The role of management accounting in supporting international entrepreneurship : a multiple case study of Finnish manufacturing SMEs

Abstract

This study examines the role of management accounting in the international entrepreneurship process of SMEs, motivated by the recent change of paradigm that regards control as relevant for entrepreneurship, the considerable role SMEs and export growth play in many economies, as well as the scarcity of research combining management accounting and firm internationalization. The purpose is to understand how SMEs use management accounting to support their international entrepreneurship process of discovery, enactment, evaluation, and exploitation, how the management accounting usage differs between SMEs and what the benefits and challenges of management accounting are in an international entrepreneurship context. The research was carried out as a qualitative multiple case study and the data was collected from semi-structured interviews with two representatives from each of the four case companies.

The results of this study suggest that SMEs differ in how they make use of management accounting to support international entrepreneurship. Firstly, the phase of international entrepreneurship had an impact on the level of management accounting involvement, with management accounting not playing an important role in the initial discovery and enactment stages but becoming more prevalent in the discovery and exploitation phases. In the evaluation stage, management accounting involvement was found to be more relevant in the case of higher risk international entry strategies, whereas with lower risk international entry strategies management accounting involvement was not of equally high importance.

Secondly, in understanding how international SMEs make use of management accounting, distinguishing between incremental internationalizers and born globals was found to be relevant. Incremental internationalizers tend to utilize management accounting more than born globals in the evaluation and exploitation stages of the international entrepreneurship process. One reason behind this could be that incremental internationalizers have been in business for longer and expanded their international outreach little by little, allowing them to gain experience in how to benefit from management accounting, whereas born globals that strive for rapid international expansion right from the beginning have less focus on developing management accounting tools to support steering and monitoring.

Furthermore, this study sheds light on the relevant benefits and challenges that SMEs may expect from involving management accounting in their international entrepreneurship process.