CORRELATION BETWEEN MENTAL ACCOUNTING AND GROWTH OF SMALL BUSINESS ENTERPRISE IN NIGERIA

Main Article Content

Clement Sunny Abraham

Abstract

Small-scale enterprises are an essential part of Nigeria's business sector. SMEs have been widely identified as the leading component of every society's economic growth and development. However, the sector has been fraught with numerous challenges in the Nigerian setting. Indeed, poor accounting management is one of the primary limitations linked to the failure and undergrowth in the small business sector. Thus, the present study aimed to investigate mental accounting as an accounting strategy that could enhance the growth of small-scale enterprises in Nigeria. The study employed a cross-sectional survey design. Eighty-seven (n=87) small and medium-scale operators randomly selected from the Enugu state business hub participated in the survey. The respondents completed a self-report questionnaire. A simple linear regression model was used for data analysis. It was found that mental accounting significantly predicted the growth of small-scale businesses in Nigeria. Implications and recommendations are discussed.

Article Details

How to Cite
Abraham, C. S. . (2022). CORRELATION BETWEEN MENTAL ACCOUNTING AND GROWTH OF SMALL BUSINESS ENTERPRISE IN NIGERIA. Journal of Advance Research in Business Management and Accounting, 8(3), 1–6. https://doi.org/10.53555/nnbma.v8i3.1240
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Articles

References

Abisuga-Oyekunle, O. A., Patra, S. K., & Muchie, M. (2020). SMEs in sustainable development: Their role in poverty reduction and employment generation in sub-Saharan Africa. African Journal of Science, Technology, Innovation, and Development, 12(4). https://doi.org/10.1080/20421338.2019.1656428

Ademola, I. S. (2013). Why small-scale businesses failed as a remedy to the unemployment problem in Nigeria. IOSR Journal of Humanities and Social Science, 8(4). https://doi.org/10.9790/0837-0845661

Adhikara, N. D. (2018). Financial accounting standards for micro, small & medium entities: Implementation and factors that affect it. JEMA: Jurnal Ilmiah Bidang Akuntansi Dan Manajemen, 15(2). https://doi.org/10.31106/jema.v15i2.1126

Afif, M., & Mulyani, S. (2016). Determinants analysis of the importance of accounting, quality of financial statements, and implementation of financial accounting standards for entities without public accountability (SAK ETAP)q on SME Fostered by PT. Telkom TBK. https://doi.org/10.2991/imm-16.2016.1

Aggarwal, P., & Vaidyanathan, R. (2016). Is font size a big deal? A transaction–acquisition utility perspective on comparative price promotions. Journal of Consumer Marketing, 33(6). https://doi.org/10.1108/JCM-10-2015-1587

Ahmad, K. (2012). The use of management accounting practices in Malaysian SMEs. University of Exeter, May.

Akanbi, T. A., & Jonathan, O. A. (2018). Investment in accounting information system and sales growth: An investigation of Nigeria small and medium enterprise. Journal of Accounting and Taxation, 10(6). https://doi.org/10.5897/jat2018.0299

Aladejebi, D. O., & Oladimeji, D. J. A. (2019). The impact of record-keeping on the performance of selected small and medium enterprises in Lagos Metropolis. Journal of Small Business and Entrepreneurship Development, 7(1). https://doi.org/10.15640/jsbed.v7n1a3

Aruwa, D. (2004). Financing options for small and medium scale enterprises in Nigeria. Nigerian Journal of Accounting Research, 1(2).

Ashok, M. L., N., A., & M. S., D. (2020). Emerging trends in accounting: An analysis of the impact of robotics in accounting, reporting, and auditing of business and financial information. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3524486

Assefa, M., Jagannadha, R., & Yohannes, A. (2020). Designing of accounting information system for small and medium enterprises: Application of PLS-SEM. International Journal of Sciences: Basic and Applied Research, 54(3).

Ayodeji, M. A. (2015). Entrepreneurial development barriers in a developing nation: A case study of the Nigerian printing SMEs. Thesis.

