Playing catch-up: Can the use of innovative externally orientated management accounting techniques create and sustain competitive advantage?

Innovative externally orientated management accounting techniques (EXMATs) may not deliver the benefits anticipated. The current study investigates whether, and to what extent, EXMATs create and sustain competitive advantage. Using a quantitative research design to investigate the subject over a ten-year time frame in the Nigerian manufacturing sector, we develop a measurement scale to evaluate the use of customer-focused and competitor-based accounting techniques as innovative management accounting techniques. Four dimensions of competitive advantage are investigated – accounting returns, shareholder value creation, market share and customer patronage. The results show that firms differ significantly in competitiveness, with intense users of EXMATs consistently outperforming non-intense users and the sector average in terms of profitability, shareholder value creation, market share and customer patronage over the ten-year period examined. Overall, empirical evidence supports the proposition that intense use of EXMATs can both create and sustain competitive advantage. Our research contributes to knowledge by developing a measurement scale to assess management accounting innovation from annual reports and secondary data. Most studies have used survey methods, which may suffer from respondent bias. The study verifies that the use of EXMATs can both create and sustain competitive advantage, thus addressing the contention in the literature.