Research design and
methodology

Introduction

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      This chapter will
discuss regarding the research and design and methodology which is
going to use for data collection and analyze the research questions. In chapter 1, the main
objective of this study is to gather empirical results regarding MAP in Saudi
SMEs. Further, this study will investigate MAPs assistant of SMEs management,
to what extent use of Saudi SMEs MAPs and positive relationship between Saudi
SMEs performance and MAPs.

      This section is divided into further
five sections. In first section research design will be explained, the second section will be about data collection
methods. The 3rd section will discuss the measurements of data. The 4th
section will be discussed regarding the questionnaire design and last fifth section
will be discussed regarding the method for data analysis.

Section 1: Research design

        This section
will provide the basic direction, a research design should provide related information which is most effective and efficient
to address the research question. The descriptive data research design is going
to use to answer the questions MAPs use in the SMEs.

Section 2: Data
collection methods

        Due to time constraints and cost sample size is limited to
all SMEs nearby Jeddah and in Jeddah. Reading sample size there should be a trade-off between time and cost. Through a written questionnaire, data will be collected.

Section 3: Scaling
and measurement

        According to
the questionnaire, the five-point Likert scale is used to answer the questions. This is very much consistently use
by different researchers according to
literature review related to this topic.
For this analysis, five-point Liker will use to measure MAPs in the SMEs.

Section 4: Questionnaire design

        It is one of
important part and which variables are
going to add is very much significant
regarding this research. This was informed by
previous research has been done related
to MAPs. The main objective of this questionnaire is to collect information MAPs in SMEs in Saudi
Arabia. 

Section 5: Data
analysis methods

        Collected data
will be tested as descriptive statistics. 
All the questions results and outcome will be compared with the previous
study done and from literature to check out the current MAPs in SMEs in Saudi
Arabia. According to this section, the outline is research design and methodology. Sample size will be 30-40 SMEs. ResultsIntroductionThis chapter main purpose is to provide collected data
results and present the findings of the research question. Profile of the
companyIn section 1 of the questionnaire,
company profile information is given, related to company profile there are four
questions which covered business operation number of years, manufacturing
activities type, employees and annual sales turnover. To understand the
background of the company this information can be helpful. Below table shows
the results for 40 responding company.         Table 4.1: Responded companies
profile

Profile of Company

Frequency

Percent

 

 

 

Business operations year

 

 

1-3 years

3

8

3-7 years

14

36

More than 7 years

23

56

Total

40

100

Manufacturing activities

 

 

Furniture

1

3

Food and beverages

6

16

Non-metallic products

5

13

Basic metals

11

29

Rubber and plastic

6

16

Chemicals & chemical products

22

58

Others

13

34

Total

38

100

   

Number of employees

 

 

5-15

10

25

15-30

16

40

More than 30

14

35

Total

40

100

Annual sales turnover

 

 

Less than SAR 50,000

2

5

SAR 50,000 to SAR 70,000 million

7

18

SAR 70,000 to SAR 1.0 million

6

15

SAR 1.0 to SAR 5 million

14

35

SAR 5 million to SAR 10 million

5

13

More than SAR 10 million

6

15

Total

40

100

According to above table, more than 7 years business
percentage is 56% and respondent 3-7 has business operations year is 36%.
Business operations of companies 1-3 are only 8% year. Therefore most of the
companies are set up a business which is quite reasonable going to use
management accounting methods and have management accounting system development
which is very much suitable for their business. This finding can be used as a directory,
as companies just seek an entry directory when setup other than on formation.
Next, companies manufacturing activities and Chemicals & chemical products have the highest
percentage which is 58% and 29% for Non-metallic products. Among all Furniture has the lowest
percentage which is only 3%. From all the data collection, small enterprises have less response rate rather than medium
enterprises. Results show the population is mostly biased for medium-size enterprises and give 40% and 25%
firms have less than 15 employees. This
results also indicated that results is also base o annual sales turnover ratio
from SAR 1.0 to SAR 5 million and has the highest
percentage 35%. The smallest percentage
is for less than SAR 50,000 which is 5%. Extent of the use
of management accounting practicesNext section of the questionnaire is extent use of management
accounting techniques through two main MAPs. Part A is cost system and part B
is budgeting system.  If respondent goes for yes answer than further inquiry has
been made on the based on a five-point Likert
scale for extended use of
management accounting practices. Below table give the results of extended
use of management accounting practices:Table 4.2: Extent use of management
accounting practices

