Journal of International Financial Management & Accounting 23:3 2012

Factors Associated with the Adoption and Use

of Management Accounting Techniques in
Developing Countries: The Case of Romania
Nadia Albu
The Bucharest University of Economic Studies, 6 Piaţa Romană, Romania,
e-mail: nadia.albu@cig.ase.ro

Cătălin Nicolae Albu

The Bucharest University of Economic Studies, 6 Piaţa Romană, Romania,
e-mail: catalin.albu@cig.ase.ro

Abstract
The purpose of this article is to investigate and analyze through the lens of contingency
theory the existence and use of management accounting techniques in Romanian enti-
ties, with an in-depth consideration of the institutional factors characterizing the envi-
ronment of this country. Using a sample of 109 respondents, we identify factors
associated with the existence and use of management accounting techniques in a con-
text where organizational practices are subject to variations, resource and training scar-
city, and uncertainty. Our findings indicate that the most important factors are the type
of capital and size. The adoption and use of management accounting techniques are
mostly associated with the presence of foreign capital as a defining feature of the
Romanian environment. However, we find limited statistical support for the importance
of the environment and competition, factors usually related to the use of such tech-
niques in other developing countries.

1. Introduction
The features of the current business environment shape the characteris-
tics of management accounting practices (MAP) used in businesses.
The increased globalization of markets, transnational trade
agreements, harmonization of financial accounting standards,

The authors of this article have benefited from a seed grant sponsored by the International
Association for Accounting Education and Research (IAAER) and the Association of Char-
tered Certified Accountants (ACCA). We especially thank Robert Faff and Donna Street for
comments and general guidance throughout the evolution of this article. Drafts of this article
have been presented at the Early Career Researcher Consortium seed grant deliverable held in
conjunction with AMIS 2011 (Bucharest, 8–9 June), the IAAER International conference
“Accounting Renaissance” (Venice, 3–5 November 2011) and the 3rd GAOC conference (Kuala
Lumpur, 14–17 July 2012). We thank the reviewers and participants for their constructive feed-
back and suggestions. The authors acknowledge the financial support for these conferences from
CNCSIS-UEFISCSU, project number PN II-RU TE_337/2010. We also thank the JIFMA
reviewers and all the others who contributed to the development of this article.
© 2012 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
246 Nadia Albu and Cătălin Nicolae Albu

internationalization of teaching, of the profession, and of multinational

practices generate a convergence toward a global set of management
accounting practices (Granlund and Lukka, 1998). However, a coun-
try’s national culture, legislation, and historical background are key
elements that induce variations from other countries. Accordingly,
MAP emerge as “highly situated phenomena—limited by historical
conditions that are specific to given times and places” (Baxter and
Chua, 2003: 108) resulting in the need to research the influence of vari-
ous particular settings on management accounting systems (MAS)
(Bhimani, 2007).
Developing countries1 share similar economic characteristics such as
low rates of per capita income, capital formation, and value added
(Hopper et al., 2009). These countries have attracted increasing atten-
tion over the last 20 years, economically, politically, and from the
research standpoint (Anderson and Lanen, 1999; Luther and Longden,
2001; Jaruga and Ho, 2002; O’Connor et al., 2004; Alattar et al., 2009;
Hopper et al., 2009). As developing countries represent attractive
investment destinations facing rapid and at times drastic changes,
investors need to understand how accounting systems work and the
extent to which the implementation of various accounting and non-
accounting techniques of Western inspiration works in a foreign envi-
ronment. Developed economies are thus given the opportunity to see
“the Western legacy under revival” (Hopper et al., 2009). Additionally,
there are only relatively few studies of (management) accounting prac-
tices in many less developed countries (LDC), and each new study
brings the opportunity of a fresh perspective on this rich unexploited
research environment. Knowledge about MAP in any of these coun-
tries is not extensive, with the most prominent exception being China
(Hopper et al., 2009). Not least, developing countries might benefit
from the experience of others and benchmark their own development.
In this context, we address the gap in the literature with a compre-
hensive investigation of the factors associated with the adoption and
use of regular management accounting techniques (MAT) in Roma-
nian companies. Romania is an ex-communist country in Central and
Eastern Europe (CEE) and was viewed as the “Cinderella” state of the
region because of the difficulties encountered in the first 10 years after
the fall of communism in 1989 (PriceWaterhouseCoopers, 2009). In
the late 2000s, Romania became an increasingly attractive investment
opportunity for foreign investors, and the country’s accession to the
European Union in 2007 and the “growth story” behind it led to a
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 Management Accounting Practices in Romania 247

higher level of economic performance than many expected (Middleton

et al., 2007).
The purpose of this article is therefore to investigate and analyze
through the lens of contingency theory the existence and the use of
MAT in Romanian companies, with a particular focus on the institu-
tional factors characterizing the environment of this country. We use a
quantitative approach on a sample of 109 entities. Given the difficulties
in gathering data in such settings, our sample size is comparable with
other management accounting (MA) studies conducted in LDC (Van
Triest and Elshahat, 2007; Hopper et al., 2009).
Our study contributes to the MA literature in LDC in several ways.
First, we investigate separately the adoption and use of MAT, thus
gaining a deeper understanding of these related perspectives. Second,
we propose and employ a theoretical framework to study and highlight
the importance of some factors for the adoption and use of MAT,
considering the institutional factors that characterize the Romanian
context. Finally, we construct and use several indexes to investigate
the factors associated with the adoption and use of MAT.
The remainder of the article is organized as follows. In section 2, we
review the MA literature in LDC and in Romania. Section 3 describes
the theoretical framework and research method. We next present and
discuss our results in section 4. Finally, conclusions and future
research directions are outlined in section 5.

2. Literature Review
2.1. General Overview
Over the last few decades, several authors (Granlund and Lukka, 1998;
and more recently Bhimani, 2007) advance the issue of convergence or
divergence of MAT and MAP. This broader topic influences the theo-
retical underpinning of MA research. For example, contingency theory
is based on the universal view that contextual factors affect MAS and
are objectively determined, remaining imperative across social, eco-
nomic, or political systems (Bhimani, 2007: 345). The theory is based
on the work of organizational theorists suggesting that the organiza-
tion’s structure (including its MAS) depends on contingency variables
(such as its environment, size, or strategy). The contingency variables
usually reported are the entity’s size, the environmental characteristics,
the entity’s technology and structure (in a traditional approach), and
© 2012 Blackwell Publishing Ltd
248 Nadia Albu and Cătălin Nicolae Albu

more recently the type of strategy employed, culture, and structural

arrangements (Chenhall, 2007).
While contingency theory is useful in understanding the influence of
organizational attributes on MAS, it marginalizes the context-specific
influences (Bhimani, 2007); hence, alternative theories are employed to
illuminate the social factors and features impacting MAS. This broader
perspective is especially important in assessing differences in the use of
MAT across various contexts (countries, regions, and different levels
of economic development) because MAP have alternative institutional
foundations in different societies. Bhimani (2007) calls for studies in
different contexts to better understand the phenomenon of conver-
gence—divergence in MAP, and of the factors affecting it. “Questions
about the inertia and dynamism of homogenizing forces in altering,
shaping, and mobilizing particular accounting systems remain largely
unanswered.” (Idem, p. 351) In this context, our research is an interna-
tional study (based on the Romanian experience) contributing to the
general understanding of (management) accounting in relation to a
specific context (LDC) in CEE.

