A Perspective of Managment Accouting

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A revenue management perspective of management accounting practice in small

businesses
Frederick Ng, Julie A. Harrison, Chris Akroyd,
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MEDAR
21,2 A revenue management
perspective of
management accounting
92
practice in small businesses
Frederick Ng and Julie A. Harrison
Department of Accounting & Finance, The University of Auckland,
Auckland, New Zealand, and

Chris Akroyd
Department of Accounting, Oregon State University, Corvallis, Oregon, USA
Abstract
Purpose – The purpose of this paper is to develop a framework for the systematic examination of
management accounting practices in small businesses using a revenue management perspective.
This highlights the multi-faceted nature of size as a contextual factor and emphasises the role of
management accounting in supporting profit-oriented decision-making, rather than its traditional role
of co-ordination, control, and accountability.
Design/methodology/approach – The framework is theoretically derived from the management
accounting, revenue management, and small business literature. An illustrative case study of a small
fast-food business is presented to demonstrate the applicability of this framework to practice.
Findings – The paper identifies that various dimensions of business size have different and sometimes
opposing effects on management accounting practices. Given heterogeneity is a common feature of
small businesses, the framework considers alternative specifications of the size contingency variable.
Research limitations/implications – The synthesis of small business characteristics and revenue
management perspective offers a more incisive understanding of what has traditionally been
considered a simple practice. The case study illustrates some of the influences of small business
characteristics identified in the framework. Given its narrow scope, the findings are used for
theorisation rather than offering generalisable results. Further cross-sectional comparisons of small
businesses are needed to confirm size influences.
Practical implications – The framework can assist practitioners to gauge the strengths and
weaknesses of their management accounting practices and can help assess the value of adopting more
sophisticated management accounting practices, given their particular business environment. A synthesis
of these small business attributes can help practitioners identify key barriers to implementation.
Originality/value – The revenue management perspective and the inclusion of key characteristics
of small businesses provide a new approach to evaluating management accounting practices in
small businesses.
Keywords Management accounting, Revenue management, Small business
Paper type Research paper
The authors would like to thank Paul Rouse, William Maguire, Charl de Villiers, Susan Poffley,
and participants at the AFAANZ 2009 annual conference and the University of Auckland
Meditari Accountancy Research
Vol. 21 No. 2, 2013 management accounting group seminar series for their helpful comments. The authors
pp. 92-116 would also like to acknowledge the financial support of the University of Auckland’s Thesis and
q Emerald Group Publishing Limited
2049-372X
Research Essay Publications Scholarship programme and the New Zealand Institute of
DOI 10.1108/MEDAR-07-2012-0023 Chartered Accountants.
Introduction A revenue
Small businesses play an important economic role in many countries given their ability management
to contribute to their local communities and economies[1] (Devins, 1999; Friar and perspective
Meyer, 2003; Peterson et al., 1986), but they remain a relatively unexplored context in the
management accounting literature. Further, these businesses have significantly higher
failure rates than large businesses (Stanworth and Gray, 1991), suggesting management
accounting practices need to focus on areas that can best improve small 93
business survival rates. Revenue management provides an approach that emphasises
maximizing revenue through the creation and management of customer offerings
(Chiang et al., 2007). This emphasis on revenue generation may better align management
accounting practices with the objectives of many small businesses.

Generally, accounting research has examined the use of management accounting
practices, that is, practices that support internal decision-making, in the context of
large businesses. The literature on management accounting has examined its role as a
mechanism for performance enhancement, co-ordination, control, and accountability
(Scapens and Bromwich, 2001). In contrast, in small businesses the literature suggests
that management accounting practices and other information systems used are
informal or simplified (Danes et al., 2008; Dodge and Robbins, 1992; Dyer and Ross,
2007; Halabi et al., 2010). Accordingly, opportunities exist to investigate the influence
of size as a contextual factor on management accounting practices (Chenhall, 2007).
This paper examines two issues related to small businesses. First, we examine the
meaning of size for small businesses. This variable often receives a narrow treatment in
the literature, with only sales and/or employee count being used as a proxy, or where
research into the implications of size is restricted to size variations within larger
businesses. Yet, researchers have found that small businesses are not homogenous and
as such cannot be considered together (Birley and Westhead, 1993). Small businesses are
often suggested to have characteristics which may render the findings from large
business research irrelevant (Gleadle and Haslam, 2010; Greenhalgh, 2000; Howorth and
Westhead, 2003; King et al., 2010). In particular, small business features that differentiate
them from larger businesses include their limited access to capital, smaller resource
bases, and the immersion of the owner in the business operations.
Second, we examine the impact of the relatively smaller scale of operations in small
businesses. This reduced scale suggests internal decisions that support the improvement
of profitability are of greater importance than decisions related to co-ordination, control,
and accountability. Compared to larger organisations, small businesses commonly have
access to limited resources in terms of access to capital and skill availability, but owners
typically work in close proximity to a relatively small group of staff. As a consequence the
crucial business decisions relate to revenue and cash flow generation given the problems
of accessing funds from external sources. A revenue management perspective reflects the
importance of these types of decisions. In contrast, the co-ordination, control, and
accountability roles, important in management accounting within larger organizations,
are not as important in the small business context given the proximity of the owner to the
day-to-day operations. Instead, the main focus for many small businesses is the generation
of revenue to fund operations, thus, ensuring long-term survival.
The purpose of this paper is to develop a conceptual framework from the literature to
analyse the management accounting practices of small businesses using a revenue
management perspective. Revenue management focuses on demand and resource
MEDAR management practices that will maximize revenue. We argue this emphasis on revenue
21,2 generation better aligns with the objectives of many small businesses. We consider the
existing management accounting frameworks developed for larger businesses, which
focus on co-ordination, control, and accountability, may overlook other techniques oriented
towards improving profitability and, as such, are not applicable to small businesses.
A review of the management accounting, small business, and revenue management
94 literature is used to develop the conceptual framework. The framework incorporates key
characteristics of small businesses identified from the literature as influencing the nature of
management accounting practice. Small businesses are found to possess a variety of
characteristics that can have complementary or competing influences on management
accounting practices. The framework considers management accounting practice as a
general process to support internal decision-making rather than searching for the presence
of particular management accounting techniques. This follows arguments that
organisations may use general data in a variety of ways, rather than formally adopt new
management accounting systems (Bromwich and Bhimani, 1989; Burns et al., 1999; Burns
and Baldvinsdottir, 2005). It also acknowledges that the management accounting practices
performed by small businesses are unlikely to form part of a separate management
accounting function, but rather will be part of the general management or accounting
functions. The paper concludes with a case study of a small, recently established, fast-food
business that demonstrates how the framework could be used in practice.
We consider the contribution of the framework is that it models the relationship
between small business characteristics and management accounting practices in
relation to each key area of revenue management decision-making. Also, the
framework can help facilitate and structure future research aimed at investigating how
small business characteristics, as well as other contextual factors, influence small
business management accounting practices. By recognising the heterogeneity found in
small businesses, the framework breaks down the size contingency variable. In doing
so, we suggest that various dimensions of business size have different and sometimes
opposing effects on management accounting practices. This is in contrast to prior
research which implicitly suggests that size has a uniform effect on
management accounting processes and techniques. In addition, the framework can
assist practitioners in assessing the value of adopting more sophisticated management
accounting practices, given their business environment.
The paper proceeds as follows. The next three sections review relevant literature on
management accounting practices in small businesses, revenue management literature,
and the links between these two literatures. This provides the conceptual basis for
developing the framework. An outline of the proposed framework is then discussed.
This describes the essential activities prescribed by revenue management, examples of
management accounting practices used to support revenue management activities, and
the influence of small business characteristics on those practices. Next the application of
the framework is illustrated using a case study of a small business. We conclude by
discussing the contribution and limitations of the framework, and suggesting areas for
future research.
Management accounting practices in small businesses

