Effect of Strategic Management Accounting Techniques on Investment Decisions Among Manufacturing Firms in Kenya

Abstract

The investigation aimed to examine the influence of effect of strategic management accounting techniques on investment decisions among manufacturing firms in Kenya. Target costing, balanced scorecard, and just in time were the explanatory variables of the study which represented SMATs whilst the response variable was investment decision of manufacturing firms. The study adopted the descriptive research design which was cross-sectional as the information collected was done in a defined period. The target population of the study was 691 manufacturing firms from which a sample size of 69 finances managers, production mangers, production supervisors, or accounting managers from sampled firms which was 10 % of the population. A structure questionnaire adapted from past studies was designed to collect the information and the instrument was administered using the drop and pick method so as to avoid personal contact with respondents as per the COVID-19 guidelines of limiting physical contact. descriptive, correlation, and regression analysis was used to analyse the data from which the findings show that target costing and balanced scorecard had a positive and meaningful impact on investment decisions whilst there was no effect of just in time production on manufacturing firms’ investment decision. The study concluded that target costing and balanced scorecard had a positive impact on investment decisions and just in time production did not have any effects. The study recommends that manufacturing firms should adopt target costing approach to help them manage production such that they reduce the costs of products which has a direct effect on investment decision of manufacturing firms. Manufacturing firms should enhance the adoption balanced scorecard principles in their operations and let their stakeholders be aware of their strategy while also defining their strategic goals in a clear and understandable manner. Manufacturing firms should strive to just in time production such as continuous improvement, controlling material flow and production scheduling that can help firms reduce cost whilst increasing productivity and improving quality due to the ever rising costs of production such as raw materials, labour and operating materials in Kenya. The study used quantitative methods and there is need for future studies to include qualitative methods so as to get more in-depth information on how balanced scorecard and target costing have contribute to investment decisions among manufacturing firms.