 

 

Small

 

 

Medium

 

 

 

 

 

 

 

 

 

 

No

Yes

Rank

No

Yes

 

Rank

 

 

 

 

 

 

 

 

Costing system

14

21

2

14

26

 

1

 

 

 

 

 

 

 

 

Budgeting system

6

11

3

9

16

 

2

 

 

 

 

 

 

 

 

Notes:
Total responses for small firms = 20; medium =30 According to above table results,
medium-sized companies have higher MAPs
adoption other than small-size firms. Due to more complexity of the activities
of the business that’s why medium-sized firms use more management accounting
techniques especially those firms which has more modern techniques and new
management system (Abdel-Kader and Luther, 2008). Due to more capital
investment and additional business investment can increase more risk level too.
This extent use of MAPs can helpful tin get more excess to
innovative administrative. Above two main reasons can highly contribute towards
higher use of more sophisticated accounting methods for medium firms. Furthermore, results show that medium-sized firms
more frequently use the budgetary system
and this is due to the size of the firms.
Larger firms have more complex business
activities and all these firm required a well-sophisticated
accounting system. From all most of respondent’s use management accounting and
use costing system and budgeting system which is significantly more than from
traditional use MAPs to sophisticated MAPs. From all medium-size firms use more
accounting practices over small-sized firms. The
last point is different size firms have
different rank on the base little difference to MAPs adoption between small and
medium firms. Part A: Costing systemUnder this section, two points have been
considering cost collection technique and
specific costing methods. Below table shows the results for extent use of
costing system. On the base of mean rank the technique, for every individual technique shows the average score on the five-point Likert scale. Table 4.3: Costing system results
and ranking techniques

 

Total approval (%)

Use of frequency

Results

 

 

(S4 & S5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

S

M

Total

Adopters

Total

Mean

Standard

Rank

 

respondents

deviation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost collection method

 

 

 

 

 

 

 

 

Job costing

6

8

9

33

11

3.09

1.06

2

Batch costing

10

13

16

39

13

2.89

1.26

3

Contract costing

5

9

10

34

10

2.85

1.12

4

Process costing

16

15

20

38

17

3.66

1.03

1

Costing technique

 

 

 

 

 

 

 

 

Absorption costing

14

19

21

32

29

3.21

1.40

1

Variable costing

5

13

25

35

23

3.16

1.14

2

Activity-based costing

6

6

14

34

22

2.77

1.44

3

   Total approval of costing methodsAccording to above table and shows the surprising results
for individual techniques, very few firms is using more than one cost
collection technique or stick with one technique. Only contract costing system
technique is the point which uses less in
both small and medium-sized firms. As per cost collection techniques, total
process costing has the highest
percentage. ABC costing is same for small and medium-sized firms and job
costing is lowest for both firms. Variable costing is very low in small-sized
firms.  Overall after this results, firms
use moderate level techniques under the head of the costing system. The overall finding
is process costing is mostly used cost
collection methods and costing techniques are
absorption costing technique which is mostly used
by both small and medium-sized firms.       Part B: Budgeting systemFor budgeting system,
three heads are used budget prepared
type; budget timings; budget type methods. Table 4.4: Budgeting systems results
and ranking techniques

 

Total approval (%)

Use of frequency

Results

 

(S4 & S5)

 

 

 

 

 

 

 

 

S

M

Total

Adopters

Total
respondents

Mean

Standard
deviation

Rank

 

 

 

Budget type

 

 

 