Small businesses have received only limited attention in the management accounting
literature (Mitchell and Reid, 2000), despite their economic importance. Small businesses
are commonly defined as having fewer than 50 employees (European Commission, A revenue
2003; Peterson et al., 1986), although this definition includes businesses considered management
“medium-sized” in economies such as New Zealand (Jurado et al., 2008; Massey et al.,
2005)[2]. Management accounting studies have identified a number of differences that perspective
exist between small and larger businesses. Research suggests that management
accounting and other information systems in small businesses are often informal or
very simple (Danes et al., 2008; Dodge and Robbins, 1992; Dyer and Ross, 2007; 95
Halabi et al., 2010), and these businesses are less likely to use sophisticated management
accounting techniques (Adler et al., 2000; Cadez and Guilding, 2008; Innes and
Mitchell, 1995). Small businesses have problems in recording cash flow, inventory,
cost controls and other management accounting information, and these problems
persist in most stages of the business life-cycle (Dodge and Robbins, 1992). Danes et al.
(2008) found that while small businesses do estimate cost and expense figures and
prepare financial records, this does not appear to be done to any great extent. Further, the
evidence on the value of financial information in small businesses is inconclusive
(Argiles and Slof, 2003).
Contingency theory provides the theoretical lens of this paper. It proposes that business
practices, such as management accounting, are systematically influenced by the
environment in which a business operates (Burns and Stalker, 1961; Galbraith, 1973).
Within management accounting, contingency theory-based research has developed an
extensive body of findings into the effect of contextual factors such as organisational
structure, external environment, and strategy on management control systems and other
features of management accounting (Chapman, 1997; Gerdin and Greve, 2004; Reid and
Smith, 2000). Yet despite this progress, relatively limited attention has been directed
towards the effect of size as a contextual factor, with research commonly examining
differences in size among large organisations, measured using partial proxies such as
employee numbers or turnover figures (Chenhall, 2007). A stronger definition of size and its
diverse effects would help structure and generalise the effects of size as a contextual factor.
In contrast, the small business literature identifies many potential influences on
management accounting practices that can be considered when examining differences in
practice across different types of small businesses. If these factors are not distinguished
and captured separately this could lead to omitted variable bias, overlooking potential
explanations, and/or the weakening of research results (Ryan et al., 2002). To overcome
this limitation, the following paragraphs review and synthesise the research related to
small business characteristics and their likely effect on management accounting practice.
Libby and Waterhourse (1996) found that organization size did not predict the rate of
change in management accounting practice. Instead, they found that higher rates of
change were related to the attention given to decision-making and control, and that this
was not necessarily a function of size. Other studies have emphasised the need to explain
differences in the use of management accounting techniques by identifying and exploring
barriers such as the cost of change, the lack of relevant skills, management inertia, and the
lack of relevant software (Adler et al., 2000; Clarke et al., 1999). However, while these
studies recognised that size is a contextual variable that encapsulates a range of different
characteristics, size has received a narrow treatment in the empirical literature where it is
often measured using only sales or the number of employees (Cadez and Guilding, 2008;
Clarke et al., 1999). Further, these studies have largely examined differences in size within
large organisations (Chenhall, 2007).
MEDAR Beyond employee numbers and turnover figures not much is known about how
21,2 variations within small businesses affect management accounting practices (Dalley and
Hamilton, 2000). In particular, larger businesses often have a management accounting
function separate from other organizational activities, and while this separation is
unlikely to occur in small businesses, further study is needed to investigate how
management accounting practices differ across settings (Byrne and Pierce, 2007). It is
96 likely the nature of the co-ordination, control, accountability, legitimacy, performance
evaluation, cost control, and productivity improvement activities vary in response to
differences in business size on a number of dimensions (Anthony, 1965; Byrne and
Pierce, 2007; Scapens and Bromwich, 2001; Yazdifar and Tsamenyi, 2005). For example,
in the case of the owner-operator there is often no separation between the management
accounting function and other management activities in the business. As a consequence,