Azimkhan, A., Yesentemirov, A., Salimzhanova, B., Aidashev, M., Aitzhanova, D., Taskinbaikyzy, Z., Mukhametzhanova, D., & Kurmanalina, A. (2020). Impact of small and medium-sized entrepreneurship on employment in Kazakhstan. Academy of Entrepreneurship Journal, 26(3).

Barberis, N., & Huang, M. (2001). Mental accounting, loss aversion, and individual stock returns. Journal of Finance, 56(4). https://doi.org/10.1111/0022-1082.00367

Basil, D. Z., & Runte, M. M. (2008). How individuals mentally account for work-time volunteerism: Putting the work into volunteer work. Advances in Consumer Research - European Conference Proceedings, 8.

Cant, M. C., Wiid, J. A., & Kallier, S. M. (2013). Small business owners' perceptions of moral behavior and employee theft in the small business sector of Nigeria. Gender & Behaviour, 11(2).

Celuch, K., Bourdeau, B., Saxby, C., & Ehlen, C. (2014). SME internet use: The moderating role of normative influence. Journal of Small Business Strategy, 24(2).

Chidiebere, M., Chigozie, E., & Abuka, K. (2014). Accounting skills for sustainable development of small and medium scale enterprises in the Taraba State of Nigeria. International Journal of Education Learning and Development, 2(2).

Daferighe, E. E., Offiong, P. E., & Jeremiah, O. O. (2019). Adoption of cutting-edge information technology and development of SMEs in Nigeria. Archives of Business Research, 7(5).

Eniola, A., & Ektebang, H. (2014). SME firms performance in Nigeria: Competitive advantage and its impact. International Journal of Research Studies in Management, 3(2). https://doi.org/10.5861/ijrsm.2014.854

Eppinger, E., & Vladova, G. (2013). Intellectual property management practices at small and medium-sized enterprises. International Journal of Technology Management, 61(1). https://doi.org/10.1504/IJTM.2013.050244

Evers, E., & Imas, A. (2019). Mental accounting, similarity, and preferences over the timing of outcomes. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3452943

Fatoki, O. (2014). The causes of the failure of new small and medium enterprises in South Africa. In Mediterranean Journal of Social Sciences (Vol. 5, Issue 20). https://doi.org/10.5901/mjss.2014.v5n20p922

Gbandi, E. C., & Amissah, G. (2014). Financing options for small and medium firms (SMEs) in Nigeria. European Scientific Journal, 10(1).

Hahnel, U. J. J., Chatelain, G., Conte, B., Piana, V., & Brosch, T. (2020). Mental accounting mechanisms in energy decision-making and behavior. Nature Energy, 5(12). https://doi.org/10.1038/s41560-020-00704-6

Iacob, V.S., & Mironescu, R. (2017). Meanings of small business and its management. Journal of Engineering Studies and Research, 19(4). https://doi.org/10.29081/jesr.v19i4.100

Kowo, S. A., Adenuga, O. A. O., & Sabitu, O. O. (2019). The role of SME development on poverty alleviation in Nigeria. Insights into Regional Development, 1(3). https://doi.org/10.9770/ird.2019.1.3(3)

Kwon, S. Y., & Jang, S. C. S. (2011). Price bundling presentation and consumer's bundle choice: The role of quality certainty. International Journal of Hospitality Management, 30(2). https://doi.org/10.1016/j.ijhm.2010.08.001

Lee, S. H., & Lee, J. E. (2015). Moderating impacts of transaction utility on price, quality, and value relationships. Journal of Foodservice Business Research, 18(4). https://doi.org/10.1080/15378020.2015.1068671

Levav, J., & McGraw, A. P. (2009). Emotional accounting: How feelings about money influence consumer choice. Journal of Marketing Research, 46(1). https://doi.org/10.1509/jmkr.46.1.66

Loureiro, Y. K., & Haws, K. L. (2015). Positive affect and malleable mental accounting: an investigation of the role of positive affect in the flexible expense categorization and spending. Psychology and Marketing, 32(6). https://doi.org/10.1002/mar.20808

Manzoor, F., Wei, L., Nurunnabi, M., & Subhan, Q. A. (2019). Role of SME in poverty alleviation in SAARC Region via Panel data analysis. Sustainability (Switzerland), 11(22). https://doi.org/10.3390/su11226480

