Success and Growth of SMEs in Thailand - Essay Example

Influence of Integration Managerial Accounting Skills on Small and Medium Enterprises Business toward the Success and Growth of SMEs in Thailand Table of Contents CHAPTER I: THE RESEARCH PROBLEM 3 Statement of the Problem 3 Background / Need for the Study 3 Purpose of the Study 4 Theoretical Foundation(s) 4 Hypothesis / Assumptions 4 Research Questions 5 Definition of Terms 5 Limitations of the Study 5 Delimitations 5 Significance of the Study 6 CHAPTER II: REVIEW OF RELATED LITERATURE 6 Overview (including restatement of the purpose) 6 Theoretical Foundation(s) 6 Current Literature related to study 7 CHAPTER III: METHODOLOGY 8 Restatement of the Purpose & Research Questions 8 Research Method and Design 8 Selection of Subjects or Participants (Population) 9 Instrumentation (Methodological Assumptions or Limitations) 9 Data Collection Procedures 9 Data Analysis 9 Reference 11 CHAPTER I: THE RESEARCH PROBLEM Statement of the Problem I want to study the contribution of the effective managerial accounting skill on the growth and success of the small and medium enterprises (SME) in Thailand. Background / Need for the Study SME have always been a very important aspect for the growth of national economies. Therefore, it becomes quite necessary to maintain the stability of the SME. The past evidences have the given enough of the significant contributions made by these SME toward the growth of economy (Organisation for Economic Co-operation and Development, 1997, p.18). The concentration of the SME within an economy is very higher and they face the completion from other SME’s and multinational enterprises. Therefore, maintaining a sustainable SME is quite challenging task that requires a very effective integration managerial accounting skills (Wignaraja and O'Neil, 1999, p.47-50). Besides, Thailand is rapidly developing nation and in this regard, Thai SMEs have played a very vital role. Thai Government also strives to impose effective policies for SME developments. However, government keeps trying to bring economic prosperity through SME development. On the other, the growth of SME also depends on the managerial skills like accounting and others (Nagai, 2008 p.160-165). Chartered Institute of Management Accountants (CIMA) has identified the accounting skill set that includes analysis, strategy, risk, planning and communication (CIMA, 2011). In context to rapid development of the Thai economy, the role of managerial practises in the growth of SME should be assessed for future of development. Purpose of the Study The purpose of the study is to find the effectiveness of managerial accounting skills in growth of SMEs in Thailand. Theoretical Foundation(s) SMEs are exposed to a number of risks and challenges due to their vulnerable nature and size. The primary aim of the managerial practises in to overcome these challenge. Therefore, in order to present the theoretical background relating to this topic, the necessary theories that must be explained are managerial accounting skills like costing systems, risk management, budgeting, performance evaluation, financial communication and information for decision making and strategic analysis. Hypothesis / Assumptions Based on the core management accounting skills that includes five major aspect i.e. financial communication and information, performance evaluation, risk management, and financial planning four hypotheses are framed and these are given. H1: The financial communication and information help the managers or owners to take better decision making process. H2: The performance evaluation process has a positive impact on SME growth. H3: The effective risk management skills increases the sustainability of a company H4: Effective financial planning and implementations made by the managers or owners have a positive influence on the growth of SME. Research Questions In regard to research topic, two research questions for the dissertation have been framed. How the integration managerial accounting skills contribute to the growth and success of SMEs? What is impact of integration managerial accounting skills on the effective decision making process in SMEs? Definition of Terms Small and medium enterprises, managerial accounting, managerial skills, entrepreneurs’ skill, risk management, performance evaluation, financial information Limitations of the Study This study strives to present the influence of managerial accounting skills on Thailand’s SMEs and hence, the conclusion of this study will be applicable for Thai-based SMEs. Besides, the data will be belonged to a specific time-frame and hence, the outcome of the study is expected to lose its relevancy with the passage of time. Delimitations The study will be effective for the determining the theoretical relationship between the growth of the SME and managerial accounting skills. Significance of the Study The objective of the study is to offer proper understanding the importance of managerial accounting skills for bring the growth and success to the SMEs based in Thailand. CHAPTER II: REVIEW OF RELATED LITERATURE Overview (including restatement of the purpose) The literature review section will present a detailed theoretical background related to the topic of this research paper. On the other hand, the literature review section will also address the research question and the overall objective of this paper. The literature review of this will deal with a certain functions that strive to support the study. It will justify the research question as well as research method by providing the background of the concern information to establish the importance of the research paper (Monash University, 2006). Therefore, literature review of this study will consist of major sections. The first section will attempt to present the theoretical background of the study that will discuss the five areas of the integration managerial accounting skills i.e. analysis, strategy, risk, planning and communication. The second section will conduct an extensive study on the past literature review on this research topic. Theoretical Foundation(s) A business organisation is the influence by a number of factors that can be grouped into two broad areas i.e. external and internal factors. The external factors cannot be controlled by the management or the owners; whereas internal factors are directly related to a firm that an effective management system can control (Gupta, 2005, p.463). However, in case of external factors, it is necessary to combat the