2.2. Previous Management Accounting Research on LDC

LDC are characterized by social and political reforms such as privati-
zations and liberalization of markets, weaker capital markets, less-
effective bureaucracies and regulation, and rapid change (Joseph,
2008). Because of their general economic developments, the manage-
ment model in LDC should support profitability and sustainable
growth (Joseph, 2008). Accounting should evolve from bookkeeping to
fulfilling the users’ needs, both internally and externally (Anderson
and Lanen, 1999). Factors such as the globalization of markets, the
involvement of the World Bank and of the International Monetary
Fund in economic reforms, foreign investment, and the growth of mul-
tinationals have generally led to the adoption of many Western
accounting practices in LDC (Alawattage et al., 2007).
There is little research on LDC (Hopper et al., 2009), and work on
these countries has even been marginalized and labeled as esoteric
(Alawattage et al., 2007). Generally, there are two streams of MA
research on LDC: one discusses the effects of economic developments
on the use of MAT. The other focuses on the existence of MAT in
different countries, usually differentiating between “traditional” and
“modern” techniques. Both are detailed below.
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 Management Accounting Practices in Romania 249

The first stream of research is exemplified by HassabElnaby et al.

(2003). These authors conduct a study using a 37-year data set in
Egypt and conclude that the development of accounting is primarily
influenced by the economic and political environment and to a smaller
extent by privatizations and the development of the stock market.
Anderson and Lanen (1999) conduct case studies in 14 Indian compa-
nies to evaluate the changes in their MAS following the economic
changes that were initiated in 1991. They conclude that these changes
affected organizations’ strategy and structure, including their MAS.
Alam (1997) investigates the use of budgets in two state-owned organi-
zations in Bangladesh and finds that budgeting depends on the uncer-
tainty of the economic environment. Kattan et al. (2007) conduct a
10-year analysis in a case-firm in Palestine, and find that MAS are
used in a more organic manner in times of environmental uncertainty
and that accounting is viewed more as a “bean counting” activity than
support in decision making. In contrast, based on a study in South
Africa, Luther and Longden (2001) conclude that a volatile environ-
ment makes accounting information more valuable.
In relation to the second stream, Joshi (2001) documents in India a
preference for traditional techniques, with modern techniques, such as
Activity-Based Costing (ABC) or Balanced Scorecard (BSC), being
adopted to a larger extent by larger companies or by multinationals.
In the Middle East, Van Triest and Elshahat (2007) (Egypt), Al-Nimer
(2011) (Jordan), and Uyar (2010) (Turkey) document that companies
generally use traditional basic techniques, that MAS have a reduced
degree of sophistication and that modern techniques enjoy a low rate
of adoption. Haldma and Lääts (2002) and Szychta (2002) report on
the changes in MAS in Estonian and Polish entities, respectively,
immediately following the fall of communism. They document the
extensive use of budgets, financial reports based on official financial
statements and costing systems and the reduced use of global perfor-
mance measurement systems or modern techniques. In the same vein,
Kallunki et al. (2008) find lower but increasing rates of adoption and
use of MAT in Russia than in more developed countries.
MA research on LDC is generally exploratory but contributes to
understanding the local context. It provides the necessary background
for more advanced studies by investigating the factors associated with
the use or change in MAS in addition to documenting their existence
and use. For example, based on a study of Egyptian companies, Van
Triest and Elshahat (2007) do not find any correlation between entity
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250 Nadia Albu and Cătălin Nicolae Albu

size and the characteristics of the costing systems in place. Studying

Turkish companies, Uyar (2010) document the need to increase profit-
ability and to control costs, the intensification of competition, and the
economic crises as drivers of MAS change. For South African entities,
Luther and Longden (2001) conclude that changes in the economic
environment, improvements in education, and the intensification of
competition led to increased perceived benefits of MAS and to the use
of modern techniques (such as the BSC or ABC). In two ex-communist
countries, Estonia (Haldma and Lääts, 2002) and Poland (Szychta,
2002), respectively, changes in organizational structure, size, the need
for efficiency and the intensification of competition are found to be
associated with improvements of MAS.
The largest number of published articles on an LDC deals with
China, thus allowing for the evolution of incipient into more
advanced and fine-tuned research. Studies (cited by Duh et al., 2009)
conducted immediately after the privatizations that took place in the
1990s mainly investigate the use of MAS. However, the increasing
amount of research conducted subsequently allowed researchers to
study the factors impacting the adoption of Western MAT by Chi-
nese entities (O’Connor et al., 2004) or the existence and use of MAT
and their effect on the performance of listed entities (Duh et al.,
2009). O’Connor et al. (2004) find evidence that Chinese entities have
increasingly used MAT recently to improve the decision-making pro-
cess and to increase performance accountability. Duh et al. (2009)
find that Chinese listed entities use not only traditional MAT but also
some modern techniques (such as ABC, Economic Value Added, or
Target Costing). They also document a positive association with the
firm’s performance in some of these listed Chinese companies. As for
the factors affecting MAS, Lin and Yu (2002) identify two factors
contributing to MAS success via a case study: managers having the
right professional qualifications and enthusiasm for change. On the
other hand, Li and Tang (2009) find that the design of performance
measurement systems is affected by political constraints, user partici-
pation, culture, and embedded practices. O’Connor et al. (2004) and
Duh et al. (2009) discuss the impact of firm size, strategy, industry,
foreign ownership, and stock exchange listing on the use and change
of MAS.
To conclude, the MA literature on LDC has very fragmented find-
ings. Several factors are the likely culprits. First, different countries
have varying environmental and political conditions, and results are
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 Management Accounting Practices in Romania 251

difficult to generalize from one setting to another. For example, in

many LDC privatizations are usually associated with MAS improve-
ments. However, O’Connor et al. (2004) document that many Chinese
state-owned entities use advanced techniques and that other factors are
more important in explaining the degree of MAS sophistication or use.
Second, LCDs experience a rapid process of change and there are sig-
nificant developments overtime. Third, even if an orientation toward
Western MAT has generally been noticed, varying approaches in
applying them are reported (Jaruga and Ho, 2002; Alawattage et al.,
2007), while the influence of environmental factors is different from
one setting to another.

2.3. Previous Management Accounting Research in Romania

Romania’s economic development after the fall of communism did not
match that of other CEE countries such as the Czech Republic,
Poland, or Hungary. The 1990s were the most difficult years, with high
levels of inflation, political instability, limited development of the stock
market, and frequent changes in the financial accounting model (Filip
and Raffournier, 2010).
Only after 2000 did new MA roles and techniques appear in Roma-
nian books and research articles. Glăvan et al. (2007) find that a high
percentage (66 per cent) of managers who they interview use financial
accounting information in decision making, thus leading to a reduced
number of entities implementing MAS. Similarly, Jinga et al. (2010)
provide evidence that the most useful source of information for deci-
sion making in Romanian entities is the financial reporting system.
This is in line with Volkàn (2010), who finds that many Romanian
entities do not have any MAS. These empirical studies (Glăvan et al.,
2007; Jinga et al., 2010; Volkàn, 2010) merely identify the existence of
MAS and eventually the ultimate use of the information provided.
However, the factors associated with the adoption or use of MAS are
not investigated.
Besides these survey-based studies, some case studies show the suc-
cess or failure of the implementation of some MAT. Albu and Alexe
(2009), Albu and Udroiu (2009), and Almăşan and Grosu (2009) inves-
tigate the use of modern MAT such as customer performance analysis,
financial, and non-financial measures for the management of employ-
ees and ABC in large companies that had recently been privatized
and/or that had foreign capital. Albu et al. (2010) investigate the case
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252 Nadia Albu and Cătălin Nicolae Albu

of several Romanian-capital medium-sized companies in the construc-

tion sector that had implemented cost tools to support decision
making. They conclude that although the systems were originally
well-conceived and well-intentioned, two factors (namely the use of
informal tools by managers and the pressure to reduce taxes)
transformed these systems into profit manipulation tools.
To conclude, while some previous studies have investigated the exis-
tence of MAS/MAP in Romanian entities, they are typified by very
small sample sizes. Additionally, our study investigates separately both
the existence and use of MAT and the factors associated with their
adoption and use in different types of entities.

