Factors affecting the use and consequences of management accounting practices in a transitional economy: The case of Vietnam

vernment, independent 
of competition or decentralization. In the tran-
sitional economy, where the level of competi-
Figure 2: Results of structural analysis - Alternative model
 -15- 
Goodness of fit criteria: χ2/df =1.688, GFI = 0.895, TLI = 0.933, CFI = 0.944, RMSEA = 0.056 
Dotted line represents not significant 
*Coefficient is statistically significant at p<0.1 level (two-tailed) 
**Coefficient is statistically significant at p<0.05 level (two-tailed) 
***Coefficient is statistically significant at p<0.001 level (two-tailed) 
COMPETITION 
New_MAPs 
PERFORMANCE 
0.29*** 
0.05 
0.33*** 
0.38** 
R2 =0.54 
0.06 
0.10 
DECENTRALIZATION
Old_MAPs 
0.31*** 
0.12 
0.13 
0.50*** 
R2 =0.28 
Journal of Economics and Development Vol. 18, No.1, April 201668
tion has been increasing and the level of decen-
tralization depends on the enterprise owner’s 
decision, the old MAPs have been continuously 
adopted widely and intensively. Accordingly, 
the influence of competition and decentraliza-
tion on the use of old MAPs is not significant. 
However, competition and decentralization 
have a positive and significant influence on 
the use of new MAPs (standardized regression 
weight = 0.29, p<0.001 and = 0.31, p< 0.001 
respectively). This result is consistent with the 
findings by Chia (1995), and by Abdel-Kader 
and Luther (2008), that there is a positive asso-
ciation between decentralization and the use of 
new MAPs. 
The findings shown in Figure 2 indicate that 
the use of old MAPs strongly impacts on the 
use of new MAPs (standardized regression 
weight = 0.50, p<0.001), providing strong ev-
idence to support H7. As a result, the use of 
new MAPs is positively associated with the 
use of old MAPs, competition and decentral-
ization, and these constructs explain 54% of 
the variation in the use of new MAPs. This key 
finding sheds light on the question by Chenhall 
and Langfield-Smith (1998) that called for in-
vestigation about the nature of the dependence 
between traditional and recently developed 
MAPs. It can be seen that the high level of 
managers’ knowledge may minimize resistance 
to change and motivate the need for change 
(Wu and Boateng, 2010), while resistance to 
change has been recognized as a substantial 
barrier to the use of “new” MAPs (Scapens and 
Roberts, 1993; Walley et al., 1994). Therefore, 
when managers have used the old MAPs at a 
high level, they have gained knowledge about 
how to use a MAP in their enterprise and how 
these MAPs bring benefit for them. As a result, 
they are more willing to apply new MAPs. 
The results in Figure 2 also show that the 
use of old MAPs did not affect performance 
directly (standardized regression weight = 
0.13, p<0.198), while the use of new MAPs 
has a positive, significant influence on per-
formance (standardized regression weight = 
0.38, p<0.002). This finding is consistent with 
Baines and Langfield-Smith (2003) and Cadez 
and Guiding (2008) who found that the use of 
advanced MAPs is positively associated with 
performance.
It is noted that the use of old MAPs does not 
directly influence enterprise performance. The 
positive and significant correlation (r = 0.35, p 
< 0.001 as reported in Table 3b) between the 
use of old MAPs and performance is explained 
by the direct relationship (standardize regres-
sion weight = 0.13) and the indirect relationship 
between the use of old MAPs and performance 
existing through the mediation of the use of 
new MAPs (see Table 3). Accordingly, the use 
of new MAPs explains 26% of variation in the 
performance (standardized regression weight = 
0.51, p<0.001) shown in Figure 2. 
5. Conclusion 
This study provides a number of practical 
implications for both enterprise managers and 
policy makers in Vietnam. First, the findings 
indicate that both competition and decentral-
ization are positively and significantly related 
to the use of MAPs. However, they have no 
direct influence on enterprise performance, but 
they have an indirect effect on enterprise per-
formance through an important mediating role 
played by the use of MAPs. Therefore, Viet-
namese enterprises operating in high level of 
Journal of Economics and Development Vol. 18, No.1, April 201669
competition need to use MAPs intensively to 
enhance their performance. Besides, it is not-
ed that managers in decentralized enterprises 
are allowed to have more authority for plan-
ning and controlling activities under their own 
responsibility. As a result, they are willing to 
use new management tools, including MAPs, 
to improve relevant information that they need 
to use for the planning, controlling, organizing, 
evaluating and decision making that they bear 
the full responsibility for. Therefore, to facili-
tate the use of MAPs, decentralization should 
be carried out in Vietnamese enterprises. 
Second, the findings of this study indicate 
that the use of MAPs is positively associated 
with enterprise performance (including both fi-
nancial performance and non-financial perfor-
mance). Therefore, to improve the enterprise 
performance, Vietnamese enterprises should be 
motivated to make greater use of MAPs, espe-
cially the new MAPs. This is the responsibility 
not only of enterprise managers but also of pol-
icy makers. The policy makers should, through 
accounting associations, organize on-job train-
ing courses about how to adopt MAPs in prac-
tice and help enterprises know how to adopt 
MAPs, especially new MAPs. On the other 
hand, enterprise managers acknowledge that 
the increasing use of MAPs can provide Viet-
namese enterprises with better information; so 
in turn, managers can make better decisions. 
This leads to improved enterprise performance.
As with other empirical studies, this study 
is subject to several limitations that encour-
age consideration for further studies. First, 
this study examined a wide range of items. Al-
though the majority of respondents were guid-
ed to answer the questionnaire, it is possible 
that the respondents misunderstood some items 
(Chenhall and Langfield-Smith, 1998). Second, 
the data were collected from medium and large 
Vietnamese enterprises; it is possible that the 
results may not generalize to all Vietnamese 
enterprises, especially for small Vietnamese 
enterprises. Thus, further studies should be 
conducted for small Vietnamese enterprises to 
ascertain whether the above findings general-
ize to all Vietnamese enterprises. Finally, the 
analysis has not covered some factors that may 
influence the use of MAPs, but that have been 
considered in other studies, such as technolo-
gy and organizational culture (Anderson and 
Lanen, 1999; Chenhall, 2003). Thus, future 
studies could investigate the effect of these oth-
er factors to extend the coverage of the current 
study. 
Acknowledgement:
I would like to thank Prof. Lokman Mia and Prof. Tom Nguyen for their suggestions and comments.
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