 

 

 

 

 

Sales budget

8

18

23

31

37

4.21

0.35

1

Purchasing budget

16

15

30

23

31

3.56

1.04

5

Production budget

26

28

31

30

27

4.05

1.02

4

Cash flow budget

18

17

41

34

40

4.31

0.52

2

Financial position budget

18

18

22

24

30

4.20

0.37

3

Timings

 

 

 

 

 

 

 

 

Monthly budget

14

21

22

26

35

3.34

1.12

2

Annual budget

34

37

33

34

21

4.17

0.42

1

Continuous/rolling budget

10

9

8

16

27

3.11

1.36

3

Methods

 

 

 

 

 

 

 

 

Flexible budget

10

13

19

17

40

3.87

1.06

1

Incremental budgeting

24

27

23

28

31

3.14

1.93

2

Zero-based budgeting

22

11

32

6

9

2.33

1.03

3

 Total approval of budgeting methodsAccording to above table, medium firm’s respondent is more
than over small to adopt the financial budget overall budget levels. Cash flow
budget has highest percentage rate overall
budget types. When we consider the timing
of the budget
not surprisingly annual budget has more percentage for small and medium
firms. Incremental budgeting is mostly used
methods for the budget for both
small-medium firms. Zero-based budgeting has the lowest respondent and
adopters. Overall results are most of the
respondent use budget system for their
business and as business size growth budgeting system also increase. Performance of the
firm                In
section 4 firm performance has been
examined on the base on two dimensions financial and non-financial measurement.
Business performance covers the financial
measures is cash flow and operating profit rate. Non-financial measures are
productivity level, product quality, and sales growth rate. According to the results, operational performance perceptions of
respondents is higher than that for business performance because all items come under operational performance has more
mean meanwhile measures business underperformance
has low mean.    Table 4.4: Performance of the firm

 

n

 

 

Frequency of use

 

Standard

 

%

S1

S2

S3

S4

S5

Mean

deviation

 

 

 

 

 

 

 

 

 

Level of productivity

89

0

13

18

16

10

11.4

0.62

Product quality

99

1

14

21

22

8

13.2

0.43

Sales growth rate

100

2

09

11

18

14

10.8

0.78

Operating profit growth rate

79

2

14

10

19

6

10.2

0.99

Cash flow growth rate

100

2

12

11

21

8

10.8

0.68

Total average

 

1

12

14

19

9

11.28

0.80

       Management
accounting roleQuestionnaire section 5 deal with role management accounting
in MAPS in SMEs. Evaluating and measuring performance and current activities
controlling and decision making subjectivity reducing has the highest percentage of highest mean values too.Table 4.5: The role management
accounting.

 

 

 

 

 

 

 

Mean

Standard

 

n

S1

S2

S3

S4

S5

 

deviation

 

 

 

 

 

 

 

 

 

Planning the future strategies, tactics and operations

25

0

5

26

39

20

18

0.89

Controlling current activities

36

0

3

21

39

27

18

0.873

Measuring and evaluating performance

25

0

1

19

26

24

14

0.963

Optimizing the use of firm’s resources

25

1

3

25

21

21

14.2

0.729

Reducing subjectivity in decision making  process

25

0

6

25

33

16

16

0.978

Improving internal and external communication

36

0

8

26

31

15

16

0.608

 Conclusions and
recommendations

This chapter will discuss regarding the research questions
in this study. This section starts with
the research problem to each research question. After that future research are classified. It has no doubt as Saudi economy
has great importance from small and
medium-sized enterprises. They play an important role in employment and an economic boost
in the Saudi economy. To achieve growth especially suitable growth these SMEs play a valuable help to Saudi economy.

Overall all other sectors. SMEs play a critical role in
manufacturing sector (Oil and refineries) sectors and directly contributes
towards exports and GDP. From all one of major contribution is towards Saudi
government sector, give different potential advantages, Saudi government and policymakers have
made different policies to promote the development of SMEs to make sure the
sustainability and survival. Training and financial assistance for the business technical section, management marketing
skills from government support for this sector. All these steps give the stimulated growth to this sector.