techniques related to co-ordination, control, and accountability functions are likely to be
absent. In contrast, a small business that is a franchise of a larger organization may not
have separation of the management accounting function, but is likely to employ a
greater variety of management accounting techniques. Accordingly, it is necessary to
examine size as a contingency variable using a variety of measures, and to look beyond
the co-ordination, control, and accountability activities when considering the small
business context.
The concept of size may be considered a measure of the resources available to a
business (Fredrickson and Mitchell, 1987; Mintzberg, 1994). Banbury and Nahapiet
(1979) argued that there is a relationship between resource availability and the
introduction of formalised practices. Small businesses may be reluctant to invest in
sophisticated and expensive management accounting practices if they are unsure of the
benefits (Holmes and Nicholls, 1989; McMahon, 2001). This smaller resource base can
also mean that small businesses are less able to survive the impact of poor decisions
(Covin and Slevin, 1989).
As a consequence of smaller resource bases, record keeping can be limited in small
businesses (Danes et al., 2008; Dodge and Robbins, 1992; Dyer and Ross, 2007;
Halabi et al., 2010). This may also reflect the very close relationships between small
businesses and their customers (Ahire and Golhar, 1996; Bitner and Powell, 1987;
Danes et al., 2008), which allows information to be collected informally rather than
formally (Dalley and Hamilton, 2000; Smeltzer et al., 1988). That is, the informal control
mechanisms can be sufficient for these businesses as complexity and information
asymmetry are low (Lawrence and Lorsch, 1937; Wynarczyk et al., 1993). Accordingly,
formal management accounting practices may not be needed to track customer habits and
demand trends. Further, the data collected informally may be richer and more detailed
compared to formal collection in larger companies that only collect rigid sets of data.
Simple management accounting information can be sufficient if the managers have
a detailed understanding of the underlying processes (Johnson and Kaplan, 1987).
In certain contexts, owner immersion coupled with informal or even incomplete
practices may serve as an acceptable surrogate for more sophisticated practices. It is
possible that this more detailed and more frequently updated non-financial information
could actually improve the quality of decision-making.
Small businesses are unlikely to dominate their local markets (Hunger and
Wheelen, 1998). As a consequence, these businesses have limited freedom to set prices,
as they are unable to influence market prices in the same way a large market leader
is able. This, in turn, could limit the need for small businesses to adopt management A revenue
accounting practices that inform pricing decisions, such as target costing or pricing management
using activity-based costing.
Many small businesses are owner-operated, and the position of the owner means he or perspective
she is central to the decision-making and culture in the firm (Johnson and Winterton, 1999;
Kruse et al., 1997; Lawrence and Lorsch, 1937). Accordingly, the owner’s characteristics are
important in determining the management accounting information needs of the business. 97
A concentrated ownership base (Holliday, 1995) suggests that small business owners will
enjoy all the benefits arising from improved management accounting practices, making
them more likely to pursue these practices where they are viewed as adding value.
Entrepreneurs have been described as possessing attributes such as a need for
achievement, greater innovation and initiative, and positive attitudes towards risk
(Dalley and Hamilton, 2000; Harris et al., 2007). This suggests a greater likelihood that
they will be attracted to business innovations, such as the adoption of more
sophisticated management accounting practices. However, managers may also resist
change, as owners have been found to be reluctant to accept external advice (Storey
and Strange, 1992) and to have a strong connection to practices that they have
developed over a number of years (Devins et al., 2005).
Further, many small business owners have limited knowledge of strategic planning
due to a lack of business education (Hodges and Kent, 2006) and limited experience or
knowledge of business issues (Beverland and Lockshin, 2001; Marriott and
Marriott, 2000). This can result in an absence of planning and, consequently,
management accounting practices concerned with both forecasting and record keeping
may be absent. Halabi et al. (2010) speculated that accounting reports were of little use
to many business owners, because they were not well understood.
Owner motives can also affect the adoption and use of management accounting
practices. Many entrepreneurs adopt a profit focus (Evans and Leighton, 1989; Heino, 2006),
which suggests these owners will be interested in improving management accounting
practices in order to improve revenue. However, some small business owners may have
motivations other than purely financial (Beverland and Lockshin, 2001; Polzin et al., 2000).
Accordingly, owners may be content with satisficing profit levels, rather than maximised
profits (Greenbank, 1999). For these businesses, owners may not attach as much value to
the improved decision-making offered by better management accounting practices.
Life-cycle considerations have also been shown to influence management accounting
practice (Dyer and Ross, 2007). Dodge and Robbins (1992) suggested that
owner-operator businesses go through four phases: formation, early growth, later
growth, and stability. Firms face different challenges during these stages which can
affect the usefulness of management accounting practices. For example, customer
contact is the primary concern in the growth stage of the business, meaning manager
attention may be distracted away from market-based pricing techniques. Further, there
may also be insufficient information during the growth phase of the firm to set prices
according to demand. As a result, pricing may be cost-based, and some demand-based
techniques may not be appropriate during the growth phase of small businesses.
Similarly, during the growth phase small businesses usually have significant cash flow
and investment restrictions imposed by suppliers of capital; this may also limit
businesses willingness or ability to invest in more complex management
accounting practices.
MEDAR Accordingly, the different characteristics of small businesses can generate
21,2 management accounting practices that differ from those found in large businesses.
Owner motivation and education, the business resource base, market position, and
life-cycle can affect the nature and value of management accounting practices in
businesses. As shown in Figure 1, these characteristics can have both negative and
positive directional effects on the likelihood of management accounting practice use. As
98 such, a more complex treatment of size is needed to understand these influences.
Revenue management
Small businesses are often characterised as having significantly higher failure rates than
large businesses (Stanworth and Gray, 1991). This suggests that their management
accounting practices need to focus on areas that will best increase the chances of long-term
survival, such as improving revenue and managing limited capacity. Given its focus on
revenue growth, a revenue management perspective could inform existing research on the
value-adding roles of management accounting practices in small businesses (Dunk, 1999).
Revenue management is an area of growing interest within management accounting
research, notable for its synergies with strategic management accounting
(Bromwich, 1999), and the important role of management accounting information in
revenue management (Huefner and Largay, 2008). We argue a focus on revenue
generation aligns with the management accounting needs of owners and managers of
small businesses. Revenue management offers an incisive lens through which to view
practices designed to improve profitability. It prescribes a cohesive process of activities
which connect pricing and inventory decisions to rigorous demand analysis.
Directional Effect on
Small Business Likelihood of
Characteristic Management Accounting
Practice
Inability to influence price Negative
Smaller resource bases Negative
Concentrated ownership Positive
Lack of education/experience Negative
Openness to change Positive
Resistance to change Negative
Extensive daily involvement Positive
Profit/expansionist motive Positive
Figure 1. Lifestyle/satisficing motive Negative

The influence of small
business characteristics on Life cycle – Formation Negative
management accounting
practices Life cycle – Maturity Uncertain
Revenue management practices were developed in the airline industry in response to A revenue
increased pressures on the survival of these businesses, which arose due to the removal of management
industry protections and the rapid increase in new competition (Boyd, 2007). While these
practices were initially developed for large businesses, the focus provided could assist perspective
with the problem of small business survival rates. Revenue management is concerned
with creating and managing service packages to maximize revenue (Chiang et al., 2007) or,
more simply, as selling the right product to the right customer at the right time for the right 99
price (Smith et al., 1992). Airline yield control methods are a well-known application of
revenue management. These methods are used to change prices over time as well as
determine when fare classes should be opened or closed. However, the term also
encompasses differential pricing techniques, product configurations, and process
management. Research has reported that businesses implementing such techniques

