FACTORS INFLUENCING MANAGEMENT ACCOUNTING TECHNIQUES IN THE GARMENT MANUFACTURING INDUSTRY OF CAMBODIA

Management accounting techniques are important in a garment factory as they help in the cost control, budgeting, and decision-making. They aid managers in analyzing materials use, labor efficiency and overhead costs. The adoption of management accounting techniques will help factories improve profitability, allocate resource, boost productivity, and remain competitive in market. The purpose of this study is to use an empirical analysis to examine the impact of management decision making, production technologies, and the predictability of the external environment on the implementation of management accounting techniques in garment industry of Cambodia. The analysis of the data is initiated with a Confirmative Factor Analysis (CFA) of 104 garment manufacturing cluster in Cambodia to measure the prediction of observed variables toward latent variables: Production Technology (PRT), Decision Making (DEM), Predictability of the External Environment (PEE), and Accounting Techniques (ACT). The path analysis will be conducted through the estimation of a Structural Equation Modeling (SEM) to evaluate factors that determinant the management accounting techniques. The results of this study suggested that of the three factors—PEE, PRT, and DEM—investigated, only production technology significantly and strongly influenced the adoption of accounting practices in the garment manufacturing industry of Cambodia. The positive and significant association of PRT with ACT indicated that technological development was a key motivator for the adoption of advanced management accounting practices, which were essential to ensure cost control, monitor performance, and provide decision support in a technologically oriented context. The effect of decision-making processes was positive but only marginally significant, and not significant at the 5 per cent level. By contrast, the predictability of the external environment was related to accounting techniques, but not directly, so its influence was either mediated or contingent.