3. Theoretical Framework and Method

3.1. The Theoretical Framework
Many studies conducted in LDC use contingency theory aimed at
assessing in a given national setting the contingency causalities estab-
lished in developed countries or to identify new contingency factors.
For example, a contingency approach is used in survey-based research
(Luther and Longden, 2001; Haldma and Lääts, 2002; Duh et al.,
2009) and in case studies (Alam, 1997; Anderson and Lanen, 1999;
Waweru et al., 2004; Kattan et al., 2007) in LDC. However, contin-
gency theory is not very powerful in explaining the factors affecting
MAS in LDC because it is mainly based on rationalism (Bhimani,
2007). In the same vein, Hopper et al. (2009) suggest that in develop-
ing countries, coercion tools or the need for legitimacy are more
important than rational control. Because of its limited ability to pro-
vide a deeper understanding of the reasons underlying the adoption of
MAP or their use, the contingency approach needs to be supplemented
with other sociological theories (Gong and Tse, 2009). Institutional
theory was used in previous studies in LDC, as the main theory or in
association with contingency theory, to understand how organizations
interact with their environment (Alam, 1997; O’Connor et al., 2004;
Waweru et al., 2004).
Several studies in LDC only analyze the existence of MAT in differ-
ent organizations. We agree that the existence and use of MAT are
two different things (Anderson and Lanen, 1999). This may also be the
case in Romania, because prior literature documented that in some
circumstances extant cost computation techniques are only used for
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 Management Accounting Practices in Romania 253

taxation purposes and not for management decisions (Albu et al.,

2010). Thus, we separately analyze: the existence (adoption) of differ-
ent MAT (costs, budgets, performance measurement etc.) and their
perceived degree of use (and utility) in the managerial process.
Drawing on the previous literature (as explained previously) and on
the institutional characteristics of the Romanian context, we propose
and employ the theoretical framework presented in Figure 1.

3.1.1. Contingency Variables

Different factors that affect MAS are considered in the contingency
literature, such as the environment, organizational size, structure,
strategy, technological environment, or culture (Chenhall, 2007). Prior
literature in LDC argues that the number of MAT and how they are
used is contingent on the characteristics of the environment. Although
multiple taxonomies are used in the literature to characterize the
environment (stable or dynamic, predictable or unpredictable, simple
or complex), probably the most widely researched aspect is the degree
of uncertainty (Chenhall, 2007). Environmental uncertainty is associ-
ated with more externally focused and non-financial MAS, while
hostility is associated with formal controls (Chenhall, 2007).
Most MA literature in developed economies investigates a transfor-
mation from a stable and predictable environment toward an uncertain
and hostile one that was demonstrated to lead to a tightening of con-
trol and subsequently to the adoption of more organic controls. How-
ever, the development of the environment is somewhat different in
LDC, as economic and political stability usually increase after the nec-
essary reforms, thus reducing environmental uncertainty. In previous
studies in LDC, the development of the environment is considered as a
very important factor for the evolution of MAS. For example, Alam

Contingency variables
- environment
- industry
- size The existence of MAT

Institutional factors
- source of capital The use (utility) of MAT
- stock exchange listing
- degree of competition
- relation with taxation
- training and competencies in MA

Figure 1. Theoretical Framework

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254 Nadia Albu and Cătălin Nicolae Albu

(1997) and Kattan et al. (2007) find that MAS are more functional
and mechanistic in more moderated uncertainty conditions. In the
same vein, Kallunki et al. (2008) find evidence that the level of infor-
mal control decreases and that MAT are used to a higher extent and
provide more useful information in a more stable environment. Also,
Alattar et al. (2009) find that the use of MAT increases in line with an
increase in environmental stability.
Previous studies document variations in how MAT are used across
different industries (Widener, 2006; Duh et al., 2009; Uyar, 2010). Each
industry has distinctive characteristics with respect to demand and to
the organization of activity, and faces different constraints. Prior stud-
ies in Romania (Jinga et al., 2010; Volkàn, 2010) also find differences
in relation to the adoption of MAT between various industries. How-
ever, Duh et al. (2009) find that industry is not a very important fac-
tor, being only related to the use of some MAT.
Another factor usually employed in MA contingency studies is size:
small versus large entities do not need/use the same MAT and/or in
the same way (Chenhall, 2007). An increase in size is usually associ-
ated with a tighter control on the environment and an increase in the
entity’s resources, as well as with an increased use of control tech-
niques. Studies conducted in developed countries generally find sup-
port for an increased adoption of more formal techniques and more
sophisticated MAS by large companies (Chenhall, 2007). This variable
is also used in many studies in LDC, with the majority confirming its
influence on MAS. However, Van Triest and Elshahat (2007) do not
find any correlation between the size of the entity and the characteris-
tics of the costing system.
For several reasons, we exclude other contingency factors—notably,
structure, and strategy. Evidence exists (Almăşan and Grosu, 2008)
that Romanian managers often make decisions by reacting to current
developments instead of implementing any strategy and by trusting
their intuition. Also, Romanian accountants (acting as respondents to
surveys) do not necessarily have a good understanding of the general
organizational context and might not be aware of their entity’s strate-
gic choices. Additionally, entities’ structure and strategy are constantly
changing due to the rapid changes they currently face, hence interpret-
ing results based on these factors might be misleading. To obtain rele-
vant data about these factors, direct observation could be needed
(Anderson and Lanen, 1999). Our research design choice to omit these
factors is consistent with prior LDC studies.
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 Management Accounting Practices in Romania 255

3.1.2. Institutional Factors

We also consider several institutional factors, namely the source of
capital, stock exchange listing, the degree of competition, the relation-
ship with taxation and MA training and competencies.2 Institutional
theory suggests that organizations adopt practices in response to pres-
sures (O’Connor et al., 2004) or to gain legitimacy (Alam, 1997). The
international orientation of entities in LDC (presence of foreign capi-
tal, foreign business partners, and international exposure) can create
pressures for changing or improving their MAS (Anderson and Lanen,
1999; Duh et al., 2009). The case of joint ventures was investigated by
O’Connor et al. (2004) and entities with foreign ownership by Duh
et al. (2009). We therefore select the source of capital, to investigate
the impact of foreign capital in entities operating in Romania.
Listing on a stock exchange is also considered an important factor
in LDC because it can create pressures for better accountability
(O’Connor et al., 2004), thus resulting in the implementation of a
MAS. Hopper et al. (2009) argue that while the development of stock
exchanges is very important in LDC, existing literature only provides a
limited understanding of how it influences MAS. It is expected that
the listing on the stock exchange will create pressure for increased
transparency and for superior MAT to improve performance.
Research on LDC usually links the intensity of competition to the
process of privatization, to trade barriers or to the establishment of
foreign entities in the country. Thus, competition acts as an important
institutional factor that might create pressures for the use of some
MAT (Luther and Longden, 2001; Duh et al., 2009) and that requires
“extra discipline” (O’Connor et al., 2004). Competition usually intensi-
fies in LDC as a result of the development of the economic environ-
ment. Many studies conducted in LDC (Luther and Longden, 2001;
Haldma and Lääts, 2002; Szychta, 2002; O’Connor et al., 2004; Duh
et al., 2009; Uyar, 2010) find evidence that the intensification of com-
petition led to increased levels of use and change of MAS, and to
MAS becoming more sophisticated (Waweru et al., 2004).
The development of financial reporting and its relationship with tax-
ation also influence MAP in LDC, as do the competencies of accoun-
tants and managers (Hopper et al., 2009). In developing countries,
accounting was assimilated with bookkeeping and the accounting pro-
fession was underdeveloped for a long period of time (Anderson and
Lanen, 1999; Kattan et al., 2007). In many LDC, there is a close
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256 Nadia Albu and Cătălin Nicolae Albu

relationship between accounting and taxation, and generally account-

ing is perceived as an obligation and a means to fulfill the needs of the
State. While the importance of these factors has been acknowledged in
LDC, there is no extensive research of their influence on MAS.

