Using Transaction Cost Economics to explain outsourcing of accounting

Using Transaction Cost Economics to explain outsourcing of accounting This study explores whether SMEs involved in the outsourcing of accounting tasks differ, in terms of transactional and personal (CEO) characteristics, from others that perform the same tasks within the company. We rely on the transaction cost economics (TCE) model, while controlling for age, educational background, and trust of the SME executive in the external accountant. A survey was developed to investigate the outsourcing by Belgian SMEs both of routine (entry of invoices, interim reporting) and non-routine (period-end accounting, preparation of financial statements) accounting tasks. For the routine accounting tasks, frequency was significantly associated with outsourcing. Meanwhile, for non-routine accounting tasks, asset specificity and frequency were significantly associated. High-frequency tasks were associated with lower levels of outsourcing. Similarly, higher asset specificity was associated with lower levels of outsourcing. Furthermore, the educational background of the CEO, as well as the CEO’s level of trust in the external accountant, was significantly associated with outsourcing, confirming the upper echelon theory. Having a more educated CEO was associated with lower levels of outsourcing, both for routine and non-routine accounting tasks. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Using Transaction Cost Economics to explain outsourcing of accounting

Loading next page...
 
/lp/springer_journal/using-transaction-cost-economics-to-explain-outsourcing-of-accounting-4U8dmCbTQD
Publisher
Springer US
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-008-9149-3
Publisher site
See Article on Publisher Site

Abstract

This study explores whether SMEs involved in the outsourcing of accounting tasks differ, in terms of transactional and personal (CEO) characteristics, from others that perform the same tasks within the company. We rely on the transaction cost economics (TCE) model, while controlling for age, educational background, and trust of the SME executive in the external accountant. A survey was developed to investigate the outsourcing by Belgian SMEs both of routine (entry of invoices, interim reporting) and non-routine (period-end accounting, preparation of financial statements) accounting tasks. For the routine accounting tasks, frequency was significantly associated with outsourcing. Meanwhile, for non-routine accounting tasks, asset specificity and frequency were significantly associated. High-frequency tasks were associated with lower levels of outsourcing. Similarly, higher asset specificity was associated with lower levels of outsourcing. Furthermore, the educational background of the CEO, as well as the CEO’s level of trust in the external accountant, was significantly associated with outsourcing, confirming the upper echelon theory. Having a more educated CEO was associated with lower levels of outsourcing, both for routine and non-routine accounting tasks.

Journal

Small Business EconomicsSpringer Journals

Published: Nov 4, 2008

References

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 12 million articles from more than
10,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Unlimited reading

Read as many articles as you need. Full articles with original layout, charts and figures. Read online, from anywhere.

Stay up to date

Keep up with your field with Personalized Recommendations and Follow Journals to get automatic updates.

Organize your research

It’s easy to organize your research with our built-in tools.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve Freelancer

DeepDyve Pro

Price
FREE
$49/month

$360/year
Save searches from
Google Scholar,
PubMed
Create lists to
organize your research
Export lists, citations
Read DeepDyve articles
Abstract access only
Unlimited access to over
18 million full-text articles
Print
20 pages/month
PDF Discount
20% off