Determinants of managerial accounting technique adoption in manufacturing enterprises: a structural equation modeling approach

Purpose This paper aims to examine the mediating effect of Contingent and Upper-Echelon factors on the relationship between Managerial Accounting Techniques (MAT) and the financial performance of manufacturing enterprises. Based on Upper-Echelon theory, it is hypothesized that executive characteristics such as age (AG) experience (ES), gender of CEO and CFO (GCEO/ GCFO), education of CEO and CFO (ECEO/EDCFO) and the involvement of accountants in strategic decision-making play an important role in this mediation. In line with the Contingency theory, factors such as firm size, production technology (PT), production sector (PS) and environmental (EN) conditions are considered key determinants influencing the use of MAT and their impact on the financial performance of manufacturing enterprises. Design/methodology/approach A quantitative, deductive approach was adopted, using a sample of 155 small, medium and large manufacturing enterprises in Kosovo. Structural equation modeling was used to explore the relationships between latent constructs and their impact on MATs use and enterprise financial performance. Findings The study found that accountant involvement in strategic decision-making, female CEO leadership, enterprise size and advanced production technology significantly increase the use of MATs of Stages 3 and 4. MAT usage positively impacts profitability, with CEO experience further enhancing profitability. CFO experience and environmental uncertainty showed no significant effects, and the production sector was not a determinant. In contrast, CEO education and experience positively impact profitability, while CFO education and experience have no effect. The model explains 63.1% of the variance in MAT usage and 10.8% in profitability. Research limitations/implications The study focuses exclusively on the manufacturing sector to ensure accuracy in assessing the use of MATs, acknowledging that different sectors may use varying techniques. Future research should expand the sample to include companies from other sectors. Originality/value This study offers valuable insights into the application of managerial accounting techniques in manufacturing enterprises within a developing emerging economy, contributing to understanding their influence on financial performance.