3.2. Method
Based on our theoretical framework, we developed a questionnaire
divided into three sections. The first section contains demographic
questions (respondent’s age, gender, and prior accounting experience).
The second section focuses on organizational characteristics, while the
third part contains questions about the entities’ MAS and MAT.
Following previous research (Widener, 2006; Duh et al., 2009; Henri
and Journeault, 2010), we measured some of the variables using per-
ceptual instruments. We asked respondents to indicate their own or
their entity’s perceived level of the variables and MAT. Prior literature
demonstrates that using a perceptual instrument does not impair the
analysis (Henri and Journeault, 2010).
We asked our respondents to rate on a 5-point Likert scale the per-
ceived degree of stability and predictability of their entity’s environment
(from 1 “very stable and predictable” to 5 “very unstable and unpre-
dictable”), considering the entity’s relations with its clients, suppliers,
and regulatory bodies. Industry is a categorical variable indicating the
entity’s core business: service, commerce, manufacturing, financial, or
other (respondents were asked to indicate). We further distinguished
between manufacturing and non-manufacturing entities, considering
the differences in the resources used to compete (as per Widener,
2006). We measured entities’ size by the number of employees as per
the official European Union categories: small entities (10–49 employ-
ees), medium-sized entities (50–249 employees), and large entities
(more than 250 employees). We excluded from our analysis micro-enti-
ties3 (less than 10 employees) because they have specific needs and
prior literature in Romania (Volkàn, 2010) documents that most of
these entities do not use any MAS.
Previous literature (Duh et al., 2009) argues that the perceived nat-
ure of the competition does a better job than an external measure as it
influences internal decision making. We therefore asked respondents to
rate on a 5-point Likert scale the degree of competition as perceived
by their entity (from 1 “reduced” to 5 “intense”). Type of capital is
a categorical variable (“entirely Romanian capital,” “prevailing
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 Management Accounting Practices in Romania 257

Romanian capital,” “prevailing foreign capital,” and “entirely foreign

capital”). Listing on a stock exchange is a binary variable. We asked
respondents to indicate on a 5-point Likert scale the degree of influ-
ence they perceive taxation has on their entity’s MAS (from 1 “extre-
mely reduced” to 5 “extremely significant”). The same 5-point Likert
scale was employed to rate the perceived level of MA competencies by
staff (where 1 was “very limited” and 5 was “very good”).
We designed the list of MAT following previous studies (such as
Haldma and Lääts, 2002; Szychta, 2002; Duh et al., 2009). Previous
studies on LDC investigate primarily the existence of MAT, or at most
they use a single Likert scale to measure at the same time the existence
and either the degree of usefulness or the level of use of the specific
MAT; thus, confusion may have occurred.4 Consequently, for a more
meaningful analysis, we investigated the adoption of different MAT
separately from their level of use. Thus, we designed a question that
asked respondents to: a) indicate the adoption of the specific MAT
(operationalized with a Yes/No binary variable) and b) to the extent
they answered “Yes” in a), to rate on a 5-point Likert scale the level
of use of each MAT for managerial purposes (from 1 “very limited” to
5 “extremely significant”). The questionnaire was amended after pre-
testing on two Romanian academics who are also practitioner accoun-
tants and on two accountants. The amendments mainly related to the
phrasing used, to clarify the questions and to make the results more
meaningful.
As revealed in the literature, collecting data on LDC is a difficult
undertaking, leading to scarcity of MA empirical studies in such coun-
tries (Hopper et al., 2009). We therefore used two sources of data.
First, we distributed the questionnaire to Master of Science (MSc) stu-
dents in accounting programs in our university during December 2010
and January 2011, and we asked them to complete it only if they had
MA experience. Usually, Romanian accounting MSc students have rel-
evant work experience and are already in the process of becoming
qualified. We thus obtained 25 answers (out of a total of 103 students
attending the programs). Second, we distributed the questionnaire to
professional accountants qualified with the main professional accoun-
tancy organization, that is, the Body of Expert and Licensed Accoun-
tants of Romania (ro. Corpul Experţilor Contabili şi Contabililor
Autorizaţi din România-CECCAR), within the same time period. We
received answers continuously, with responses being received until
early March 2011. The usual pattern was to send out the questionnaire
© 2012 Blackwell Publishing Ltd
258 Nadia Albu and Cătălin Nicolae Albu

and to receive answers in the first one to five days from the distribu-
tion (although we allowed the questionnaire to be answered within
four weeks from receipt). Additional follow-up attempts resulted in
almost no response.
Finally, after three and a half months, we obtained another 94
answers from professionals (giving a grand total of 119). However,
some of the returned questionnaires were incomplete. Ten question-
naires were thus discarded, eight due to the large number of missing
answers, and two that although they were complete, pertained to two
very particular areas of activity (namely a foundation and an educa-
tional institution), preventing meaningful comparison with the rest of
the sample. Our final sample is 109 usable questionnaires comparing
favorably to similar studies conducted in other LDC5 and in Roma-
nia.6 The demographic data for our sample are shown in Table 1.
Our sample comprises eight listed entities (7.3 per cent) (seven large
entities and one medium-sized entity). Of the eight, two have exclu-
sively (100 per cent) Romanian capital, three prevailing foreign capital
and three 100 per cent foreign capital. Six of the eight listed entities
are in the manufacturing sector, one in trading and one in services.
The other entities are not listed.
Two-tailed Mann–Whitney tests were run to compare the students
and the professional accountants’ subsamples. No statistically signifi-
cant differences were obtained at the conventional level of 1 per cent.
Also, no statistically significant differences were observed between
early and late respondents (the first 20 and the last 20 questionnaires

Table 1. Demographic Data

Medium-sized
Small entities entities Large entities Total
N (%) N (%) N (%) N (%)
Panel A. Industry classification
Trade 9 (8.3) 5 (4.6) 2 (1.8) 16 (14.7)
Services 33 (30.3) 16 (14.7) 5 (4.6) 54 (49.5)
Manufacturing 5 (4.6) 5 (4.6) 11 (10.1) 21 (19.3)
Financial 15 (13.8) 2 (1.8) 1 (0.9) 18 (16.5)
Total 62 (56.9) 28 (25.7) 19 (17.4) 109 (100)
Panel B. Type of capital
Entirely Romanian 45 (41.3) 16 (14.7) 6 (5.5) 67 (61.5)
Prevailing Romanian 5 (4.6) 4 (3.7) 3 (2.8) 12 (11.0)
Prevailing foreign 6 (5.5) 5 (4.6) 6 (5.5) 17 (15.6)
Entirely foreign 6 (5.5) 3 (2.8) 4 (3.7) 13 (11.9)
Total 62 (56.9) 28 (25.7) 19 (17.4) 109 (100)

© 2012 Blackwell Publishing Ltd

 Management Accounting Practices in Romania 259

received, the latter used as a proxy for non-respondents) (Widener,

2006; Henri and Journeault, 2010); we interpret this as a reduced risk
of non-response bias in our data.

