 2010 ) grounds a displacement towards proviso of more non-compliance services to SMEs among professional comptrollers in Malaysia, an emerging economic system[ 1 ]. However, the relationship between external comptrollers ‘ services and SME public presentation has non been examined in an emerging economic system context. It is besides argued that empirical grounds from the most developed economic systems may non be as applicable to economic systems such as Malaysia or Iran[ 2 ]( Mashayekhi and Mashayekh, 2008 ) due to differing institutional context ( Devi and Samujh, 2010 ) and degree of province intercession in economic activities ( Ismail and Zin, 2009 ; Ismail and King, 2006 ) . For illustration, there are several grounds that Persian SME environment differs from that of developed economic systems: ( 1 ) inadequate accounting and direction, ( 2 ) high cost of entree to information, ( 3 ) barriers to beginnings of finance, ( 4 ) populace policy defects, ( 5 ) hapless direction and ( 6 ) unskilled workers ( UNIDO, 2003 ) .
Given that, the nature of comptrollers ‘ services is people-intensive and SMEs lack people and capableness, it is seasonably to analyze whether there is an association between the proviso of external comptrollers ‘ advisory services and SME public presentation in an emerging economic system. Hence, this paper aims to place the factors that influence Persian SMEs to obtain consultative services from external comptrollers and to research the nexus between the consultative services and steadfast public presentation by using the resource-based View ( RBV ) theorization in the Persian fabrication sector.
The remainder of the treatment is organised as follows: Section 1 provides the reappraisal of literature and develops hypotheses using the resource based position ( RBV ) as a theoretical model to look into the usage of consultative services. Section 2 explains the research methodological analysis. Section 3 presents the findings. Section 4 discusses the deductions. Section 5 concludes with suggestions for future research.
1. Review of Literature
1.1. The Role of External Accountants in SMEs
As a consequence of the denationalization programme in 1991, fiscal coverage has gained importance in Persian companies fuelled by international force per unit areas from the World Bank and the International Monetary Fund ( Mashayekhi and Mashayekh, 2008 ) . Therefore, the demand for fiscal coverage has increased in connexion with denationalization of economic entities ( Salehi and Azary, 2008 ) . To run into with this demand, the Persian Association of Certified Public Accountants ( IACPA ) was established in 2001 as an independent professional organic structure ( non-government association ) ( Mirshekary and Saudagaran, 2005 ) . Professional comptrollers play an of import function in Iranian SMEs which comprise about 90 per centum of companies of Iran ( Mirshekary and Saudagaran, 2005 ) . Based on IACPA ( 2003 ) and interviews[ 3 ]with selected Persian professional comptrollers and SME owner/mangers, it is revealed that the accounting, audit and consultative services are critical in the Persian SMEs.
Although smaller companies ‘ entree to a broad assortment of consultative services, such as Bankss, is available, it is expected that the external comptroller would play a cardinal function in helping SME owner/managers to pull off their houses efficaciously ( Mole, 2002 ) . External comptrollers are perceived to be of important support to the owner/managers in running the house specifically when it comes to the debut and execution of alterations ( Gooderham et al. , 2004 ) . The function of the external comptroller is chiefly perceived by SME owner/managers as assisting them to get by with revenue enhancement demands, even though empirical grounds suggests that services provided by the external comptrollers extends beyond traditional work ( Marriott and Marriott, 2000 ) . Obviously, external comptrollers execute a figure of functions in the SME community: they non merely supply accounting and scrutinizing services with respect to compliance issues but besides provide consultative services on a scope of broader business-management issues ( Marlow and Carter, 2005 ) . External comptrollers are chief advisors to most concerns on all facets of making concern ( Leung et al. , 2008 ) . Indeed, external comptrollers maintain a wide base of expertness, enabling them to lend to the success of companies beyond traditional services ( e.g. accounting and scrutinizing ) ( Greenwood et al. , 2002 ) .