enjoy 2-5 per cent increases in revenue (Hanks et al., 2002; Smith et al., 1992). Revenue
management practices can either be used tactically to identify opportunities for revenue
improvements or as a strategic tool from which other tactics can be built (Okumus, 2004).
Four modules of revenue management decision-making comprise revenue
management practice, being data collection, data analysis and modelling, inventory
controls, and pricing policy (Shields, 2006; Talluri and van Ryzin, 2004). Data collection
encompasses activities related to gathering information on the habits, trends, and demand
patterns of customers through techniques such as point-of-sale systems, barcodes, and
web sites. Accounting information systems ranging from software packages to
pen-and-paper records can be used to capture this information. Data analysis and
modelling activities seek to calculate customer profitability and find patterns of
differential demand through techniques such as demand forecasting and customer
segmentation. In addition to mathematical techniques (e.g. linear programming or
heuristics), management accounting tools (e.g. balanced scorecard, predictive budgets,
benchmarking, and cost-volume-profit analysis) play an important role in supporting the
data analysis required to identify tactics that will maximise revenue. Inventory control
activities involve selecting specific techniques to maximise revenue from existing
resources. These techniques include overbooking, redesigning products, changing
standard operating procedures, and inventory controls. Management accounting
techniques such as customer relationship management, theory of constraints, and
capacity management are vital in this module. Pricing policy activities aim to utilise
demand-based pricing by charging price insensitive customers a higher price and offering
lower prices to encourage those with higher price sensitivity to buy more. Again, customer
relationship management techniques assist in these decisions.
Figure 2 summarises these four generic modules of revenue management practice.
These modules represent a process similar to a typical accounting information model
of information identification, recording, analysis, and reporting (Atrill et al., 2009). The
key difference is an emphasis on demand data and revenue improvements needed to
support revenue management decisions. A revenue management perspective is helpful
as it links operations research techniques (e.g. optimisation techniques) and marketing
techniques (e.g. customer segmentation), together with accounting analysis and the
management accounting information needed to support these techniques. Further, this
approach provides a mechanism to examine how techniques such as the balanced
scorecard, customer profitability analysis, benchmarking, and revenue driver analysis
can be used to improve revenues (Maguire and Rouse, 2006).
MEDAR
Data collection
21,2
• Customer characteristics
• Sales information
• Habits, trends, patterns of demand
• Collected via point-of-sale systems, barcodes, websites, etc.
100
Data analysis and modelling
• Analysing customer profitability

• Determine differential demand patterns
• Forecasting demand and demand modelling

• Optimisation techniques
Inventory controls
• Customising products to meet segment needs

• Changing standard operating procedures
• Duration controls
Pricing policy
Figure 2. • Demand based pricing policies
Modules of revenue
• Create barriers among segments
management
decision-making
Sources: Adapted from Harvey et al. (2004); Shields (2006); Talluri and van Ryzin (2004)
A revenue management perspective on small business management

accounting practice
The management accounting literature reviewed above identified that different
characteristics of small businesses can generate management accounting practices that
differ from those found in large businesses. That is, the “size” contingency factor is best
viewed not as a uni-dimensional factor but as a multi-dimensional factor when
considering differences in the management accounting practices adopted by small
businesses (Adler et al., 2000; Clarke et al., 1999). Relevant aspects of size that influence
the sophistication of management accounting practices include the immersion of the
owner in the day-to-day business operations, the owner’s business objective (either
profit/growth or lifestyle/satisficing), the owner’s level of education, the owner’s
openness to change and innovation, the size of the business resource base, the business’s
ability to influence market prices (which is normally low for small businesses), and the
stage of the business life-cycle. Further, these effects can be positive on some practices
and negative on others. For example, the inability to influence market prices can be
negatively associated with the sophistication of the customer relationship management
practices used to identify customers’ willingness to pay and price sensitivity, but can
be positively associated with the sophistication of customer relationship management
practices aimed at targeting different customer segments. Accordingly, a more complex
treatment of size is needed to understand these influences on small business
management accounting.
Despite this heterogeneity, some common features do exist for small businesses that A revenue
affect the focus of management’s attention and should inform the design of management management
accounting practices. Small businesses, generally, have limited access to capital, smaller
resource bases, and the management and ownership of the business are less likely to be perspective
separated. Accordingly, the main focus of management decision-making for these
businesses is on revenue generation, which is needed to fund business operations. This
is particularly relevant in light of the poor survival rates for newly established small 101
businesses. These small business characteristics are also likely to make other traditional
management accounting functions related to control, coordination, and accountability
less important.
From a contingency perspective the interaction of this multi-dimensional size
variable and the revenue decision-making focus suggests that management accounting
practices will vary both in response to different size characteristics and also in
response to the revenue objectives of a business. Accordingly, when identifying the
“best fit” of practices for small businesses it may be more appropriate to examine
management accounting practices in terms of how they support revenue management
decisions. In this regard, we argue that using the decision-making modules from the
revenue management literature provides a framework for analysing differences in
management accounting practice across different small businesses. In this respect,
research has found that the principles of revenue management are transferable to the
small business context. In particular, the structure of revenue management is similar
between both large and small organisations (Kimes, 1999). Small businesses have been
found to practice each of the four modules of revenue management decision-making,
although in a simplified form (Shields, 2006), often incorporating informal practices
rather than formal management accounting practices. Revenue management decisions
require businesses to engage in activities related to collecting customer and sales data,
analysing and modelling that data, formulating inventory controls that target high
value customers and reserve capacity for them, and formulating pricing policy. Rather
than treating management accounting practices as a single group of activities, if they
are instead examined in relation to each of these four modules, then the influence of the
small business characteristics can be better modelled to explain the level of practice
used in relation to each. For example, in a small business where the owner is closely
involved with day-to-day operations there may be a large amount of information on
customer demand collected informally via telephone, emails, or letters because the
owner personally knows his or her customers and does not need more formal
information systems to collect the data. While it may look to an outsider that no data is
collected as no formal information system exists, it could be that the owner’s
understanding of customer data is such that no formal system is required. In addition,
the identification of these interactions and the level of practice currently employed by a
small business provide opportunities to introduce targeted innovations that support
those revenue management decisions.
While it is common in small businesses for one formal accounting information system
to meet multiple accounting functions, such as financial, tax and management
accounting, the focus of this paper is on the management accounting practices. That is,
the framework developed in the next section considers how the management accounting
practices vary to support revenue-focused management decisions depending on the
characteristics of the small business under examination. This distinction between
MEDAR management accounting practices and other accounting practices may not be
21,2 articulated by many small businesses in practice. However, we consider that some of the
practices developed are distinct and only relate to management accounting purposes
and that this distinction is important when developing a theoretical framework.
Accordingly, the framework in the next section takes a contingency theory
perspective to connect the influence of small business characteristics on management
102 accounting practices (Figure 1) with the four generic modules of revenue management
decision-making (Figure 2). This facilitates systematic investigation of how each
characteristic can affect management accounting practices in small businesses, while
incorporating the complexities of size as a contextual variable.
Revenue management framework for small business management