4. Results
It is generally accepted that there are three classes of MAT: costing,
planning and budgeting, and performance measurement. While finan-
cial performance measurement is considered more traditional, there
has recently been an increasing emphasis on the measurement and
management of non-financial performance (see for example, Widener,
2006). Hence, the composite classes of MAT that we utilize for our
study are as follows: (1) Costs (Full costing methods, Cost analysis as
fixed/variable and Standard costing); (2) Planning and budgeting (Stra-
tegic planning, Medium-term planning, Budgets and Investment plan-
ning); (3) Financial performance measurement; and (4) Global
performance measurement (Global financial performance analysis,
Quality costs, and Environmental costs). We present our results on
two levels: (1) existence (adoption) and use of MAT and (2) factors
affecting existence and use.

4.1. The Existence and use of Individual MAT and Classes of MAT
Table 2 presents our analysis on the rate of adoption and the rate of
use (1) of individual MAT (Panel A) and (2) of the four composite
classes of MAT constructed as described previously (Panel B). For
each class of MAT, the number and frequency disclosed in Table 2
correspond to the entities using at least one technique in each class.
Two ranks are employed: (a) “Rank based on adoption” presents
MAT and classes of MAT and (b) “Rank based on use.” All items are
presented in descending order of their rank of adoption.
Management accounting techniques generally rank similarly in
terms of adoption and use (Table 2, Panel A). However, two excep-
tions are apparent: (1) full-costing methods rank better with respect to
adoption (4th) than with respect to use (9th) and (2) quality costs
score lowest in terms of adoption (11th) but are reported to be used
more than many other techniques (6th).7
Another finding is the preference for financial performance measure-
ment (reports) and planning and budgeting techniques (1st and 2nd
both for adoption and use) and the reduced interest in adopting and
© 2012 Blackwell Publishing Ltd
 Table 2. Perceived Rates of Adoption and Use of MAT and Classes of MAT
260

Adoption Use

Mean for Rank

Number Rank based on perceived based Min Max Standard
(% of adoption) adoption use on use (N min) (N max) deviation

© 2012 Blackwell Publishing Ltd

Panel A. MAT
Financial performance 83 (76.1) 1 4.084 1 2 (4) 5 (34) 0.913
measurement
Budgets 75 (68.8) 2 3.947 2 2 (8) 5 (26) 0.985
Global performance analysis 59 (54.1) 3 3.746 3 1 (2) 5 (18) 1.108
Full costing methods 56 (51.4) 4 3.464 9 2 (12) 5 (10) 1.026
Medium-term planning 50 (45.9) 5 3.700 5 2 (7) 5 (13) 1.015
Investment planning 46 (42.2) 6 3.717 4 1 (2) 5 (16) 1.186
Cost analysis as fixed/variable 45 (41.3) 7 3.533 7 1 (1) 5 (11) 1.179
Strategic planning 35 (32.1) 8 3.514 8 1 (1) 5 (11) 1.269
Standard costing 33 (30.3) 9 3.303 11 1 (1) 5 (4) 1.015
Nadia Albu and Cătălin Nicolae Albu

Environmental costs 31 (24.8) 10 3.323 10 1 (2) 5 (2) 1.013

Quality costs 25 (22.9) 11 3.680 6 1 (1) 5 (7) 1.180
Panel B. Classes of MAT
Financial performance 83 (76.1)a I 4.084 I 2b(4) 5(34) 0.913
measurement
Planning and budgeting 81 (74.3) II 3.622 II 2(7) 5(13) 0.946
Global performance measurement 72 (66.1) III 3.618 III 1(1) 5(13) 1.008
Costs 66 (60.6) IV 3.462 IV 1,667(1) 5(7) 0.895

Notes: aFor each category, the number and frequency correspond only for the entities using at least one technique for each category.
b
Minimums and Maximums are determined for the entire class of MAT. For example, referring to global performance measurement, one entity con-
siders that the level of use is one for all the global performance measurement techniques it uses, while 13 entities consider that the level of use is five
for all such techniques used.
 Management Accounting Practices in Romania 261

using costing techniques 4th in both respects). Costs are generally

reported in the literature to be useful for pricing and product deci-
sions, identification of cost reduction opportunities, performance mea-
surement, and strategy implementation. However, our findings
suggesting a reduced rate of adoption and use of costing techniques
are generally in line with prior literature in LDC and in Romania
(Duh et al., 2009; Jinga et al., 2010; Volkàn, 2010). Previous studies in
LDC also provided evidence of an increased application of budgets
and performance measurement systems (Haldma and Lääts, 2002;
Szychta, 2002; Uyar, 2010; Al-Nimer, 2011).
The percentage of entities that have not adopted certain techniques
is costing, 39.4; planning and budgeting, 25.7; financial performance,
23.9; and non-financial performance, 33.9. Our findings are
comparable with previous results in LDC (Haldma and Lääts, 2002;
Szychta, 2002; Volkàn, 2010). Because costing techniques are reported
to have the lowest degree of adoption in our sample, we further
analyze the adoption of other MAT by the entities that have not
implemented any costing technique, and by the entities that have
adopted at least one costing technique. The results are presented in
Table 3.

Table 3. Comparative Presentation of Adoption of Non-Costing MAT by

Entities not Having Adopted any Costing Technique, and Entities Having
Adopted at Least One Costing Technique
Entities with
at least one
costing
Entities with no technique
costing techniques adopted
(Number/(%) (Number/(%)
of total sample) of total sample)
43 (39.4%) 66 (60.6%)
Planning and budgeting techniques
Entities with no techniques adopted 23 (21.1%) 5 (4.6%)
Entities with at least one technique adopted 20 (18.3%) 61 (56.0%)
Financial performance measurement
Entities with no techniques adopted 21 (19.3%) 5 (4.6%)
Entities with at least one technique adopted 22 (20.2%) 61 (56.0%)
Global financial performance measurement
Entities with no techniques adopted 29 (26.6%) 8 (7.3%)
Entities with at least one technique adopted 14 (12.8%) 58 (53.2%)

© 2012 Blackwell Publishing Ltd

262 Nadia Albu and Cătălin Nicolae Albu

As reflected in Table 3, almost half the entities that have not

adopted any costing techniques have however adopted planning and
budgeting MAT (approximately 47 per cent), financial (approximately
51 per cent), or global performance measurement MAT (approximately
33 per cent). Furthermore, entities that have adopted at least one cost-
ing technique have also adopted to a high extent techniques in the
other three classes (approximately 92 per cent for budgeting techniques
and for financial performance, and approximately 88 per cent for glo-
bal performance techniques).
Nine entities (8.3 per cent) have adopted all MAT indicated, 54 enti-
ties (49.5 per cent) have adopted at least one technique in each of the
four classes, and 15 entities (13.8 per cent) do not use any of the
MAT. Most entities that use all MAT are large (six of nine), and most
entities not using any of the techniques are small (12 of 15). This find-
ing suggests that size is a contingency factor for the adoption of MAT
in our sample.
To deepen the analysis, we constructed three types of indexes for
each class of MAT:
– Existence of at least one MAT in the class is a dummy variable that
is assigned the value of 0 (if no MAT in the class has been adopted)
or 1 (if at least one MAT in the class has been adopted);
– Complexity of each class represents the average of the scores of
existence of different MAT in each class, and ranges between 0 (no
MAT) and 1 (all the MAT), that is if an entity adopts three MAT
in a class containing four MAT, it receives .75;
– Use of the MAT included in a specific class can range from 1 (not
used at all) to 5 (used to the highest extent). For example, if only
two MAT are used from a class containing three, one with a level of
2 and the other with a level of 4, the index of use of this class is 3
(the calculation treats the non-used MAT as missing data, that is, it
does not take that value into account).
Based on these class indexes, we also constructed composite indexes
for the existence, complexity and use of the MAS as a whole, follow-
ing the same principles described previously. Cluster analysis was per-
formed on the index of complexity to identify relevant groupings with
respect to the rate of adoption of MAT. Specifically, we performed
agglomerative hierarchical clustering because it does not require the
researcher to indicate a desired number of clusters. Three clusters
emerged from our analysis (within-class variance decomposition for
© 2012 Blackwell Publishing Ltd
 Management Accounting Practices in Romania 263