1.2. External Accountants ‘ Advisory Servicess
In New Zealand, Lewis et Al. ( 2005 ) revealed that, of a scope of advisers, external comptrollers were ranked first by SME owner/managers in footings of frequence, usefulness and significance of advice obtained. In the UK, Berry et Al. ( 2006 ) found 85 per centum of little endeavors used their external comptroller as a beginning of consultative services. In add-on, Berry et Al. ( 2006 ) study that 69 per centum of little houses utilise their external comptroller for statutory advice, 33 per centum as concern direction advice and 31 per centum for fiscal direction support work. In the UK and Canada, Blackburn et Al. ( 2006 ) claim that external comptrollers are chief beginning of support and advice to SME sector in contrast to other beginning of concern advisers such as Bankss and canvassers. In Australia, Leung et Al. ( 2008 ) studies that external comptrollers have provided much of the fiscal direction and revenue enhancement support for the SME sector and have long been seen as the preferable professional advisor to SMEs.
In the UK, Kirby et Al. ( 1998 ) separate statutory services from non-statutory services in the SME environment. They concluded that SMEs utilised external comptrollers as beginning of “ non statutory services ” . In Norway, a survey of use of external comptrollers as a beginning of support and advice to little companies conducted by Gooderham et Al. ( 2004 ) indicated that external comptrollers are a dependable Jesus of consultative services and support in little companies. In Australia, Carey et Al. ( 2005 ) examines the function of comptrollers in supplying concern advice to SMEs. They found that 67 per centum of SMEs utilise external comptrollers as a beginning of concern advice and besides indicate that there is room for external comptrollers to increase the sum of concern advice they provide to SMEs. In the UK, Scott and Irwin ( 2009 ) revealed that external comptrollers were the chief beginnings of advice in the SME environment. In drumhead, whilst this research was undertaken in more developed economic systems, literature on function of professional comptrollers in developing states such as Iran is losing except for the limited surveies conducted in Malaysia ( Devi and Samujh, 2010 ; Jayabalan 2009 ) . Given that the above surveies are conducted in the more developed economic systems, it will be utile to analyze what factors impact determination to prosecute external comptrollers ‘ services and whether in the Persian context, there is an association between the usage of comptrollers ‘ advisory services and steadfast public presentation.
1. 3. Theoretical Framework and Hypotheses
Resource-based position ( RBV ) of the house is defined as a alone package of assets and resources or capablenesss that if a company utilises it in typical ways, can bring forth competitory benefit ( Barney, 1991 ) . For case, McIvor ( 2009 ) explains resources and capablenesss can be valuable if they permit a house to take advantage of chances and counter menaces in the competitory environment. Therefore, activities or services in which the company lacks the indispensable resources or capablenesss internally can obtain from external service suppliers ( McIvor, 2009 ) . Furthermore, Gottschalk and Solli-S?ther ( 2005 ) argue that RBV concentrates on two of import points: “ First, that resources are the determiners of house public presentation and 2nd, that resources must be rare, valuable, hard to copy and non-substitutable by other rare resources ” ( p. 657 ) . However, in accounting context, resources and capablenesss are defined as cognition and expertness ( Jayabalan et al. , 2009 ; Everaert et al. , 2006 ) . Hence, one key separating factor in the emerging economic systems ‘ context is the deficiency of resources in footings of expertness ( Jayabalan et al. , 2009 ; UNIDO, 2003 ; Ismail, 2002 ) . Consequently, the RBV explicates that a steadfast seeks cognition and advice from external beginnings to accomplish competitory benefits ( Johnson et al. , 2007 ) . Obviously, cognition and information are of import for SMEs and they should obtain them from external beginnings to achieve a competitory advantage in their competitory environment ( Johnson et al. , 2007 ) . However, SMEs suffer from the absence of managerial cognition, which can be complemented by external beginnings, peculiarly external comptrollers ( Gabrielsson et al. , 2004 ) . Interestingly, consistent with the RBV theorization, SMEs use external comptrollers as beginnings of consultative services and determination devising to make full up spreads in their internal resource ( IFAC, 2010 ; Marriott et Al 2008 ; Gooderham et al. , 2004 ) . Hence, RBV explains successfully a figure of respects of accounting for differences in the proviso of consultative services by external comptrollers ( Doving and Gooderham, 2005 ) . For illustration, the RBV indicates what factors influence determination of a house to prosecute external comptrollers as a beginning of advice and support services in SME context ( Marriott et al, 2008 ; Everaert et al. , 2006 ; Doving and Gooderham, 2005 ; Gooderham et Al, 2004 ; Bennett and Robson 2003 ) . As a consequence, the RBV is imperative to the survey of use of external resources and heightening public presentation. It suggests that house public presentation can be increased via bettering the strategic and information accomplishments of SMEs ( McIvor, 2009 ; Bennett and Robson, 2004 ) . The illation of RBV is that if houses are to turn, they need to go more adept at seeking adept cognition from external service suppliers and so embed the cognition they get into their houses ( Worrall, 2007 ) .