accounting
Figure 3 shows our proposed framework of small business revenue management
practice that incorporates a synthesis of the relevant revenue management, management
accounting, and small businesses literature. Figure 3 shows the interaction between each
of the four modules of revenue management decision-making, the differences in small
business characteristics, and how these influence the management accounting practices
adopted within each revenue management module.
For the data collection module, the extent of data collected is negatively related to
smaller resource bases. The necessary information on customer trends is expected to
be collected using informal information systems by the owner, and a lack of education
or understanding of the revenue generation processes is likely to cause gaps in the
information considered vital for revenue management. In particular, businesses in the
growth phase of their lifecycle are unlikely to have the depth or history of management
accounting information needed to inform demand-based pricing and inventory
controls. In contrast, businesses in the mature phase of the lifecycle are likely to have
such information, enabling them to adopt more sophisticated practices. In either case,
Small business
characteristics • Life cycle –Maturity • Profit/expansionist • Profit/expansionist • Profit/expansionist
positively associated motive motive motive
with management • Extensive daily
involvement • Concentrated • Inability to influence • Openness to change
accounting practices
ownership price
Data collection Data analysis and Inventory controls Pricing policy

Modules of revenue modelling
management
decision-making Track demand, habits, Identify customer segments Target customer segments Price by willingness to pay
and volumes and demand patterns and reserve capacity
• Budgets • Customer
relationship
• Sales trends
Management management
• Accounting • Customer
• Sales break-even • Theory of
accounting information relationship
practices systems • Benchmarking constraints
• Project management management
Figure 3. • Linear programming
• Cost-volume-profit
• Capacity
management
Revenue
management-focused
• Inability to influence
framework of small Small business
characteristics
• Smaller resource bases • Smaller resource bases • Lack of education/ price
experience
business management negatively associated
with management
• Lack of education/
experience
experience
• Resistance to change
• Lifestyle/satisficing
accounting accounting practices • Life cycle–Formation • Lifestyle/satisficing
motive
• Lifestyle/satisficing
motive
motive
experience
extensive daily involvement by owners can compensate for incomplete data collection A revenue
or even provide better information than rigid record-keeping. management
For the data analysis module, the level of analysis is also negatively affected by
smaller resource bases, and a lack of owner education and/or experience. A smaller perspective
resource base restricts the tools the owner has to analyse demand. Only the simplest
revenue management techniques, such as basic linear programming and simple
formulas, can be expected to exist. A general lack of education and experience suggests 103
that even these simple techniques will be unused. The extent of data analysis will also be
affected by the owner’s motives for running the business. Those with a profit-based
motive will be more likely to rigorously analyse data. Those with a lifestyle-based
motive will be less inclined to do so. In contrast, concentrated ownership is expected to
increase the rigour of data analysis, as the owner faces increased risk of business failure.
For the inventory controls module, the level of control will be negatively affected by
a lack of owner experience, owner resistance to change, and a lifestyle motive.
Inexperienced owners may miss opportunities to implement customer segmentation or
not understand the benefits of doing so. Resistance to change can mean an owner does
not implement revenue management techniques even if the benefits are explained.
A lifestyle motive can compound this if the owner is comfortable with existing
practices or deemphasises the potential benefits. However, an owner motivated by
profit is more likely to adopt revenue management techniques. Finally, the inability to
influence prices can mean that businesses use segmentation and yield management
techniques rather than differentiated pricing.
For the pricing policy module, the level of sophistication will be positively related
with whether the owner has a profit-based motive and their openness to change.
However, small businesses may be unable to influence price as larger competitors
provide substitute products. A resistance to change and a lifestyle motive reduce
the perceived benefits and increase the perceived costs of implementing differentiated
pricing. Lack of experience and the many problems faced during business formation will
also reduce the use of pricing policy modifications.
This conceptual framework, thus, allows for the analysis of small business
management accounting practices using a revenue management perspective. By
emphasising revenue generation, and the associated management accounting practices,
we consider the framework better aligns with the profit improvement objectives of many
small businesses. In the next section, we apply the framework to an illustrative case
study to determine whether the expected relationships shown in Figure 3 are reflected
in practice.
An illustrative case study

Our case study site was a fast-food restaurant chain, NewFastFood, recently established
in New Zealand. An interview[3] was conducted with one of the company owners, who
was involved with the day-to-day operations of the company and was both an owner and
a director. The purpose of the interview was to determine whether the revenue
management focus developed in our framework was applicable to this business.
In particular, the purpose was to discuss the management accounting practices used in
the business to support decisions related to how prices and products were determined,
with a view to determining the influence of the company’s characteristics on these
practices. The questions used to guide the interview are contained in the Appendix.
MEDAR At the time of the interview NewFastFood had one flagship store. Since then, several
21,2 other stores have been opened across New Zealand. These stores are small in size,
each employing fewer than 50 employees. Some stores have a lobby on the premises,
while others are booths in food courts. While the company is part of a larger international
franchise, it was able to choose its own accounting and other information systems,
determine its own prices and business controls, and develop and implement the
104 promotions and offers held in store.
With his frequent contact with potential franchisees, the director commented that
potential franchisees come from a wide range of backgrounds:
Most of them are employees of companies, [but] it’s just so vague. We’ve got policemen who
are interested, we’ve got salesmen who’ve been made redundant [and] we’ve got people who
are unhappy in their own jobs.
In addition to the mix of employment backgrounds, potential franchisees also varied
significantly in age. A first group was referred to as “mom and pop owners”,
franchisees in their 40s and 50s who had relatively greater access to capital. The
director also explained that many young people were also attracted to the franchise
brand due to its fresh image. However, this latter group had significantly lower access
to capital. An enterprising spirit was a common characteristic among potential
franchisees. The director described these people as looking for a new lifestyle; people
who want to be “controlling their own destiny rather than be an employee of a
company”. While these small business owners are somewhat constrained in their
operational freedom under the franchise model, the director emphasised that the
owners still had significant flexibility: “It’s not too rigorous being in franchising.
You can still create your own hours; you can create your own culture within your
business”.
The revenue management framework developed in this paper offers a lens to break
down the sources of management information used by this business, the analysis
conducted, and the resulting application of management accounting information. It
also highlights the effects of small business characteristics on management accounting
practices and management decisions. Figure 4 summarises the case study using this
framework. The activities performed in relation to each of the four revenue management
decision-making modules are described, together with an analysis of how the
small business characteristics affected the management accounting practices used.
Data collection
Figure 4 shows that the management accounting practices used by NewFastFood for the
collection of data included the use of MYOB software[4] and point-of-sale information
systems, together with owner intuition. The accounting system in NewFastFood was
based on the MYOB accounting package, which was used to prepare summary
financials and meet financial reporting requirements. The MYOB system recorded cash
receipts and summary information from the point-of-sale system, but did not provide the
business with a breakdown of financial components. A separate point-of-sale system
was used to collect sales data. The point-of-sale system was a customised
software system purchased from a local software developer. When asked about
the information recorded, the business owner suggested it collected a range of
transaction information:
Small business
• Extensive daily • Profit/expansionist
A revenue
management
characteristics
involvement • Profit/expansionist motive • Profit/expansionist
positively associated
with management • Profit/expansionist motive • Inability to influence motive
perspective
accounting practices motive price
Data collection Data analysis and Inventory controls Pricing policy