forces by faring strategies and in case of internal forces, the managers must develop an effective the management practises. In case of SMEs, the internal and external forces are harsh. On the other hand, the SMEs’ importance for the economic growth is very significant. Most of the world economies have recognised the importance of SMEs for multiple reasons. OECD has reported that “SMEs account for over 95% of enterprises and 60%-70% of employment, and generate a large share of new jobs in OECD economies” (OECD, n.d.). In the light of this, it has been clarified that growth of SMEs remain one of the major priorities for the economies and this regard the financial accounting skills are necessary. The management accounting skills includes the financial accounting like financial communication and information, performance evaluation, risk management, and financial planning etc (Clayman, Fridson and Troughton, 2008, pp.5.1.3-5.1.4). In order to explain the need of managerial accounting skills two major theoretical will be discussed i.e. the theory of the firm and the theory of entrepreneurship (Rajaram, 2008). Current Literature related to study SME and managerial accounting skills both are interesting research area, and hence a large number of research has been conducted on this topics. Besides, in Asian countries like Thailand, Korea, China etc have faced a very rapid growth and hence, many research papers have been framed on this area. Peter Baily has found that the SMEs in Asian countries have demonstrated considerable potentials as managerial practises including the managerial accounting skills in Asian SMEs have shown effective performance (Baily, 2008). Mbogo has investigated the specific managerial practises and its impact of Kenyan SMEs. He has found that the managerial practises like training, accounting skills, HR, etc have a direct impact of the decision making styles and on strategic analysis that influences the growth of SMEs in Kenya (Mbogo, 2011, p.32). CHAPTER III: METHODOLOGY Restatement of the Purpose & Research Questions This paper will investigate the role of integration of managerial accounting skills in the growth of SMEs in Thailand and research methodology will address the two research questions. Besides, the aim of this research method will be test the four hypotheses stated in the first section. Research Method and Design Based on the nature of this research and its necessity to obtain the outcome, quantitative research analysis will be conducted using the primary data. Qualitative research analysis deals with mathematical statistical techniques and tools to crunch the data. Primary data will be collected using relevant questionnaire. In order to crunch the obtained data to reach at valid result, the correlation and regression techniques will be used to determine the relationship between the managerial accounting skills and growth of SMEs. In this regard, the statistical software like Statistical Package for Social Sciences (SPSS) is applied for processing and analysing the data using descriptive analysis. Selection of Subjects or Participants (Population) The primary data will be collected from the 50 respondents using the ser of questions. All the respondents will be top and middle level managers. For the validity of data, the selected managers will be experienced and from the SME companies. Instrumentation (Methodological Assumptions or Limitations) For collecting the data, questionnaire will include a set of relevant question that will aim to obtain their demographic nature and managerial accounting skills. The questions will be frame exclusively considering the managers of SME having the managerial accoutring skills and hence, it will be helpful in not losing the focus of the study. Data Collection Procedures The data will be collected the using the questionnaires and the interviews will takes voluntarily from the respondents. Moreover, they will be assisted for completing the questionnaire by offering better explanations of each question. Data Analysis The data analysis will be based on correlation and regression models and based on four stated hypotheses; there will be four independent variable i.e. financial communication and information, performance evaluation, risk management, and financial planning. The dependent variable will be effective decision making process of the organisation. The question will be based on the five point scale ranging from 1 (strongly agree) and to 5 (strongly disagree). Based on result of the descriptive statistics and multivariate regression models, the hypotheses will be tested to reach at final decision of the study. Reference Baily, P. (2008). Cambodian Small and Medium Sized: Enterprises: Constraints, Policies and Proposals for Their Development. Retrieved on July 04, 2011 from http://www.eria.org/research/images/pdf/PDF%20No.5/No,5-1-Cambodian.pdf. CIMA. (2011). What is management accounting? Retrieved on July 04, 2011 from http://www.cimaglobal.com/About-us/Why-CIMA-is-different/What-is-management-accounting/. Clayman, M. R., Fridson, M. S. and Troughton, G. H. (2008). Corporate Finance: A Practical Approach. John Wiley and Sons. Gupta, P. N. (2005). Comprehensive Business Statistics. Laxmi Publications. Mbogo, M. (2011). Influence of Managerial Accounting Skills on SME’s on the Success and Growth of Small and Medium Enterprises in Kenya. Retrieved on July 04, 2011 from http://www.ajol.info/index.php/jolte/article/viewFile/66602/54323. Monash University. (2006). Writing literature reviews. Retrieved on July 04, 2011 from http://monash.edu/lls/llonline/writing/general/lit-reviews/index.xml. Nagai, K. (June 04, 2008). Small & Medium Enterprise Development Policies in Thailand. Retrieved on July 04, 2011 from http://www.smrj.go.jp/keiei/dbps_data/_material_/common/chushou/b_keiei/keieikokusai/pdf/SME_in_ASEAN_E2_0803.pdf. OECD. (No date). Centre for Entrepreneurship, SMEs and Local Development. Retrieved on July 04, 2011 from http://www.oecd.org/about/0,3347,en_2649_34197_1_1_1_1_1,00.html. Organisation for Economic Co-operation and Development. (1997). Globalisation and small and medium enterprises (SMEs), Volume 1. OECD Publishing. Rajaram, R. (2008). A needs analysis of financial management and accounting skills in the SME sector in KwaZulu-Natal. Retrieved on July 04, 2011 from http://researchspace.ukzn.ac.za/xmlui/bitstream/handle/10413/1006/Rajaram_R.pdf?sequence=1. Wignaraja, G. and O'Neil, S. (1999). SME exports and public policies in Mauritius, Issue 1. Commonwealth Secretariat. Read More