Relationship between strategic management accounting techniques and profitability – a proposed model

Abstract

Purpose

The purpose of this study is to propose a comprehensive strategic model to manage profitability. Strategic management accounting concepts and tools are adopted to explore and manage the main profitability drivers (cost, assets, and revenue).

Design/methodology/approach

A deductive approach is used to identify the variables of the profitability model. Phase one of this study rely on reviewing prior literature in the field in order to identify the key profitability drivers that uses in managing profitability (costs, assets and revenue).Phase two of the research focuses on testing the perceptions of the managers of Egyptian “Information and communications technology” sector, the relative merits of such a model.

Findings

The most important finding in the current study, which has not been investigated in previous studies, is that the proposed comprehensive profitability model which contains cost, the assets and revenue techniques was a better predictor of profitability than the alternative models, which contain a combination of two variables.

Originality/value

As the first study of its kind, this model contributes to the theoretical literature in the field. It is also a practical contribution in managing profitability of the Egyptian “Information and communications technology” sector.

Citation

Abdelmoneim Mohamed, A. and Jones, T. (2014), "Relationship between strategic management accounting techniques and profitability – a proposed model", Measuring Business Excellence, Vol. 18 No. 3, pp. 1-22. https://doi.org/10.1108/MBE-04-2013-0023