1.3.1. Owner/ Manager Knowledge
RBV explains that bulk of SMEs can non transport out the accounting undertakings ( services ) in-house because they are faced with unequal cognition and unqualified employees or resource restraints ( Jayabalan et al. , 2009 ; Everaert et al. , 2006 ) . For illustration, it is claimed that SMEs lack the necessary accomplishments and resources ( i.e. experience, cognition and expertness or people ) to execute accounting maps internally. Furthermore, entree to relevant expertness and cognition was clearly the most of import ground to prosecute professional comptrollers ( Jayabalan et al. , 2009 ; Everaert et al. , 2007 ; Ismail, 2002 ; Marriott and Marriott, 2000 ; Holmes and Nicholls, 1988 ) . Hence, external comptrollers are in a alone place to supply professional and support services to SMEs ( Breen et al, 2003 ) . However, many reported that SME owner/managers are frequently non cognizant of the scope of support services and advice available to them ( Ismail and Zin, 2009 ; Ismail and King, 2007 ; Liddicoat and Stringer, 2005 ) due to the inaccessibility of sufficient grounds of the benefits of such services ( Watson, 2003 ) , or deficiency of support in seeking relevant information ( Curran and Blackburn, 2000 ) . In fact, sophisticated SME owner/managers may understand the benefits of counterbalancing their ain inadequate cognition or accomplishments by using external service supplier ( Ismail and King, 2007 ; Watson, 2003 ) . For illustration, Audet and St-Jean ( 2007 ) found that the SME owner/managers, who knew more about the external services, utilised those services more than SME owner/managers who did non hold any information about these services. However, less sophisticated and incapable SME owner/managers might be incognizant of their ain failings to inquire for advice and support, believing they can execute it all themselves ( Watson, 2003 ) . Therefore, the predicted relationship is examined by agencies of the undermentioned hypothesis.
Hypothesis 1: Firms with owner/managers holding high degrees of cognition in accounting will use external accountantsaˆ? advisory services more than those houses that with owner/managers holding low degrees of cognition.
1.3.2. Technical Competence
The RBV postulates that owner/managers must understand why competencies should be acquired as valuable resources to better house public presentation ( Caldeira and Ward, 2003 ) . From a RBV position, maps which are non important to the nucleus competences must be obtained from external service suppliers ( Gilley et al. , 2004 ) . For case, SMEs should get the activities that are non core competencies to better house public presentation ( Gilley et al. , 2004 ; Espino Rodriguez and Padron-Robaina, 2004 ) . For most portion, bulk of SME owner/managers have no professional, direction and other formal makings ( Stanworth and Gray, 1992 ) . One possible manner for a smaller house to obtain competences is to prosecute services of qualified individuals ( Gooderham et al, 2004 ) . Therefore, by trusting on external beginnings, smaller houses can acquire the competency they need from external service suppliers ( Carey et al. , 2006 ; Gilley et al. , 2004 ) . Furthermore, the trust by SMEs on external comptrollers is perceived to be a consequence of the perceptual experiences of SMEs that external comptrollers are competent and can supply a value-for-money advisory and support services ( Leung et al, 2008 ) . Obviously, empirical research shows that proficient competency of the external comptroller is positively associated with the usage of comptrollers ‘ advisory services ( Gooderham et al. , 2004 ; Carey et Al. 2005 ) . Consequently, the earlier statements are summarised in the undermentioned hypothesis:
Hypothesis 2: The higher the perceptual experience that an external comptroller has high proficient competency in offering accounting undertakings, the greater the leaning to utilize external comptrollers ‘ advisory services.
1.3.3. Competitive Intensity
Competitive force per unit areas force SMEs to beginning for important competences to guarantee endurance and development ( Gooderham et al, 2004 ) . For illustration, SMEs are unable to go on when they face intense competitory force per unit area because their limited resources do non allow them to accommodate their merchandise ( Gooderham et al, 2004 ) . Consistent with RBV, the house that faces intense competition needs more resources and support than the house that does non confront competitory force per unit area ( Worrall, 2007 ; Gooderham et Al, 2004 ) . For illustration, Devi and Samujh ( 2010 ) argue “ Understanding concern demands provides chances for houses in the fiscal direction services sector to place more accurately the services needed by smaller concerns in general, and therefore run into these demands more expeditiously ” ( Devi and Samujh, 2010, p. 7 ) .