Modules of revenue modelling
105
management decision Track demand, habits, and Identify customer segments Target customer segments and Price by willingnessto pay
making volumes and demand patterns reserve capacity
Analysis Pricing base

MYOB
• Summary financials • Only check sales Targeting customers • Cost-plus for
Point-of-sale trends to reveal
• Frequent user card most menu items
• Items sold; prices; popular products Discounting
Management tax; time • Cash flow modelling • Student specials • Lower profit margin
accounting practices Intuition for newproducts on high price meals
• Customer Benchmarking Capacity controls
• Discount for
demographics; • Limited; between- • Special order large orders
operational store comparison treatment Price premium
standards splanned • None
Figure 4.
• Inability to influence
Small business
• Smaller resource bases • Lack of education/
price Illustrative application
characteristics
negatively associated • Life cycle –Formation
experience
of framework for a
with management
accounting practices experience experience
• Lifecycle -Formation
small business
Everything you see on our menu is recorded and we can find out exactly which item sold, at
which time it sold: items, quantities, dollar values, tax excluded/included figures, time of
purchase, time of invoice.
This was used to track sales trends and product popularity. Specific information on
current promotions was also recorded on the point-of-sale system, e.g. the number of
student specials (described below). The director also explained that the point-of-sale
system offered a number of other tools, such as tracking inventory levels and collating
data across several stores. However, these features were not used at the time of
the interview.
While the point-of-sale system collected a comprehensive range of data at relatively
low cost, it did not collect customer demographic information or operational standards
(e.g. the time to put out the order); details that are important for informing revenue
generation decisions (Kimes et al., 1999). The director explained that a lot of this
information was collected through direct observation and experience. With active daily
involvement, he was able to get a “360 degree view on the functions of the business,
marketing, finance, [and] operations”. For example, when asked if the time to put out the
order was recorded by formal practices, he explained that the information was not
collected as he was able to rely on “owner-operator intuition in knowing how long it
should/shouldn’t take” and that “as an owner-operator, you get a good idea of the
customer demographic”. The director’s view was that the owners would remain
“hands-on”, but that they would no longer “mop the floors of every business” when more
than one store was owned by a franchisee.
The discussion revealed the business had a relatively sophisticated customer data
collection system compared to other local small businesses. The level of sophistication of
the management accounting practices appeared to be influenced by the owner’s daily
involvement in the business and by his profit/expansionist motive as shown at the top of
Figure 4. The director explained that his desire to expand his business prompted him to
invest in a more sophisticated accounting system for data collection and analysis
MEDAR (the point-of-sale system) compared to systems that other similar sized businesses might
21,2 use. He explained that he was planning to use this information to provide benchmarking
targets when other stores in the franchise were opened. From his experience as a director
of a local business association, the director suggested that other small businesses would
be reluctant to implement a more sophisticated accounting information system, as the
extra information would not be seen as worth the additional cost:
106 It’s going to cost about ten to twenty thousand dollars to set up this type of system that we’ve
invested in. And that can scare away small business owners because they don’t see the return
on that investment.
He expected other businesses would just use a cash-register and computer
spread-sheets for record keeping, relying on intuition for the rest.

Owner intuition and direct experience also played a significant part in collecting
customer demographic information in NewFastFood, substituting for formal and more
expensive systems. This reflected the early stage in the life cycle of the business
(as shown at the bottom of Figure 4). That is, because the business was relatively new
and had limited business history, the director relied on first-hand experience
supplemented with some formal management accounting information, rather than just
relying on formal accounting systems.
This reliance on owner immersion was informed in part by research from the US
division of the franchise. The New Zealand business required that new franchisees be
actively involved in their stores as owner-managers, citing the franchise’s international
research finding that:
Of their 300 restaurants, so they’ve done their research, those that have failed are more likely
to be those not involved directly hands-on with the business [. . .] these individual restaurants
need to be run by an owner-operator.
Additionally, the director commented that the franchise environment influenced data
collection in terms of following franchise systems and operational guidelines. While
potential owners were described as having the entrepreneurial spirit, the US division
warned that occasionally, there were potential owners who wished to deviate from the
franchise systems:
If you were too entrepreneurial, you tend to challenge what has been proven and provided to
you in your manuals and your recommended way of operating. We want people to have high
energy, can follow systems, but yet have the initiative to go into business on their own.
Data analysis and modelling