the optimal classification 0.167, between-classes variance decomposi-

tion 0.437), with the following characteristics (see Table 4).
Based on the levels of adoption corresponding to class centroids, it
appears that entities in the 1st group have adopted to the highest
extent MAT across all four classes (hence, we label this group “High
adopters”). Entities in the 2nd group adopted MAT to a moderate
extent (hence, we label this group “Medium Adopters”), while entities
in the 3rd group have adopted MAT to the smallest extent (hence, we
label the group “Low Adopters”).
Panel C, Table 4, gives descriptive statistics for the factors expected
to impact the adoption and use of MAT for all the groups resulting
from the clustering process. High adopters have higher means for size,
industry, capital, and listing than entities in the other two categories,
thus suggesting that entities included in this group are larger entities,
are funded more through foreign capital, are listed to a higher extent,
and predominantly have more manufacturing activity than entities in
the other groups.8 Medium and Low adopters perceive the environ-
ment as more unstable and unpredictable, competition as more intense
and taxation to exert more influence on their MAS than High adopt-
ers. Also, High and Medium adopters perceive the level of MA compe-
tencies of their staff as being higher than Low adopters.

4.2. Factors Influencing the Existence and use of MAT—Statistical

Results
Table 5 shows the Spearman correlation coefficients for the existence,
complexity and use of MAT and classes of MAT and the factors asso-
ciated with MAT. The table indicates that size, industry, type of capi-
tal and listing mostly have significant positive correlations with most
existence, complexity and use indexes. Interestingly, the environment is
significantly negatively correlated with the existence of many tech-
niques and complexity of classes of techniques. MA competencies
appear to be significantly positively correlated with the existence, com-
plexity and use of planning/budgeting, and performance measurement
techniques. Somewhat surprisingly, competition is not significantly cor-
related with any of the MAT. Taxation is significantly negatively cor-
related only with the complexity of the costing system and the
existence of standard costs and is positively correlated with the use of
global performance techniques. Also, there are correlations for exis-
tence and complexity indexes of classes of MAT with the factors
© 2012 Blackwell Publishing Ltd
 264

Table 4. Clusters of MAT Adopters

Total sample Class 1 Class 2 Class 3
Panel A. Statistical data
Objects 109 48 35 26
Within-class variance 0.240 0.116 0.097

© 2012 Blackwell Publishing Ltd

Minimum distance to centroid 0.142 0.183 0.152
Average distance to centroid 0.460 0.324 0.248
Maximum distance to centroid 0.846 0.498 0.879

Total sample Class 1 Class 2 Class 3

Mean (St. dev.)

Panel B. Complexity of MAS—total sample and class centroids

Complexity of costing techniques 0.410 (0.400) 0.799 0.124 0.077
Complexity of planning and budgeting techniques 0.472 (0.382) 0.771 0.321 0.125
Complexity of financial measurement techniques 0.761 (0.428) 1.000 1.000 0.000
Complexity of global measurement techniques 0.352 (0.339) 0.618 0.219 0.038
Nadia Albu and Cătălin Nicolae Albu

Total sample Class 1 Class 2 Class 3

Mean (St. dev.) Mean (St. dev.) Mean (St. dev.) Mean (St. dev.)

Panel C. Characteristics of the sample and of each class

Size 1.606 (0.770) 2.021 (0.812) 1.343 (0.591) 1.192 (0.491)
Industry 0.193 (0.396) 0.396 (0.494) 0.00 (0.00) 0.077 (0.272)
Capital 1.275 (0.449) 1.479 (0.505) 1.143 (0.355) 1.077 (0.272)
Listing 0.073 (0.262) 0.167 (0.377) 0.00 (0.00) 0.00 (0.00)
Environment 3.560 (1.031) 3.250 (1.101) 3.829 (0.923) 3.769 (0.908)
Competition 3.807 (0.976) 3.708 (1.110) 3.829 (0.891) 3.962 (0.824)
Taxation 3.945 (1.008) 3.792 (1.010) 4.200 (0.868) 3.885 (1.143)
Competencies 3.633 (1.024) 3.771 (0.951) 3.829 (0.954) 3.115 (1.107)
 Table 5. Spearman Correlations Among Factors, MAT and Classes of MAT
Size Industry Capital Listing Environment Competition Taxation Competencies
Existence costs 0.374*** 0.347*** 0.329*** 0.227** 0.254*** 0.010 0.079 0.071
Complexity costs 0.395*** 0.426*** 0.396*** 0.318*** 0.256*** 0.069 0.159* 0.105
Use costs 0.179 0.107 0.115 0.021 0.082 0.124 0.183 0.143
Full costs 0.402*** 0.429*** 0.394*** 0.274*** 0.221** 0.011 0.099 0.059
Costs as fixed/variable 0.262*** 0.394*** 0.318*** 0.336*** 0.159 0.074 0.121 0.191**
Standard costs 0.287*** 0.235** 0.265*** 0.197** 0.232** 0.154 0.210** 0.018
Existence planning/ 0.273*** 0.127 0.362*** 0.165* 0.161* 0.081 0.034 0.215**
budgeting
Complexity planning/ 0.486*** 0.258*** 0.500*** 0.272*** 0.266*** 0.101 0.050 0.213**
budgeting
Use planning and 0.030 0.024 0.023 0.035 0.098 0.051 0.036 0.261**
budgeting
Strategic planning 0.474*** 0.112 0.544*** 0.259*** 0.320*** 0.084 0.129 0.188*
Medium-term planning 0.421*** 0.251*** 0.340*** 0.165* 0.201** 0.106 0.019 0.065
Budgeting 0.277*** 0.128 0.371*** 0.189** 0.112 0.095 0.073 0.240**
Investment planning 0.398*** 0.336*** 0.347*** 0.258*** 0.205** 0.043 0.141 0.171*
Financial performance 0.313*** 0.164* 0.249*** 0.158 0.099 0.064 0.011 0.291***
Use financial 0.238** 0.253** 0.216* 0.151 0.073 0.176 0.094 0.235**
performance
Existence global 0.367*** 0.203** 0.312*** 0.202** 0.276*** 0.097 0.007 0.287***
performance
Complexity global 0.396*** 0.303*** 0.384*** 0.344*** 0.299*** 0.099 0.056 0.284***
performance
Use global performance 0.213* 0.110 0.141 0.079 0.048 0.100 0.409*** 0.135
Quality costs 0.143 0.121 0.299*** 0.181* 0.174* 0.013 0.011 0.161*
Environmental costs 0.230** 0.208** 0.249*** 0.368*** 0.222** 0.069 0.142 0.096
Non-financial indicators 0.416*** 0.310*** 0.320*** 0.259*** 0.232** 0.088 0.008 0.318***
Management Accounting Practices in Romania

Notes: Significant correlation coefficients are indicated in bold.

*, **, *** represent p < .10, p < .05 and p < .01, respectively.

