Contextual factors affecting the application of strategic management accounting in Saudi Arabia

Type of the article: Research ArticleThe purpose of this study was to investigate the contextual factors affecting the application of strategic management accounting (SMA) in Saudi Arabia. A quantitative research methodology was adopted to collect data using a questionnaire sent to managers, senior accountants, and accountants in 64 companies; a total of 225 valid responses were obtained to test the research hypotheses. The research hypotheses were to determine whether or not external and internal factors influenced the application of SMA, and this was examined by running a regression and correlation analysis. External factors were found to be positively related to SMA application in Saudi companies. These included environmental uncertainty, competitive pressure, government regulation, and business strategy. The internal factors that also had a positive correlation with SMA application were information technology, organization size, decentralized governance, organizational culture, organizational structure, and human resources. The context and cultural components of Saudi companies determine the effects of external and internal factors on SMA application in Saudi companies, and these effects differ from one company to another in terms of their degrees of influence. The study concluded that external factors such as environmental uncertainty, competitive pressure, and business strategy have the most significant influence on SMA application. Conversely, organizational size and government regulation exert the least influence. These findings imply that companies should make SMA application a top priority if they are to perform in a dynamic environment characterized by change, and they should do so to enhance their strategic organizational responsiveness and decision-making.