Title
Using transaction cost economics to explain outsourcing of accounting Using transaction cost economics to explain outsourcing of accounting
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Dordrecht ,
Subject
Economics
Source (journal)
Small business economics: an international journal. - Dordrecht
Volume/pages
35(2010) :1 , p. 93-112
ISSN
0921-898X
ISI
000279036400006
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
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 CEOs 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.
E-info
https://repository.uantwerpen.be/docman/iruaauth/e3832a/dedb97ee317.pdf
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