© 2012 Blackwell Publishing Ltd

265
266 Nadia Albu and Cătălin Nicolae Albu

investigated, but they are almost non-existent for use indexes. The
source of capital is significantly positively correlated with most of the
MAT and indexes. Overall, the results indicate the existence of system-
atic relationships among the existence, complexity and use of MAT
and classes of MAT and the factors usually associated with MAT.
In our main analysis, we ran multiple regressions on the MAS as a
whole, on MAT and classes of MAT. With respect to the regressions9
run for the MAS as a whole, the model is significant only for MAS’s
complexity; results are reported in Table 6. Our findings suggest that
the type of capital, size, industry, and level of competencies enhance the
complexity of MAS. Further, as the findings reported in Table 5 suggest
differences in terms of the factors affecting existence and use of MAT
between classes, we also ran regressions for each class of MAT (see
Table 7). Table 7 additionally reports on regressions run for several
individual MAT. Only the results of significant regressions are reported.
The results (Panel A, Table 7) indicate that the existence of costing
techniques is positively related to size, industry, and type of capital and
negatively related to the perceived uncertainty of the environment. Cost-
ing techniques complexity is related only to industry and type of capital,
while use is positively related to the level of competencies as well as to
taxation and type of capital. The existence of standard costing (a tech-
nique with a reduced rate of adoption as per our preliminary analysis
above) is positively related only to the type of capital. The existence of
planning and budgeting MAT and the existence of budgets (Panel B,
Table 7) are positively related only to the type of capital, while their
complexity is positively related to size, type of capital, and level of com-
petition. The existence of more advanced techniques such as strategic
Table 6. OLS Regression for Overall MAS Complexity
Factors Complexity of MAS
Size 0.104**
Industry 0.141*
Capital 0.220***
Listing 0.016
Environment 0.038
Competition 0.016
Taxation 0.004
Competencies 0.052*
F-value 8.466***
Adjusted R2 0.356

Notes: Significant correlation coefficients are indicated in bold.

*, **, *** represent p < .10, p < .05 and p < .01, respectively.
© 2012 Blackwell Publishing Ltd
 Table 7. OLS regressions results for each class of MAT and some individual MAT
Existence
of fixed/
Class Use of Existence variable
Class index of Class index of index Existence of full standard costs
Factors existence complexity of use full-costs costs costing analysis
Panel A. Regressions for the class of costing MAT
Size 0.131* 0.058 0.022 0.138** 0.423** 0.057 0.022
Industry 0.285** 0.304** 0.061 0.384** 0.168 0.119 0.409***
Capital 0.220** 0.229* 0.055* 0.295* 0.111 0.194* 0.196*
Listing 0.053 0.083 0.013 0.042 0.547 0.038 0.252
Environment 0.077* 0.045 0.001 0.048 0.063 0.061 0.025
Competition 0.055 0.011 0.007 0.049 0.353** 0.042 0.027
Taxation 0.009 0.034 0.331*** 0.015 0.252* 0.047 0.040
Competencies 0.011 0.024 0.331*** 0.002 0.173 0.015 0.083*
F-Value 4.426*** 6.423*** 137.201*** 6.396*** 2.131* 2.601** 4.522***
Adjusted R2 0.202 0.287 0.944 0.286 0.141 0.106 0.207

Existence of Existence of Existence of

Class index of Class index of strategic investment medium-term Existence
Factors existence complexity planning planning planning of budgets
Panel B. Regressions for the class of planning and budgeting MAT
Size 0.104 0.193*** 0.247*** 0.165** 0.252*** 0.108
Industry 0.035 0.073 0.155 0.276** 0.133 0.037
Capital 0.280* 0.297*** 0.423*** 0.193* 0.267** 0.305**
Listing 0.063 0.070 0.024 0.025 0.214 0.018
Environment 0.038 0.045 0.079** 0.037 0.040 0.023
Competition 0.047 0.067* 0.061 0.087* 0.069 0.052
Management Accounting Practices in Romania

Taxation 0.036 0.004 0.028 0.066 0.029 0.048

Competencies 0.059 0.042 0.027 0.075 0.005 0.070

© 2012 Blackwell Publishing Ltd

267
 268

Table 7 (Continued)
Existence of Existence of Existence of
Class index of Class index of strategic investment medium-term Existence
Factors existence complexity planning planning planning of budgets

© 2012 Blackwell Publishing Ltd

F-Value 3.348** 10.051*** 11.293*** 5.283*** 4.845*** 3.626***
Adjusted R2 0.148 0.401 0.433 0.241 0.222 0.163
Financial Financial Global Global
performance performance performance performance Use of Existence of
measurement class measurement class measurement class measurement class quality environment
Factors index of existence index of use index of existence index of complexity costs costs
Panel C. Regressions for the classes of financial and global performance techniques
Size 0.116* 0.185 0.133** 0.048 1.099*** 0.015
Industry 0.079 0.517* 0.084 0.110 0.069 0.043
Nadia Albu and Cătălin Nicolae Albu

Capital 0.171* 0.165 0.218** 0.185** 0.855** 0.114

Listing 0.121 0.186 0.115 0.171 0.551 0.504***
Environment 0.004 0.029 0.080* 0.058** 0.133 0.063
Competition 0.018 0.217** 0.017 0.002 0.329* 0.012
Taxation 0.025 0.004 0.014 0.001 0.292 0.031
Competencies 0.089** 0.275** 0.096** 0.054* 0.211 0.004
F-Value 2.647** 2.399** 4.359*** 5.843*** 4.904* 2.861***
Adjusted R2 0.109 0.120 0.199 0.264 0.565 0.121

Notes: Significant correlation coefficients are indicated in bold.

*, **, *** represent p < .10, p < .05 and p < .01, respectively.
 Management Accounting Practices in Romania 269

planning or investment planning is positively related to size and type of

capital as well as to industry and competition (for investment planning).
The existence of performance measurement MAT (Panel C, Table 7) is
positively related to size, type of capital, and level of MA competencies,
while the existence of global performance measurement techniques is
negatively related to the uncertainty of the environment.

4.3. Factors Influencing the Existence and use of MAT—Further

Analysis
Our results suggest that type of capital is the most significant factor
for the existence and use of MAT. The role of this factor as facilita-
tor is consistent with previous literature in other LDC (Anderson and
Lanen, 1999; Joshi, 2001; O’Connor et al., 2004; Duh et al., 2009).
However, previous literature views the type of capital as having a
limited influence on some MAT (Duh et al., 2009), usually being
associated with the adoption of modern MAT (Joshi, 2001). In our
sample, the presence of foreign capital is positively significantly
related to the existence and complexity of costs, budgets, and perfor-
mance measurement MAT. Also, the presence of foreign capital is
related to the adoption and use of more modern techniques such as
strategic planning, global performance measurement, or quality costs.
This is in line with previous studies in Romania investigating the
adoption of modern techniques in privatized firms or in entities with
foreign capital (Albu and Alexe, 2009; Albu and Udroiu, 2009;
Almăşan and Grosu, 2009).
The second most important factor is size, thus generally confirming
the classic contingency models (Chenhall, 2007). Entity size is signifi-
cant for the existence and use of MAT. It is positively related to the
existence of strategic planning, investment planning, and medium-term
planning and performance measurement techniques, thus confirming
the contingency-based hypothesis that larger entities use budgets and
performance management systems as control mechanisms to manage
their activity. However, size is negatively related to the use of full cost-
ing techniques and quality costs. Our results thus partially confirm
findings of previous literature reporting that an increase in size is
related to a higher use and complexity of MAS (Joshi, 2001; Haldma
and Lääts, 2002; Szychta, 2002; Alattar et al., 2009). In our sample,
size is positively related to the existence of costs and performance mea-
surement techniques but not to the complexity and degree of the use
© 2012 Blackwell Publishing Ltd
270 Nadia Albu and Cătălin Nicolae Albu

