The Interactive Effect of Competition Intensity and Customer Service Competition on Customer Accounting Sophistication: Evidence of Positive and Negative Associations

Morten Holm*, Christian Ax

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

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.
Original languageEnglish
Article number100644
JournalManagement Accounting Research
Volume46
Number of pages15
ISSN1044-5005
DOIs
Publication statusPublished - Mar 2020

Bibliographical note

Published online: 30 August 2019

Keywords

  • Competition intensity
  • Competition type
  • Customer accounting
  • Customer profitability analysis
  • Customer service competition
  • Management accounting systems (MAS)

Cite this