In the competitory state of affairs, SME proprietor / directors should larn how to work external resources to assist their companies to go more productive and competitory ( Worrall, 2007 ) . Mentioning to earlier treatment, one possible manner to cut down competitory force per unit area and addition sufficient competency and resource is to use qualified individuals ( Gooderham et al, 2004 ) . However, given the deficient figure of qualified professional comptrollers, we expect SMEs will turn to external comptrollers for advice and support services ( Berry et al. 2006 ; Devi and Samujh, 2010 ) as advice and support services comprise a scope of competences and cognition that are much important for the house endurance and deriving competitory advantage ( Gooderham et al, 2004 ) . For case, Gooderham et Al. ( 2004 ) argue that when a smaller company is faced with vulnerable competition, they refer to an external comptroller as a beginning of support and advice to get competitory advantage. Consequently, our 3rd hypothesis based on the earlier treatment is as follows:
Hypothesis 3: The houses that face more intense competition will use more external comptrollers ‘ advisory services.
1.3.4. Complexity of Marketing Decisions
Consistent with RBV, smaller companies need to get advice and support services to broaden their market for accomplishing competitory advantage ( Marriott et al 2008 ) . Further, Johnson et Al. ( 2007 ) argue the demand of company owner/manager to get external advisory services and support is dependent on the nature of the market within which the company is runing. For illustration, when a company is runing in the local market, they might be able to drive the concern based on its internal resource and may merely necessitate limited external support ( Johnson et al. , 2007 ) . In add-on, while SME owner/managers may be proficient in the merchandise ( services ) markets within which they work, they may non be proficient in accounting, operational and fiscal direction issues, or may miss other of import accomplishments and expertness ( Devi and Samujh, 2010 ; Collis and Jarvis, 2002 ; Marriott and Marriott, 2000 ) . Although market issues are non legalised by legislative act, as accounting issues, Pineda et Al. ( 1998 ) reported that SME owner/managers besides see market issues as accounting issues. Therefore, SME owner/managers may handle this country of expertness in the same manner as they perceive accounting issues or fiscal direction issues ; they may prosecute advice and information when they make marketing determinations on merchandise quality, merchandise lines and pricing ( Pineda et al. , 1998 ; IFAC, 2010 ) .
Mcgee and Sawyerr ( 2003 ) explain complex selling determinations involve important sum of uncertainness, and that the company owner/manager should obtain external resource to cut down this uncertainness. Based on the earlier statement, we can anticipate that the SME directors who are confronting more complex selling determinations would seek advice and support ( Dyer and Ross, 2008 ) . Consequently, they may mention to external comptrollers for fiscal direction advice and possibly wider aid ( Berry et al. 2006 ) . Evidence suggests that SME owner/managers seek specialised advice and support services where needed ( Sian and Roberts, 2009 ) . For illustration, Sian and Roberts ( 2009 ) reported that SME owner/managers use external comptrollers on a assortment of concern advisory services beyond traditional services. Dyer and Ross ( 2008 ) found that complexness of selling determinations is significantly associated with concern advice. Therefore, we hypothesise an association between the usage of consultative services and complexness of selling determinations as follows:
Hypothesis 4: The higher the complexness of the selling determinations confronting the SMEs, the higher the usage of external comptrollers ‘ advisory services.
1.3.5. SME Performance
Bennett and Robson ( 1999 ) grounds an association between SMEs ‘ use of the consultative services of an external comptroller and employment growing. Bennett and Robson ( 1999 ) categorized three growing classs: ( I ) declining/stable, ( two ) medium growing, and ( three ) fast growing. They found that the consultative services of an external comptroller are associated with SME growing. Additionally, Robson and Bennet ( 2000 ) examined the relationship between concern advice provided by an external comptroller and SME public presentation. However, they did non happen a positive relationship between concern advice and SME public presentation. They categorized public presentation in three groups ( 1 ) alteration in figure [ of staff ] employed by client, ( 2 ) per centum alteration in house turnover and ( 3 ) alteration in profitableness per employee.
