The Relationship between Management Accounting Practices and Performance of the Small and Medium Enterprises in Libya: A Proposed Conceptual Framework

Abstract

Economists acknowledge that the small and medium enterprises (SMEs) are one of the major contributors to the social and economic development. These enterprises are the principal driver of economy and growth in the majority of the developing countries. They are the principal absorber of the labor and a true driver of the investment, competition, and economic growth. The SME sector contributes to economic advancement by virtue of its role in generation of wealth; creation of job opportunities, and reduction of poverty. This paper suggests conceptual framework for investigation of the role of the management accounting practices (budgeting, costing, performance evaluation, decision support, and strategic planning) on the levels of performance of the SMEs by using a sample of the manufacturing companies in Libya. Previous studies provide evidence supporting that the management accounting practices (MAPs), which include financial and non-financial information, constitute one of the most important management information systems (MISs) that should be utilized by the SMEs. This study maintains that the MAPs are important for the SMEs in order to survive and continue their businesses.

Keywords: small and medium enterprises, management accounting practices, Libya