From the research, it
has been clear that MAPs has a significant role
in firm’s management effectiveness and
efficiency and can increase performance. Through MAPs, it is easy for a business
to compete in the marketplace and reduce
business risk level. To the use more and more Maps advantages there is a need for
knowledge and awareness among Saudi business so they can take benefits from above-mentioned advantages. As per Saudi
context, there is research lack in the MAPs and SMEs due to government failure
to take active participation in the MAPs for SMEs. Like MAPs is not included in the training of management
skills for entrepreneurs by the Saudi government. The details conclusions of every research question are given below:

Question 1 Analysis:

Research question 1 investigate that current use of MAPs in
the Saudi manufacturing SMEs, on the base of costing and budgeting. After
analysis results showed that MAPs has a significant
effect on SMEs firms. Around 24% for small and 35% for medium-sized
firms use MAPs. Results also showed that traditional MAPs (costing and
budgeting) was higher than the modern MAPs because management is in no doubt
for the relevance regarding the practices of SMEs for modern MAPs. From all new
created MAPs is very much limited to
larger firms especially in the developed countries, developing countries still
need more time to learn the new techniques and ideas like small-sized firms. For developing countries, some techniques are still not practical due to some cultural
difference and business style like Saudi Arabia. Over 40 SMEs in Saudi Arabia,
the extended use of MAPs was
investigated.

From all, it is very
much clear that traditional MAPs use is higher than more recent MAPS. Like
full-financial budgeting, financial performance measures, variable costing,
job-order costing were some of the most
used techniques for SMEs. From the analysis,
it is also clear that non-financial measures also very much important for SMEs
control over their operations.  On the
base of results,
medium-size firms outstripped towards small-size firms for all points in MAPS. The more significant difference can easily identify is budgeting system techniques.
There is extensive use of traditional MAPs in Saudi Arabia SMEs rather than new
modern MAPs.

Question 2 Analysis:

Second research questions results show MAPs has played a significant role in the Saudi management of
SMEs. According to results, it has shown
that Saudi SME MAPs are useful and relevant to current organizations business
style. From the results of respondents,
they agree MAPs has a role in helping the
SMEs to control, plan and performance evaluate, resources use with optimization
and communication improvement.

Question 3 Analysis:

After the results, it has very much clear MAPS play a positive role in
firm performance. But it has clear MAPS not directly contribute towards the
firm performance improvement, probably MAPs can support to increase efficiency
and management effectiveness other than direct firms performance improvement.

Recommendations:

Current research has a concern
with MAPs by SMEs in Saudi Arabia. There is huge literature support for MAPs in
SMEs, but more focus on larger firms but there is still a gap for MAPs in SMEs for Middle Eastern
countries. 

1.     
Due
to a good range of MAPs rather than a single MAP can give more authentic information
and understanding for small business to adopt modern techniques.

2.     
MAPs
can influence through external and internal organization factors. 

3.     
These findings can helpful for policymakers
in the Saudi government and improve management skills.

4.     
This
can help to enhance the Saudi government
existing management training programs for Saudi entrepreneurs.

5.     
Through
this MAPs can increase training awareness for modern MAPs.

In
summing up, the present work a detail
survey and MAPs explanation use in SMEs and make a contribution to awareness of MAPs in small firms specifically in
the Middle Eastern economy.

6.     
Small
firm sample size should be extended to get more valid responses.

7.     
Nature
of the need for modern developed MAPs and
traditional MAPs, less use of modern MAPs can raise
questions for the effective use of
techniques within in small firms.

8.     
As
in some years, Saudi Arabia market is
going to totally change and more global competitions, that’s why longitudinal
study for management accounting change through documentation change with the
passage of time can increase through modern MAPs techniques.

9.     
More
research has to be done related to MAPs to compare it with rest of the
countries in terms cultural and other factors.