Performance Management Accounting and Profitability: Evidence from Small and Medium Enterprises

This study analyzed the relationship between the level of profit margin and profit margin control with the level of performance management accounting practices in SMEs. We conducted a quasi-experiment using the pro-pensity score of Rosenbaum and Rubin (1983). Then, ordinal logistic regression analysis was used to calculate the propensity score. We tested the hypothesis regarding the relative level of performance management accounting prac-tices and the level of profitability of SMEs (the profit improvement effect hypothesis). We also tested whether the variance of profit margins is smaller in the group of SMEs with relatively high levels of performance management accounting practice compared to the group of SMEs with relatively low levels of practice (profit control effect hy-pothesis). The results of the analysis were not statistically significant, as there was no tendency to suggest that SMEs' implementation of performance management accounting is associated with the achievement of higher profit margins. We also could not confirm a statistically significant difference in the tendency of SMEs to control their profit margins by engaging in performance management accounting. The results of the additional stratified analysis suggest that the relationship between the degree of implementation of performance management accounting and profitability varies depending on the size of the organization.