McNeill, L. S., Fam, K. S., & Chung, K. (2014). Applying transaction utility theory to sales promotion - the impact of culture on consumer satisfaction. International Review of Retail, Distribution and Consumer Research, 24(2). https://doi.org/10.1080/09593969.2013.830637

Meflinda, A., Mahyarni, M., Indrayani, H., & Wulandari, H. (2018). The effect of social capital and knowledge sharing on the small-medium enterprise's performance and sustainability strategies. International Journal of Law and Management, 60(4). https://doi.org/10.1108/IJLMA-03-2017-0073

Abisuga-Oyekunle, O. A., Patra, S. K., & Muchie, M. (2020). SMEs in sustainable development: Their role in poverty reduction and employment generation in sub-Saharan Africa. African Journal of Science, Technology, Innovation, and Development, 12(4). https://doi.org/10.1080/20421338.2019.1656428

Ademola, I. S. (2013). Why small-scale businesses failed as a remedy to the unemployment problem in Nigeria. IOSR Journal of Humanities and Social Science, 8(4). https://doi.org/10.9790/0837-0845661

Adhikara, N. D. (2018). Financial accounting standards for micro, small & medium entities: Implementation and factors that affect it. JEMA: Jurnal Ilmiah Bidang Akuntansi Dan Manajemen, 15(2). https://doi.org/10.31106/jema.v15i2.1126

Afif, M., & Mulyani, S. (2016). Determinants analysis of the importance of accounting, quality of financial statements, and implementation of financial accounting standards for entities without public accountability (SAK ETAP)q on SME Fostered by PT. Telkom TBK. https://doi.org/10.2991/imm-16.2016.1

Aggarwal, P., & Vaidyanathan, R. (2016). Is font size a big deal? A transaction–acquisition utility perspective on comparative price promotions. Journal of Consumer Marketing, 33(6). https://doi.org/10.1108/JCM-10-2015-1587

Ahmad, K. (2012). The use of management accounting practices in Malaysian SMEs. University of Exeter, May.

Akanbi, T. A., & Jonathan, O. A. (2018). Investment in accounting information system and sales growth: An investigation of Nigeria small and medium enterprise. Journal of Accounting and Taxation, 10(6). https://doi.org/10.5897/jat2018.0299

Aladejebi, D. O., & Oladimeji, D. J. A. (2019). The impact of record-keeping on the performance of selected small and medium enterprises in Lagos Metropolis. Journal of Small Business and Entrepreneurship Development, 7(1). https://doi.org/10.15640/jsbed.v7n1a3

Aruwa, D. (2004). Financing options for small and medium scale enterprises in Nigeria. Nigerian Journal of Accounting Research, 1(2).

Ashok, M. L., N., A., & M. S., D. (2020). Emerging trends in accounting: An analysis of the impact of robotics in accounting, reporting, and auditing of business and financial information. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3524486

Assefa, M., Jagannadha, R., & Yohannes, A. (2020). Designing of accounting information system for small and medium enterprises: Application of PLS-SEM. International Journal of Sciences: Basic and Applied Research, 54(3).

Ayodeji, M. A. (2015). Entrepreneurial development barriers in a developing nation: A case study of the Nigerian printing SMEs. Thesis.

Azimkhan, A., Yesentemirov, A., Salimzhanova, B., Aidashev, M., Aitzhanova, D., Taskinbaikyzy, Z., Mukhametzhanova, D., & Kurmanalina, A. (2020). Impact of small and medium-sized entrepreneurship on employment in Kazakhstan. Academy of Entrepreneurship Journal, 26(3).

Barberis, N., & Huang, M. (2001). Mental accounting, loss aversion, and individual stock returns. Journal of Finance, 56(4). https://doi.org/10.1111/0022-1082.00367

Basil, D. Z., & Runte, M. M. (2008). How individuals mentally account for work-time volunteerism: Putting the work into volunteer work. Advances in Consumer Research - European Conference Proceedings, 8.

