Recent research implies that the association between competition intensity and management accounting system (MAS) design varies with the type of competition involved, depending on the purpose of the MAS in focus. This study finds that competition intensity can be positively or negatively associated with customer accounting (CA) sophistication depending on the extent to which firms tailor their activities and offerings to meet individual customer needs (engage in a particular type of competition labelled ‘customer service competition’). When customer service competition is high we predict there will be a positive relationship between competition intensity and CA sophistication, whereas when customer service competition is low this relationship is negative. Drawing on archival data and survey responses collected from 209 firms, we obtained results that support this hypothesis. The study provides the first empirical evidence of a crossover interaction effect between competition intensity and competition type on MAS design. Moreover, the study extends earlier work on CA by developing and finding empirical evidence supporting a model which provides a more nuanced understanding that explains why certain firms implement sophisticated CA practices while others are content with simpler CA.
Bibliographical notePublished online: 30 August 2019
- Competition intensity
- Competition type
- Customer accounting
- Customer profitability analysis
- Customer service competition
- Management accounting systems (MAS)