Berry et Al. ( 2006 ) examined the consequence of four types of comptrollers ‘ advisory services ( concern advice, exigency advice, fiscal direction support and statutory advice ) on SME public presentation ( growing ) . They report that “ the grade of usage of a scope of external advice was positively related to the growing rate of SMEs ” ( p33 ) . Similarly, Dyer and Ross ( 2008 ) examined the usage of concern advice by the little concern proprietor and its impact on concern success. Measure of concern success in their survey was perceptual, based on satisfaction with fiscal steps ( such as sum of net incomes, Net income as per centum of gross revenues, Net income as per centum of investing, Growth in gross revenues and Growth in net incomes ) . Dyer and Ross ( 2008 ) found concern advice positively impact concern success. It is accepted that most of SMEs in lesser emerging economic system such as Iran are confronting unequal resources ( Zanjani et al. , 2008 ; UNIDO, 2003 ) . Consequently, in an emerging economic system context where there is more demand for external expertness, the usage of external comptrollers ‘ services should heighten public presentation. Hence, we hypothesise the house public presentation is associated with direct usage of external comptrollers ‘ advisory services as follows:
Hypothesis 5: There is a positive relationship between house public presentation and use of external comptrollers ‘ advisory services.
Based on earlier treatment, the research theoretical account is shown in Figure 1.
Figure 1: Research theoretical account
Accountants ‘ advisory services
Firm public presentation
Complexity of market determinations
2. Research Methodology
2.1. Datas Collection
Harmonizing to the definition of SMEs in the context of Iran by UNIDO ( 2003 ) , we limited our study population to companies in footings of figure of employees in the scope of less than 250 employees, while excepting micro-firms with fewer than 10 employees. Therefore, the populations of this paper comprise Persian fabrication SMEs because fabrication SMEs are extremely important in position of bring forthing both fabricating value added and exports in the context of Iran ( UNIDO, 2003 ) . We designed and developed a questionnaire study based on anterior research ( see Dyer and Ross, 2008 ; Ismail and King, 2007 ; Sarapaivanich and Kotey, 2006 ; Rivard et Al, 2006 ; Carey et al. , 2006 ; Doran, 2006 ; Gooderham et al. , 2004 ) . A pilot trial was conducted with 50 SME owner/managers, and so a sample of 1750 SMEs was selected indiscriminately, utilizing a graded random trying attack and the study questionnaire was sent to each SME owner/manager by station mail. We selected the owner/managers of SMEs because they would hold to derive external consultative services to pull off their concerns. We received 770 questionnaires. However, we eventually had merely 658 useable replies, stand foring an effective response rate of 38 per centum. The response rate is really high in contrast to old survey of SME context by Everaert et al. , ( 2007 ) who had a low response rate ( 10 per centum ) .
Based on the suggestion by Armstrong and Overton ( 1977 ) , we compared early and late respondents ( non-response prejudice trial ) , but we did non happen any important differences between early and late respondents in footings of the figure of employees and every bit good dependent and independent variables, which is in line with anterior research done by Everaert et Al. ( 2008 ) .
2.2. Variable Measurement
We measured each variable based on anterior surveies. The inside informations of the variable measuring are presented in Table 1. We found adequately high Cronbach ‘s alpha for all variables ( above 70 % ) .
2.2.1. Dependant and Independent Variables
In this survey, we measured Performance similar to the step used by Sarapaivanich and Kotey ( 2006 ) , foremost inquiring respondents to bespeak the degree of the importance attached to the seven public presentation ends ( see Table 1 ) on a 7-point Likert type runing from 1-not at all of import to 7-very of import. Then, respondents were asked to bespeak their satisfaction with the seven public presentation ends over the old two fiscal old ages on a 7-point Likert type runing from 1-strongly dissatisfied to 7-very satisfied.
Based on IACPA ( 2003 ) and interviews with selected Persian professional comptrollers and SME owner/mangers, we identify five types of Advisory Services ( see Table 1 ) which are applicable in Persian SMEs and these are similar to that derived by Doran ( 2006 ) . Consequently, we utilised the measuring developed by Gooderham et Al. ( 2004 ) , inquiring respondents to bespeak to what extent they use external comptroller as adviser associating to each point utilizing a 7-point Likert type, where 1 – non at all to 7 – really big grade.