Cant, M. C., Wiid, J. A., & Kallier, S. M. (2013). Small business owners' perceptions of moral behavior and employee theft in the small business sector of Nigeria. Gender & Behaviour, 11(2).

Celuch, K., Bourdeau, B., Saxby, C., & Ehlen, C. (2014). SME internet use: The moderating role of normative influence. Journal of Small Business Strategy, 24(2).

Chidiebere, M., Chigozie, E., & Abuka, K. (2014). Accounting skills for sustainable development of small and medium scale enterprises in the Taraba State of Nigeria. International Journal of Education Learning and Development, 2(2).

Daferighe, E. E., Offiong, P. E., & Jeremiah, O. O. (2019). Adoption of cutting-edge information technology and development of SMEs in Nigeria. Archives of Business Research, 7(5).

Eniola, A., & Ektebang, H. (2014). SME firms performance in Nigeria: Competitive advantage and its impact. International Journal of Research Studies in Management, 3(2). https://doi.org/10.5861/ijrsm.2014.854

Eppinger, E., & Vladova, G. (2013). Intellectual property management practices at small and medium-sized enterprises. International Journal of Technology Management, 61(1). https://doi.org/10.1504/IJTM.2013.050244

Evers, E., & Imas, A. (2019). Mental accounting, similarity, and preferences over the timing of outcomes. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3452943

Fatoki, O. (2014). The causes of the failure of new small and medium enterprises in South Africa. In Mediterranean Journal of Social Sciences (Vol. 5, Issue 20). https://doi.org/10.5901/mjss.2014.v5n20p922

Gbandi, E. C., & Amissah, G. (2014). Financing options for small and medium firms (SMEs) in Nigeria. European Scientific Journal, 10(1).

Hahnel, U. J. J., Chatelain, G., Conte, B., Piana, V., & Brosch, T. (2020). Mental accounting mechanisms in energy decision-making and behavior. Nature Energy, 5(12). https://doi.org/10.1038/s41560-020-00704-6

Iacob, V.S., & Mironescu, R. (2017). Meanings of small business and its management. Journal of Engineering Studies and Research, 19(4). https://doi.org/10.29081/jesr.v19i4.100

Kowo, S. A., Adenuga, O. A. O., & Sabitu, O. O. (2019). The role of SME development on poverty alleviation in Nigeria. Insights into Regional Development, 1(3). https://doi.org/10.9770/ird.2019.1.3(3)

Kwon, S. Y., & Jang, S. C. S. (2011). Price bundling presentation and consumer's bundle choice: The role of quality certainty. International Journal of Hospitality Management, 30(2). https://doi.org/10.1016/j.ijhm.2010.08.001

Lee, S. H., & Lee, J. E. (2015). Moderating impacts of transaction utility on price, quality, and value relationships. Journal of Foodservice Business Research, 18(4). https://doi.org/10.1080/15378020.2015.1068671

Levav, J., & McGraw, A. P. (2009). Emotional accounting: How feelings about money influence consumer choice. Journal of Marketing Research, 46(1). https://doi.org/10.1509/jmkr.46.1.66

Loureiro, Y. K., & Haws, K. L. (2015). Positive affect and malleable mental accounting: an investigation of the role of positive affect in the flexible expense categorization and spending. Psychology and Marketing, 32(6). https://doi.org/10.1002/mar.20808

Manzoor, F., Wei, L., Nurunnabi, M., & Subhan, Q. A. (2019). Role of SME in poverty alleviation in SAARC Region via Panel data analysis. Sustainability (Switzerland), 11(22). https://doi.org/10.3390/su11226480

McNeill, L. S., Fam, K. S., & Chung, K. (2014). Applying transaction utility theory to sales promotion - the impact of culture on consumer satisfaction. International Review of Retail, Distribution and Consumer Research, 24(2). https://doi.org/10.1080/09593969.2013.830637

Meflinda, A., Mahyarni, M., Indrayani, H., & Wulandari, H. (2018). The effect of social capital and knowledge sharing on the small-medium enterprise's performance and sustainability strategies. International Journal of Law and Management, 60(4). https://doi.org/10.1108/IJLMA-03-2017-0073