Figure 4 shows the management accounting practices used by NewFastFood for the
analysis and modelling of data were trend analysis, cash flow modelling of new
products, and some limited benchmarking. The main form of analysis used in the
business was tracking sales trends; checking which products were more or less popular
in order to alter menus. The director stated that at present, data analysis was informally
conducted on a weekly basis. Trends in the data were “eyeballed” and unexpected
results were highlighted, but no formal analysis of the data was conducted:
On a weekly basis, we print the reports, we use our pen and we go this, this, this. But as we
grow with our franchise network we will have a lot more benchmarking procedures.
This approach represents a simple form of threshold analysis used in revenue A revenue
management, where customer numbers are checked on a regular basis to determine management
when promotions should be offered or discontinued to stimulate demand or exploit
excess demand. For example, NewFastFood offered a free drink to students during perspective
slower months. The director explained this was a limited time offer and that when the
company did not need the extra demand, i.e. during busy times, it was not offered.
However, there was limited benchmarking to compare actual performance with 107
projected performance. The director intended to compare trends between stores as the
number of restaurants in the franchise grew, but at the time of the interview this
functionality, which was built into the point-of-sale system, was unused.
Scenario modelling was used when deciding whether to implement new promotions.
When asked about the origin of certain promotions, the director explained that “as a
bunch of directors, we just threw around some various ideas, and played with some
cash flow modelling”. Promotions were not implemented from the outset of the
business, but only after the owners had a better understanding of the business and had
collected information on the customer base from informal observation and intuition.
The discussion highlighted that there was limited reliance on formal analysis in
the company’s decision-making reflecting the smaller resource base of the business and
the reliance on owner intuition (as shown at the bottom of Figure 4). Direct experience
played a significant part in the analysis of data, substituting for formal and more
expensive systems. However, the existence of additional modelling functionality,
although currently unused, demonstrated the influence of a profit/expansionist motive
on the design of the information systems used to support management decision-making
(as shown at the top of Figure 4).
Inventory controls
Figure 4 shows the management accounting practices used by NewFastFood in
relation to inventory controls were customer targeting and some capacity controls.
Two techniques were used to target specific customer groups. Loyal customers were
targeted through a frequent-user card, where a customer could receive a free meal after
buying nine meals. To redeem the free meal, customers had to provide their name and
email address, which enabled NewFastFood to develop a database of loyal customers.
Student specials were another practice implemented by the company, whereby a free
drink was offered to students who bought a meal. The director stated that students
were a large and separable segment in the area due to the number of schools nearby. He
believed that students saw the free drink as being very valuable, while the added cost
to the business was relatively low.
Operational performance (e.g. time to prepare meals) was not formally recorded.
Correspondingly, there did not appear to be any investigation into bottlenecks or
whether operating procedures should be changed. One capacity-oriented inventory
control was identified in the treatment of large special orders. These were orders for
100-200 meals for functions held at local clubs, sold at a discount to the regular retail
price. Special orders required a week’s advance notice and were accepted or rejected
depending on how busy the director expected the store to be at the time. Special orders
were prepared during times when staff would otherwise be idle, or additional staff
were used to process orders, if necessary. The director explained that they would not
deliver (but may still make) the order if it was during rush hours:
MEDAR We have a week’s notice and we will not deliver them if they’re in our heavy rush times, like
lunch time or dinner. But we will deliver if they’re outside of peak hour.
21,2
When asked about whether standard operating procedures were changed, the director
said they were not. He required that up-selling occur at all times of the day, even during
rush hours. Customers were always asked if they wanted other sides with their meal,
and were always offered a frequent-user card. He explained that operating procedures
108 were not changed in order to maximise each customer’s experience of the store. Seating
limits were not seen as problematic as customers tended to take away food to their
office or the nearby beach or park. The business also relied on “value-added food”,
i.e. food that was pre-sliced and pre-cooked, saving staff time in producing the meals.
The discussion revealed the adoption of some targeted inventory practices, but there
was limited acknowledgment of capacity management in the business. When asked, the
director explained that capacity was not an issue at NewFastFood as he could roster
additional staff as required and that much of the food was pre-prepared. This led to
limited attention being directed to customer waiting times and potential losses in
customer satisfaction and customer numbers. This limited attention is explicable in
terms of the owner’s limited experience of more sophisticated types of capacity controls
and reflected a resistance to adopt new practices in this area (small business
characteristics shown at the bottom of Figure 4). Instead, the desire for profit/growth
coupled with the limited market position currently faced by the business (shown at the
top of Figure 4) led it to adopt controls positioned towards increasing customer numbers
through the use of lower prices for targeted customer segments.
Pricing policy
Figure 4 shows the management accounting practices used by NewFastFood in
relation to setting pricing policy related to the use of cost-plus pricing, with some
discounting. The director stated that they had two different pricing structures. Three
of the meals, the most expensive items, were priced based on the market:
We have tried to keep prices under $10 so when the customer comes in they know they are not
cracking a $10 bill to get the most expensive [meal] on the menu.
The rest of the meals were priced on a cost-plus basis. The most expensive meals were
known to be less profitable than the normal items. Special orders were discounted,
based on negotiation with the customer with prices based on cost per unit. These meals
were created using a standardised list of ingredients which was determined based on
the cost to the business:
We’re making so many units of them that our wage costs are brought down considerably because
the staff are very productive in making them. We put less [ingredients] in them as well – in the
traditional model the customer can have [many more ingredients]. We don’t stop them. Whereas
in the catering orders we just choose [a few] to put in and those are chosen based on cost to us.
There was little evidence of premium pricing, i.e. charging a higher price to customers
with higher willingness to pay. For all the promotions described, i.e. bulk orders, student
specials, and frequent user cards, a discount was offered. A 15 per cent surcharge was
charged on public holidays. However, this was only to cover the increased costs of staff
wages and is a common practice in response to New Zealand legislative requirements for
overtime pay on public holidays.
The discussion revealed owner intuition and direct experience played a significant A revenue
part in informing pricing policy decisions. Some attempt was made to use discounting management
reflecting the profit motive of the business owners (shown at the top of Figure 4).
However, consistent with Shields (2006), cost-based pricing was dominant in the perspective
business as opposed to demand-based pricing. The majority of pricing decisions, such as
public holiday surcharges, menu pricing, and discounts on special orders were based on
costs and the management accounting practices adopted were designed to support the 109
determination of those costs. One interpretation is that small businesses have less ability
to influence prices (shown at the bottom of Figure 4), with NewFastFood keeping a
maximum price of $10, but it also reflects a resistance to implement changes. This
finding is also consistent with the suggestion that market-based pricing is less likely to
occur during the early stages of a business’s lifecycle due to customer contact
being prioritised.
Conclusion
This paper has developed a framework for the systematic examination of management
accounting practices in small businesses using a revenue management perspective.
The framework incorporates a conceptual discussion of size as a contingency
variable, as well as an overview of the key principles of revenue management.
It describes management accounting using four modules of practice drawn from the
revenue management literature, being data collection, data analysis and modelling,
inventory control, and pricing policy. As an example of its use, an illustrative case study of
a fast food business was presented. This framework can assist future research into
management accounting in smaller organisations by more precisely modelling how small
business characteristics influence management accounting practices. It extends prior
management accounting research, which has traditionally focused on the practices of
larger organisations, by examining these practices in the context of small business. This
extension includes a richer description of the characteristics of business size as well as an
acknowledgement of the greater relative importance in small businesses of profit-oriented
decisions, rather than co-ordination, control, and accountability functions.
The framework’s treatment of size as a contingency variable highlights a range of
possible influences on management accounting practice, some of which have opposing
effects on the incidence and reliance on practices used. Synthesising these contextual
factors contributes to the understanding of size from a contingency theory perspective.
Treating size as a multi-faceted construct helps in determining why smaller businesses
differ in the practices used, extending the literature which typically combines the
different features of small businesses into a single contextual variable. From a
practical perspective, the framework can help in identifying the barriers to improving
management accounting practices. For example, small resource bases are commonly
viewed as a limitation on management accounting practice. However, the framework
indicates that this has a greater effect on data collection and data analysis and
modelling. Inventory controls and pricing policy are likely to be limited through other
business characteristics such as a lack of education. Identifying and removing these
barriers can improve internal decision-making, thereby helping to overcome the high
failure rates found in small businesses.
By applying a revenue management perspective, we argue that our framework
more closely aligns with the information needs of small business managers.
MEDAR Characteristics of these organisations suggest that the revenue generation role of
21,2 management accounting should be emphasised over other co-ordination, control,
and accountability roles. The framework facilitates more incisive research into the
nature and extent of small business management accounting, showing the complex
environmental interactions surrounding what is commonly viewed as a simple
practice. Presenting an integrated perspective of management accounting practice also
110 allows a balanced judgement of the strengths and weaknesses of existing practices.
One advantage of the proposed framework is that it does not assume the use of specific
management accounting or revenue management techniques. Instead, it describes
the process involved in making profit-oriented decisions. Examining individual
techniques risks the researcher overlooking surrogate techniques used in practice.
This is consistent with Bromwich and Bhimani’s (1989) and Burns et al.’s (1999)
arguments that organisations tend to make different uses of information, rather
than adopting new management accounting systems. Too strong a focus on individual
management accounting or revenue management techniques without implementing
supporting infrastructure or policies may reduce the benefits of introducing new
techniques. For example, improving data collection methods without an accompanying
improvement in data analysis and modelling may result in no improvement in
decision-making.
Further research is needed to explore the nature of management accounting practices
in small businesses. The case study provided is only intended to illustrate some of the
influences small business characteristics can have on management accounting
practices. Further, it shows how the framework can be used to analyse what might
otherwise be treated as a simple management accounting practice. Given the narrow
scope of the case, our aim is not to generalise our findings or confirm the validity of our
theoretically developed framework. Further cross-sectional comparisons of small
businesses are needed to clarify size influences. For example, to examine whether the
influence on management accounting practices of an owner’s satisficing motive, limited
education and experience, or resistance to change has the expected direction. Future
research should investigate the relationships between management accounting and
revenue management and, in particular, the types of information required and how
it is used.
Despite the importance of small businesses in most economies and the relatively
high failure rates of these organisations, there has been limited attention into the
characteristics of small businesses and their needs with regards to decision-making.
Pursuing research in these areas will assist management accounting research to extend
its scope, developing our understanding of management accounting practices in small
businesses, and its role in maximising business revenues and profits.
Notes
1. The OECD (2012) has estimated that small and medium enterprises (“SMEs”) represent
95 per cent of all enterprises and 60-70 per cent of employment in OECD economies.
2. There is a risk in measuring size using individual measures. For example,
an insurance company may have a small number of employees but very high
turnover. Conversely, a restaurant may have many part-time staff, but relatively low
turnover. This paper is interested in relative size, characterised by the ability to access
resources.
3. The interview was approximately one hour long and was conducted by two of the A revenue
researchers.
management
4. MYOB is an accounting software package targeted at small businesses.
perspective
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Appendix. Case study interview questions