We measured Knowledge of SME owner/manager with nine points derived from Ismail and King ( 2007 ) , inquiring respondents to bespeak the degree of their cognition of the accounting techniques and IT applications, utilizing a 7-point Likert type from 1 = no cognition to 7 = extended cognition.
Technical Competence was measured with six points developed by Carey et Al. ( 2006 ) , inquiring respondents to stipulate the grade to which the house perceives its external comptroller as a proficient competent beginning of accounting and consultative services, utilizing 7-point Likert graduated table where 1-lowest mark and 7 – highest mark.
Competitive Intensity is measured with five points based on Rivard et Al. ( 2006 ) and Lamminmaki ( 2008 ) . Hence, respondents were asked to enter the strength of their house competition associating to each point on a 7-point Likert graduated table from 1- really weak competition to 7- really ferocious competition.
We measured Complexity of Market Decisions with four points in line with Dyer and Ross ( 2008 ) , inquiring respondents to place the factors that affect the success of their concern on a 7-point Likert graduated table, 1 = non at all important, 7 = highly important.
2.2.2. Control Variables
RBV indicated that the usage of external support and professional services interacts with the size and age of the house ( Bennett and Robson, 2003 ) . Empirical surveies indicate that use of concern services and advice by SMEs is positively related to tauten size and house age ( Dyer and Ross, 2008 ; Robson and Bennett, 2000 ; Bennett and Robson, 1999 ) . As a consequence, we chose these variables in our survey as control variables. Therefore, we measured Firm Size, consistent with the step that was used by Audet and St-Jean ( 2007 ) , inquiring respondents to bespeak the figure of employees working in the concern. In add-on, we measured Firm Age similar to the attack utilised by Doran ( 2006 ) ; inquiring respondents to place the twelvemonth in which their concern was foremost registered.
3.1 Descriptive Statisticss
Table 2 shows the demographic profile. Our sample included 78 per centum male and 22 per centum female. Most of the respondents were rather good educated, and the general degree of managerial experience was high with about three-fourth of respondents holding over five old ages of experience.
Descriptive statistics are shown in Table 3. Descriptive statistics describe agencies and standard divergence ( S.D ) and correlativities among the independent, dependent and control variables. It is observed that all independent variables significantly correlated with the dependant. Hence, we did n’t happen correlativities more than 70 % between independent variables, so the correlativity between independent variables was such that multicollinearity is non a concern ( Lamminmaki, 2008 ) .
3.2. Hypothesiss Testing
3.2.1. Testing for direct effects: advisory services
Table 4 shows arrested development coefficients and standard mistake ( S.E ) for each of the forecaster and control variables. The multiple additive arrested development analysis in Model 1of Table 4 shows a important positive coefficient for owner/manager cognition ( Knowledge ) , proposing that the usage of consultative services provided by an external comptroller is positively related to the owner/manager cognition, thereby corroborating Hypothesis 1 ( P & lt ; 0.01 ) . It besides indicates that the usage of advisory services besides is significantly positively associated with the proficient competency ( Competence ) of the external comptroller, which provides support for Hypothesis 2 ( P & lt ; 0.01 ) . In add-on, the Hypothesis 3 having support which posits a positive relationship between competitory strength ( Competition ) and usage of consultative services ( p & lt ; 0.01 ) . Support is besides provided for Hypothesis 4 ( P & lt ; 0.01 ) which posits the more the complexness of the selling determinations confronting the house, the more the usage the external comptrollers ‘ advisory services. In other words, the complexness of selling determinations is significantly positively associated with the usage of the consultative services provided by external comptrollers ( MktDecision ) .
3.2.2. Testing for control variables effects: advisory services
We suggested that house size and steadfast age may impact the usage of external comptrollers ‘ advisory services. Model 2 in Table 4 shows consequences of the multiple additive arrested development analysis with owner/manager cognition, proficient competency, competitory strength and complexness of market determinations as the independent variables and the usage of consultative services as dependent variable, commanding for the effects of the size and age of the house. The consequences suggest that all independent variables ( owner/manager cognition, proficient competency, competitory strength and complexness of market determinations ) have a positive important impact on the usage of consultative services ( p & lt ; 0.01 severally ) . Therefore, Hypotheses 1, 2, 3 and 4 are besides supported. It noted that the usage of consultative services is non associated with house size and house age.
