Title: External pressures and financial performance of Indonesian MSMEs: role of material flow cost accounting

Authors: Noorlailie Soewarno; Satwiko Oetomo Adji Basoeki; Bambang Tjahjadi

Addresses: Faculty of Economics and Business, Universitas Airlangga, Indonesia ' Faculty of Economics and Business, Universitas Airlangga, Indonesia ' Faculty of Economics and Business, Universitas Airlangga, Indonesia

Abstract: This study aims to investigate the mediating effect of material flow cost accounting (MFCA) on the external pressure (regulatory pressure and market pressure) - financial performance relationship. The topic of MFCA is rarely researched. The data was collected using questionnaires directed to the owners/managers of micro, small and medium-sized enterprises (MSMEs) in the East Java Province, Indonesia. As many as 156 respondents participated in this research. The finding reveals that MFCA partially mediates the external pressure-financial performance relationship proving that MFCA as one of the environmental management accounting methods is beneficial and needed to enhance financial performance. Employing institutional theory, this study provides additional support to the scarcity of empirical evidence focusing on MFCA in the MSME research setting.

Keywords: material flow cost accounting; MFCA; financial performance; institutional theory; external pressure; micro; small and medium-sized enterprises; MSMEs.

DOI: 10.1504/IJGSB.2023.130315

International Journal of Globalisation and Small Business, 2023 Vol.13 No.3, pp.268 - 290

Received: 25 Oct 2021
Accepted: 27 Oct 2022
Published online: 17 Apr 2023 *