Adhikara, N. D. (2018). Financial accounting standards for micro, small & medium entities: Implementation and factors that affect it. JEMA: Jurnal Ilmiah Bidang Akuntansi Dan Manajemen, 15(2). https://doi.org/10.31106/jema.v15i2.1126

Afif, M., & Mulyani, S. (2016). Determinants analysis of the importance of accounting, quality of financial statements, and implementation of financial accounting standards for entities without public accountability (SAK ETAP)q on SME Fostered by PT. Telkom TBK. https://doi.org/10.2991/imm-16.2016.1

Aggarwal, P., & Vaidyanathan, R. (2016). Is font size a big deal? A transaction–acquisition utility perspective on comparative price promotions. Journal of Consumer Marketing, 33(6). https://doi.org/10.1108/JCM-10-2015-1587

Ahmad, K. (2012). The use of management accounting practices in Malaysian SMEs. University of Exeter, May.

Akanbi, T. A., & Jonathan, O. A. (2018). Investment in accounting information system and sales growth: An investigation of Nigeria small and medium enterprise. Journal of Accounting and Taxation, 10(6). https://doi.org/10.5897/jat2018.0299

Aladejebi, D. O., & Oladimeji, D. J. A. (2019). The impact of record-keeping on the performance of selected small and medium enterprises in Lagos Metropolis. Journal of Small Business and Entrepreneurship Development, 7(1). https://doi.org/10.15640/jsbed.v7n1a3

Ahmad, K. (2012). The use of management accounting practices in Malaysian SMEs. University of Exeter, May.

Akanbi, T. A., & Jonathan, O. A. (2018). Investment in accounting information system and sales growth: An investigation of Nigeria small and medium enterprise. Journal of Accounting and Taxation, 10(6). https://doi.org/10.5897/jat2018.0299

Aladejebi, D. O., & Oladimeji, D. J. A. (2019). The impact of record-keeping on the performance of selected small and medium enterprises in Lagos Metropolis. Journal of Small Business and Entrepreneurship Development, 7(1). https://doi.org/10.15640/jsbed.v7n1a3

Aruwa, D. (2004). Financing options for small and medium scale enterprises in Nigeria. Nigerian Journal of Accounting Research, 1(2).

Ashok, M. L., N., A., & M. S., D. (2020). Emerging trends in accounting: An analysis of the impact of robotics in accounting, reporting, and auditing of business and financial information. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3524486

Assefa, M., Jagannadha, R., & Yohannes, A. (2020). Designing of accounting information system for small and medium enterprises: Application of PLS-SEM. International Journal of Sciences: Basic and Applied Research, 54(3).

Ayodeji, M. A. (2015). Entrepreneurial development barriers in a developing nation: A case study of the Nigerian printing SMEs. Thesis.

Azimkhan, A., Yesentemirov, A., Salimzhanova, B., Aidashev, M., Aitzhanova, D., Taskinbaikyzy, Z., Mukhametzhanova, D., & Kurmanalina, A. (2020). Impact of small and medium-sized entrepreneurship on employment in Kazakhstan. Academy of Entrepreneurship Journal, 26(3).

Barberis, N., & Huang, M. (2001). Mental accounting, loss aversion, and individual stock returns. Journal of Finance, 56(4). https://doi.org/10.1111/0022-1082.00367

Basil, D. Z., & Runte, M. M. (2008). How individuals mentally account for work-time volunteerism: Putting the work into volunteer work. Advances in Consumer Research - European Conference Proceedings, 8.

Cant, M. C., Wiid, J. A., & Kallier, S. M. (2013). Small business owners' perceptions of moral behavior and employee theft in the small business sector of Nigeria. Gender & Behaviour, 11(2).

Celuch, K., Bourdeau, B., Saxby, C., & Ehlen, C. (2014). SME internet use: The moderating role of normative influence. Journal of Small Business Strategy, 24(2).

Chidiebere, M., Chigozie, E., & Abuka, K. (2014). Accounting skills for sustainable development of small and medium scale enterprises in the Taraba State of Nigeria. International Journal of Education Learning and Development, 2(2).