3.2.3. Arrested development analysis: public presentation
We noted the extent to which a house uses external comptrollers ‘ advisory services might hold an betterment on its public presentation. Therefore, for accomplishing this aim, a additive arrested development analysis was undertaken to prove the association between the use of consultative services as the independent variable and public presentation as the dependant variable in Model 3 of Table 4. Support is besides provided for Hypothesis 5 ( P & lt ; 0.01 ) which posits a steadfast public presentation improves straight to the extent to which the external comptrollers ‘ advisory services are utilized. In add-on, we besides controlled for the impact of age and size of the house in Model 4 of Table 4, and found that the usage of consultative services statistically positively associated with house public presentation ( p & lt ; 0.01 ) , and negatively associated with house size ( p & lt ; 0.05 ) , but it was unrelated to steadfast age.
4. Discussion and Deductions
In this paper, we have examined the factors that influence a house ‘s leaning to utilize external comptrollers ‘ advisory services and whether SMEs which obtain those services improve their public presentation. Pulling on the resource-based position ( RBV ) , a series of hypotheses were generated and tested on informations refering the use of consultative services by SMEs in the context of Iran.
As hypothesized before, owner/manager cognition has important positive impact on the usage of external comptrollers ‘ advisory services. In the other words, houses with owner/managers holding high degrees of cognition in accounting will utilize external accountantsaˆ? advisory services more than those houses that with owner/managers holding low degrees of cognition. Therefore, our happening corroborates anterior surveies conducted by Audet and St-Jean ( 2007 ) , indicated when the SME proprietors know more about the external service suppliers, they will use higher their services, and Ismail and King ( 2007 ) , found the usage of accounting information system was associated with SME owner/manager knowledge of accounting techniques.
We besides found a positive association between the use of consultative services and proficient competency of an external comptroller. This determination is consistent with the consequences of the old research undertaken by Gooderham et Al. ( 2004 ) , proposing that the professional comptroller ‘s competency has a important positive impact on the determination to utilize the external comptroller as concern adviser, and by Carey et al. , 2006 ) , that the proficient competency of an external comptroller is positively associated with outsourcing of internal auditing services.
More significantly, our consequences besides revealed that an SME operating in a competitory environment turns to the external comptroller for support and advice. In other words, the usage of consultative services of an external comptroller is positively associated with competitory strength. This consequence is consistent with predating research conducted by Chenhall ( 2003 ) which showed that the competition strength positively associated with the usage of formal controls, but this consequence is contradictory with a anterior survey conducted in Norway ( Gooderham et al. , 2004 ) , which indicated that concern advice of external comptroller was non related to the grade of competition. We believe the grounds could be threefold: First, the anterior research was undertaken in a more developed state, whereas nowadays survey was conducted in lesser developing state such as Iran, therefore underscoring the importance of the RBV theorisation and its pertinence in an emerging economic system context ; Second, the sample of this survey included little and average sized- endeavors whereas anterior research ( Gooderham et al. , 2004 ) focused on micro and little endeavors ( 20 employees ) , therefore proposing an impact of size on the demand for outsourcing of services ; Finally, we examined five types of advisory services provided by external comptroller, whereas prior survey tested merely concern advice of an external comptroller, clearly this indicates the importance of assortment of services for an emerging economic system.
This survey besides examined the association between complexness of selling determinations and the usage of external comptrollers ‘ advisory services, and found the higher the complexness of the selling determinations confronting the house, the higher the use of the external comptrollers ‘ advisory services. Hence, the use of the external comptrollers ‘ advisory services is positively related to the complexness of selling determinations. This determination indicates that owner/managers are willing to utilize external comptroller when the house has many different merchandises, market sections, and clients. Our determination is in line with anterior research ( Dyer and Ross, 2008 ) which demonstrated that the more complex the selling determination, the more the little concern owner/manager is likely to seek concern advice.
We besides introduced the size and age of the house as control variables in our arrested development equation. Consequently, the relationship between the usage of consultative services and four independent variables ( owner/manager cognition, proficient competency of the external comptroller, competitory strength and complexness of market determinations ) remained positively important, but the usage of consultative services was non associated with the size and age of the house. This determination is similar to Gooderham et Al. ( 2004 ) who found that the sourcing of concern advice from external comptrollers was non associated with house size, and Mohan-Neill ( 1995 ) , indicated that younger and smaller houses use less market information when they make determinations.