Background
What does the business do?
What is the experience of the team members?
What is the relationship between the small business association and the business?
What is the experience of the interviewee?
Features of small business

Describe the owner characteristics: age, experience, qualification, motivation for starting
business.
What is the size of the business? Number of employees, past and projected growth.
Describe business profitability and costs: turnover figures, rental/lease payment levels.
Discuss how the interviewee would define “small business”.
Accounting practices in small business

Presence. What type of accounting systems does the business use to support decision-making?
Sophistication. What level of complexity is the system or parts of the system designed for?,
e.g. manual records, log books, Microsoft Excel, standardised accounting packages, customised
software, etc.
Role of accounting information. How is accounting information used internally?, e.g. tracking
costs, profitability, business decisions, other.
Revenue management in small business

Describe the proposed framework and discuss the suitability and usefulness of the four element
framework in the interviewee’s business.
How does the business track demand?
How does the business analyse and segment customer data?
How does the business identify customer segments?
How does the business set/change pricing?
What examples from the business illustrate how they operate within each of the four modules?
Other topics
Any other issues the interviewee feels are relevant.
MEDAR About the authors
Frederick Ng is a Lecturer in accounting at the University of Auckland Business School. His
21,2 research investigates revenue management, with a focus on the contextual factors that influence
it and its connection with revenue drivers and cost drivers. Frederick Ng is the corresponding
author and can be contacted at: f.ng@auckland.ac.nz
Julie A. Harrison is a Senior Lecturer in accounting at the University of Auckland Business
School. She has a PhD from the University of Auckland. Prior to joining the University, she
116 worked as a transfer pricing consultant in practice. Her research interests include revenue
management, performance measurement, and transfer pricing.
Chris Akroyd is an Assistant Professor in management accounting at Oregon State
University. He has a PhD from the University of Auckland and Master’s degrees from the
University of New South Wales (Australia) and Kobe University ( Japan). He is a member of CPA
Australia. His research interests include management control, performance measurement, and
revenue management.
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

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Auckland, New Zealand, and

accounting practices with the objectives of many small businesses.

Management accounting practices in small businesses

accounting function and other management activities in the business. As a consequence,

Inability to influence price Negative

Smaller resource bases Negative

Concentrated ownership Positive

Lack of education/experience Negative

Openness to change Positive

Resistance to change Negative

Extensive daily involvement Positive

Profit/expansionist motive Positive

Figure 1. Lifestyle/satisficing motive Negative

management. Research has reported that businesses implementing such techniques

• Analysing customer profitability

• Forecasting demand and demand modelling

• Customising products to meet segment needs

A revenue management perspective on small business management

Revenue management framework for small business management

Data collection Data analysis and Inventory controls Pricing policy

An illustrative case study

Data collection Data analysis and Inventory controls Pricing policy

Analysis Pricing base

spread-sheets for record keeping, relying on intuition for the rest.

Data analysis and modelling

Appendix. Case study interview questions

Features of small business

Accounting practices in small business

Revenue management in small business

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[Abstract] [Full Text] [PDF]

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