of these techniques. However, size is positively related to the complex-

ity (but not existence) of planning and budgeting techniques.
Type of industry (manufacturing/non-manufacturing) is positively
related to the existence and complexity of costing techniques and to
the existence of full costs and the analysis of costs behavior (fixed or
variable). This factor has a limited importance to the other techniques,
being positively related only to the existence of investment planning
and the use of financial performance techniques. Our analysis thus
confirms previous results (Duh et al., 2009) documenting a reduced
influence of the type of industry on MAT.
The environment and the intensity of the competition are viewed as
undergoing rapid changes in LDC, where the environment is generally
becoming less uncertain and hostile because of economic development
and increased political stability, while competition intensifies overtime.
The entities in our sample perceive the levels of environmental uncer-
tainty and competition as relatively high (means of 3.560 and 3.807,
respectively, on a 5-point Likert scale). Competition is reported to be
positively related to the complexity of the planning and budgeting sys-
tem and to the existence of investment planning and negatively related
to the use of full costs and quality costs. The environment is negatively
related to the existence of strategic planning, thus suggesting that stra-
tegic planning is less adopted in more uncertain environmental con-
texts. This is in line with Alam (1997) suggesting that budgeting
practices have limited functionality in highly uncertain environments.
Contingency theory suggests that greater uncertainty increases the
emphasis on non-financial measures and on the scope and sophistica-
tion of MAS (Luther and Longden, 2001; Haldma and Lääts, 2002;
Cadez and Guilding, 2007). However, our results indicate that
increased environmental uncertainty is negatively related to the exis-
tence and complexity of global performance techniques. Considering
the reduced number of statistically significant coefficients across all fac-
tors, our results do not support the high importance of environment
and competition reported in other LDC (Haldma and Lääts, 2002;
Szychta, 2002; Waweru et al., 2004; Alattar et al., 2009).
The link between financial reporting, management accounting, and
taxation on the one hand, and MA competencies of accountants on
the other hand are sensitive issues in LDC. Our statistical results pro-
vide support for the positive relationship between the level of MA
competencies and the complexity of MAS in general, the use of
costing techniques, the existence and use of financial performance
© 2012 Blackwell Publishing Ltd
 Management Accounting Practices in Romania 271

measurement techniques, as well as the existence and complexity of

global performance measurement techniques. Surprisingly, the per-
ceived influence of taxation on accounting is significantly positively
related to the use of costing techniques and of full costs. This result
may raise questions about the utility of full cost information for
managerial purposes or for taxation purposes, as discussed in Albu
et al. (2010).
Reported as an important factor in other LDC, stock exchange list-
ing is positively correlated with the existence and use of many MAT,
but the results of our regression analyses show that this is a significant
factor only for the adoption of environmental costs, thus suggesting
that listed entities have environmental concerns. Some entities may
have adopted such practices for legitimization purposes (similar to
Tayles et al., 2007). Such legitimization practices have been docu-
mented in Romania (Ioan and Sandu, 2008), but further studies are
needed on how entities react to institutional pressures and for legitimi-
zation in relation to the adoption and use of MAT.

5. Conclusions
The purpose of our article is to investigate and analyze, through the
lens of contingency theory, the existence and use of MAT in Roma-
nian companies, focusing on the institutional factors characterizing the
environment of this country. We use survey data from 109 entities
varying in industry and size. We investigate the existence, complexity,
and use of usual MAT. Our analysis of the existence and use of the
MAT as reported in four broad categories (costs, planning and budget-
ing, financial performance measurement, and global performance
measurement) indicates that the most frequently adopted techniques
are financial performance measurement and planning and budgeting.
These results are generally in line with previous studies in Romania
and in other LDC.
Our results show that the most important factors associated with
the existence and use of MAT are the type of capital and the size. We
view the importance of these factors in our sample as a distinctive fea-
ture of the Romanian context, which requires further investigation in
this environment, especially in relation to the role of multinationals
and the internationalization trends of MAP. The presence of foreign
capital has a different impact in an LDC than in a developed country,
as it supports the transfer of (MA) practices. Multinational entities
© 2012 Blackwell Publishing Ltd
272 Nadia Albu and Cătălin Nicolae Albu

and foreign capital thus act as an important institutional factor in the

adoption of “modern” MAT of the western type.
Future researchers should consider the role of “inherited” practices
that might influence how new practices are implemented/used, partic-
ularly in the context of a strong influence of foreign capital. Previous
LDC studies (Anderson and Lanen, 1999) tackle the issue of adapt-
ing/adopting (new) MAP or how previous practices influence the
application of new ones. For example, communist regimes relied
heavily upon their forecasting systems, in which activities were
planned for five years by the centralized government, and all state-
owned enterprises had to keep track of their results to report over-
fulfillment of the national plan or at least the attainment of the
assigned objectives. Also, standards and standard costing were very
important during the period of communism. Our statistical results
indicate a higher existence and use of budgets and a reduced use of
standard costing. More insight could be obtained from in-depth case
studies to study the influence of such old practices and how they
have changed.
We also find a reduced influence of the environment and of compe-
tition on the MAS of Romanian entities in our sample. This finding is
inconsistent with other studies on LDC that identify them as the fac-
tors having the most important impact on the change of MAS (Luther
and Longden, 2001; Szychta, 2002; Waweru et al., 2004; Duh et al.,
2009). Future (potentially longitudinal) research could be undertaken
to investigate the importance of these factors.
Finally, we generally agree with the argument that MA competen-
cies and taxation are significant factors affecting MAP in LDC (Ander-
son and Lanen, 1999; Luther and Longden, 2001; Lin and Yu, 2002).
Our results show that these factors only have a few significant coeffi-
cients, and further research is needed to understand the role of train-
ing, of accounting competencies, and of management support, as well
as the interaction between managers and accountants when a new
technique is implemented.

Notes
1. Several terms are usually employed in the literature to refer to these countries, such
as less developed countries, developing countries, emerging economies, emerging mar-
kets, transitional economies, newly industrialized countries (Uyar, 2010). For the pur-
pose of our article, we will interchangeably use the first two.

© 2012 Blackwell Publishing Ltd

 Management Accounting Practices in Romania 273

2. Other factors have been used in prior literature but are not considered in this study,
such as shareholder value (Mikes, 2009). This is closely related to corporate gover-
nance, an area where LDC have serious issues (Duh et al., 2009).
3. The letter accompanying the questionnaire specifically asked respondents to not fill
in the questionnaire if they worked for a micro-entity.
4. While in previous studies, the questionnaire constrained an entity that did not imple-
ment a certain MAT to answer similarly to another entity that implemented the tech-
nique but did not use it, the significance is very different. On the one hand, this
implementation surely required a financial and time-consuming investment from the
subject entity. On the other hand, in an entity that has implemented a technique for
legitimating purposes although it is not presently using it, other considerations (for
example, training employees, changes in the business environment) may lead the entity
to use it in the future. This entity will be in a different position from that of companies
that have not implemented the technique. Also, low levels of use across multiple MAT
may signify, for example, an external implementation imposition while managers have
continued to rely upon informal mechanisms, or a limited trust in the utility of such
official MAT, both cases being a bad investment in official systems for the entity.
5. The number of completed questionnaires forming the basis of prior studies include:
Van Triest and Elshahat (2007) 40 in Egypt, Haldma and Lääts (2002) 62 in Estonia,
Uyar (2010) 61 in Turkey, O’Connor et al. (2004) 82 in China, Tayles et al. (2007) 119
Malaysia, Kallunki et al. (2008) 100 in Russia, and Luther and Longden (2001) 139 in
South Africa.
6. Volkàn (2010) used data from 146 entities, of which 53 were micro-entities. Jinga
et al. (2010) used data from 62 entities.
7. It is interesting to note that 10 entities in our sample have adopted but do not use
for managerial purposes certain MAT.
8. Caution must be exercised when interpreting these results. The Group 1 mean of
0.396 for industry indicates that more entities in this group have a manufacturing activ-
ity.
9. Considering the possible violations of the assumptions behind OLS regressions, we
also ran ordered probit regressions on the same data. The results are similar.

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