More significantly, this survey examined the relationship between the usage of consultative services and SME public presentation, and found that a steadfast public presentation improves straight to the extent to which the house engages an external comptroller as adviser. In other words, the usage of consultative services is positively associated with SME public presentation. Our determination is consistent with anterior surveies that indicated the use of consultative services from an external comptroller had a important positive influence on house public presentation ( Bennett and Robson, 1999 ; Berry et al. , 2006 ) , but this consequence is contradictory with the research conducted UK by Robson and Bennet ( 2000 ) which indicated external comptrollers ‘ concern advice is non associated with SME public presentation. Therefore, we can theorize that this may due to the context of the developed economic system where the SME enterprisers could be sufficiently literate on fiscal and direction issues. For case, in emerging economic system, most SMEs face trouble in pulling and retaining skilled employee ( UNIDO, 2003 ; Ismail, 2002 ; Devi and Samujh, 2010 ) . This is as a consequence of fewer experts and insufficient knowing accounting support to transport out accounting undertakings ( Jayabalan et al. , 2009 ; UNIDO, 2003 ; Ismail, 2002 ) .Thus, SMEs in the emerging economic system may see greater demand to use external comptrollers relative to more developed economic system to acquire benefit from their services ( Devi and Samujh, 2010 ; Jayabalan et al. , 2009 ) . Furthermore, the nexus between the use of consultative services and public presentation remained important after including control variables in our arrested development equation.
This survey revealed some research and practical deductions. First, this survey examined the consequence of the use of external comptrollers ‘ services on SME public presentation and confirms old research ( Bennett and Robson, 1999 ; Berry et al. , 2006 ) , and besides extends by including cognition of owner/manager, proficient competency, market determinations and competitory strength as critical factors set uping a house ‘s determination to use external comptrollers ‘ services, this makes a part to the literature on emerging economic systems. Second, this survey analysed the consequence of external comptrollers ‘ services and SME public presentation from the RBV, this provides some empirical findings non shown in old surveies. Third, this work is the first to analyze the external comptrollers ‘ services in the Persian context of an emerging economic system and it besides explicitly discusses the services presently provided by comptrollers to SME sector and examines the function that accountants drama in Persian context. Therefore, by placing the broader scope of services presently provided by external comptrollers to SMEs and the benefit attached to these services brings into concentrate the broader scope of picks available to SME owner/managers. Fourth, SMEs constitute over 90 per centum endeavors in developing economic systems. However, bulk of SMEs faced with limited capacity and expertness in-house, they usually seek support services and advice because of their necessity. In fact, external comptrollers are in a alone place to carry through the demands of SMEs, but it is of import that the support services and advice are provided by them to SMEs are fit for intents ( i.e. relevant and high quality ) . Finally, if professional comptrollers are to spread out their services to SMEs, this survey emphasises that they should increase their multidisciplinary and accomplishments base beyond traditional work and travel to be knowledge professions. Whether or non professional comptrollers can be able to achieve this displacement is arguable. This implies the accounting profession should research avenues to heighten the services offered by professional comptrollers.
5. Restrictions and Suggestions for Future Research
Generalizability of this research is limited because all of the endeavors in the sample were fabrication, generalising the findings of this research to service sector is non advisable. In add-on, we examined merely Persian SMEs, so our findings may non be generalized to SMEs in other states. However, the consequences of this survey may necessitate to be interpreted in visible radiation of a few restraints. First, this research focused on quantitative method utilizing questionnaire study, therefore future research should use qualitative attack in order to look into the consequence of consultative services on SME public presentation. Finally, this research utilised subjective steps of SME public presentation, but it may be utile to analyze nonsubjective steps of public presentation ( i.e. per centum of net incomes ) within a specific industry for future survey.
This survey examined the factors impact determination to prosecute external comptrollers ‘ advisory services and its consequence on SME public presentation by utilizing a sample of fabrication houses in Persian SME context. Our findings indicate that owner/manager cognition, proficient competency, competitory strength and complexness of selling determinations are critical factors affect a house ‘s determination to prosecute external comptrollers ‘ services in Persian SME context. More significantly, our consequences suggest the usage of the external comptrollers ‘ advisory services was significantly positively associated with SME public presentation. Although we did non carry on the mediation effects of the usage of consultative services on the relationship between four independent variables and public presentation, more intensive probe may supply a promising avenue for future research.