The moderating role of external accountants’ advice on the relationship between small business owner-managers’ digital self-efficacy and financial performance

Purpose This study aims to examine the influence of external accountants’ advice on the digital self-efficacy of small business owner-managers (SBOMs) in utilizing digital tools for accounting. Specifically, this paper investigates how such advice moderates the relationship between digitalization initiatives and financial performance through the mediating role of SBOMs’ digital self-efficacy. Design/methodology/approach Data were collected from 160 SBOMs affiliated with the Association of Small and Medium-Sized Enterprises (ASMS) in Hyogo Prefecture, Japan. A multiple mediation analysis, following the approach developed by Hayes (2018), was conducted using five measures of digital self-efficacy as mediating variables. Findings The findings indicate that SBOMs who sought advice on digital accounting tools from external accountants exhibited enhanced self-efficacy, particularly in using digital technologies for generating accounting information and facilitating employee involvement in management. This improved self-efficacy significantly contributed to better financial performance. The study offers new insights into the moderating role of external accountants in supporting the digital transformation of small and medium-sized enterprises (SMEs) and advancing their overall performance. Originality/value The contribution of this study lies in highlighting the imperative for external accountants to continuously enhance their advisory capabilities in digital technologies to support the development of SBOMs’ digital self-efficacy. To achieve this, accountants must not only acquire technical expertise in digital tools but also cultivate cognitive and psychological competencies that enable them to empathize with SBOMs and effectively strengthen their confidence in using digital technologies.