How Strategic Management Accounting Affects the Performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia

Abstract

This study examines the influence of Strategic Management Accounting (SMA) on the performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, a developing nation with limited research on SMA implementation.    Strategic Management Accounting (SMA) differs from conventional management accounting by focusing on an external perspective, long-term strategy, and the amalgamation of financial and non-financial factors in decision-making processes. The study employed a qualitative technique, conducting semi-structured interviews with 15 proprietors/managers of MSMEs across the manufacturing, service, and retail sectors.  We used NVivo software to find patterns in the data. The results show three main themes:(1) MSMEs only use SMA for some things, like target costing, benchmarking, customer profitability analysis, and the balanced scorecard; (2) even partial use of SMA can lead to better financial results (cost efficiency, revenue growth) and non-financial results (innovation, customer satisfaction, retention); and (3) obstacles include not having enough resources, not knowing about SMA, and thinking it is too difficult to use. This study enhances Contingency Theory and the Resource-Based View by offering contextual insights from MSMEs in emerging economies.