SMEs' Experience: How Years Impact Utilization of MCS for Business Advancement

Abstract

Small and medium-sized enterprises (SMEs) play a crucial role in economic growth, yet their strategic management practices, particularly in utilizing Management Control Systems (MCS), remain underexplored. While previous research has examined MCS adoption, limited studies have investigated how organizational experience, measured by years in operation, influences MCS utilization. This study fills this gap by analyzing the relationship between SME longevity and the use of MCS across five key constructs: planning and control, decision support, budgets, cost accounting and pricing, and strategic planning.

Using survey data from SMEs, our findings reveal that organizational experience significantly impacts four of the five MCS constructs, with the strongest effect on planning and control mechanisms. These results highlight the importance of accumulated knowledge in shaping financial decision-making and strategic planning within SMEs. However, decision support did not exhibit a significant relationship, suggesting potential barriers in its integration.

Theoretically, this study contributes to the understanding of MCS utilization in SMEs by integrating insights from contingency theory and resource-based perspectives. Practically, the findings offer valuable guidance for SME managers and policymakers to enhance decision-making frameworks and improve strategic management practices. By addressing a critical gap in SME research, this study provides a foundation for future investigations into the evolving role of experience in business management.