Strategic Management Accounting Practices and Socio-Cultural Value Creationin Listed Deposit Money Banks in Nigeria

One of the primary objectives of establishing businesses is value creation, adding value to the stakeholders especially the environment where it operates. The reactions of society during the cashless policy saga reflected the possibility that most Nigerian banks are lagging behind in their corporate social responsibilities. This paper investigated the impact of strategic management accounting practices on the socio-cultural value of listed deposit money banks in Nigeria. Employing a survey research design, the study sampled 310 management staff from a population of 1115 across 13 listed deposit money banks using a simple random sampling technique. The results of the pooled OLS analysis indicated a significant influence of strategic management accounting practices on socio-cultural value creation within these banks. It is recommended that bank management integrate strategic management accounting practices into their operations to enhance value creation.

Introduction

The concept of Creating Shared Value (CSV) emerged as a model intended to align business objectives with societal needs, addressing the disconnect caused by the narrow focus on short-term profit maximization for shareholders, often at the community’s expense. CSV emphasizes generating economic value in ways that also address societal challenges, thus benefiting both business and society (Porter & Kramer, 2019; Windsor, 2017). However, CSV as a framework for value creation has faced criticism, primarily due to its perceived overlap with Corporate Social Responsibility (CSR), which is often seen as more philanthropic and less focused on profit generation or genuine societal value creation (Komonen, 2019; Sheveleva, 2018). Windsor (2017) noted that ‘CSR activity remains costless to the firm, which may enjoy reputational benefits,’ suggesting that companies are often responding to social demands rather than proactively acting responsibly.

Social value is associated with the competitive edge derived from ‘the sustainable development of markets and society’ (Freudenreichet al., 2019). Unlike relationships with customers, suppliers, or employees, which are governed by economic contracts, social value fosters a stable environment for businesses, thereby legitimizing their operations and granting them a social license to operate (Freudenreichet al., 2019; Gokten & Gokten, 2017). Gokten and Gokten (2017) argue that social value is challenging to define and identify as it encompasses non-financial elements, including social and political pressures and mutual trust between the organization and society.

No entity exists in isolation; they are influenced by the environment where they operate. The operating environment expects more from companies as their contributions, giving back to the environment as compensation for the benefits derived from such environments. Due to a variety of threats, businesses may make irrational decisions in the execution of their strategies (Ebrahim & Rezaei, 2022). Recessions can have a significant effect on raw material suppliers, customers, and commercial banks’ depositors, all of whom may experience asset impairment (Aiyenijoet al., 2022). This means that businesses risk losing crucial suppliers and customers if they don’t strategically grow through internal and external channels at this time. The combination of numerous corporate scandals and the worldwide economic crisis has led to a loss of faith in the traditional financial reporting system. These factors have stymied corporate growth since stakeholders want to work with reputable organizations that can reliably deliver on their promises. Incorporating sustainability values into a company’s operations is beneficial, as seen by the growth of industries around the world that are dedicated to greener practices (Sariet al., 2020).

The banking sector has seen a tremendous transformation in recent years, resulting in a turnaround in the industry’s survival, growth, and behavior. The changes were aimed at making banking more accessible, ensuring competition, and preparing the banking industry to perform financial, economic activities and economic development (Mansaray, 2020; Kafidipeet al., 2021). The nature of organizational tactics taken by financial institutions within the system is crucial to the banking system’s survival and growth. Banks’ long-term orientation, establishment of innovative ideas, and activities capable of maintaining them in a position to gain and retain sustained success are all informed by the planning and implementation of organizational strategies (Njoku, 2022; Umadia & Kasztelnik, 2020). According to Berisha Qehaja and Kutllovci (2020), strategy is an essential management tool for any firm nowadays. For companies that want to thrive, the challenges of today’s business climate, as well as the fast-changing global economy, necessitate a high level of output speed and flexibility.

Given the significant role of strategic management accounting (SMA) in supporting effective management decision-making and driving corporate success, there is an increasing interest in exploring its impact on value creation. Various scholars have called for further research to better understand the specific SMA practices that organizations adopt and the factors influencing their choice of techniques (e.g., Alamri, 2019; Mohammedet al., 2019; Ojra, 2014; Turneret al., 2017; Zamecnik & Rajnoha, 2015). This need arises from the ongoing debate regarding the relationship between SMA and value creation, which remains unresolved due to inconsistent findings in previous studies. While SMA is recognized as a crucial tool for enhancing managerial decision-making and improving organizational performance (e.g., Alabdullah, 2019; Cadez & Guilding, 2012; Ojra, 2014; Roodbari & Kordestani, 2020; Ojraet al., 2021), the effectiveness of SMA practices in delivering these benefits depends on how well an organization aligns its SMA practices with its overall strategy and operating environment (Cadez & Guilding, 2012; Cescon, 2019; Ojra, 2014). Following this contingency perspective, the present research contributes to the SMA discourse by critically analyzing the impact of SMA practices on stakeholder value creation.

Literature Review

This section addressed the review of the concept, the underlying theory, and a review of past related studies. It is subdivided into three sections.

Conceptual Review

Social-Cultural Value

As defined by (Caldwellet al., 2017) and (Faludi, 2020), social value creation is the result of social entrepreneurship that generates intermediate or long-term impacts and brings outputs in the form of social change by addressing social issues, problems, and requirements. According to the definition provided by (Oeijet al., 2019), social value creation is the introduction of unique products, models, and services that meet social and enterprise requirements and foster new social collaborations and alliances. Co-creation between society, stakeholders, and corporate management is what creates social value. When businesses think about how they may improve people’s lives and the world at large, they are increasing what is known as “social value” (Piotret al., 2021). As proposed by Lucia and Russo (2022), social value emerges when disparate elements come together to better people’s lives or the community at large. It is about making sure that everyone has a chance to participate and succeed. It is all about official transparency and deference to authority and about learning from the past and appreciating one’s background and place in the world. It is worth cannot be measured purely in monetary or societal terms (Mahdi & Ezekiel, 2021). Anti-racism campaigns, community organizing, animal rights activism, and folk art all have significant societal significance. It is worthless in monetary terms but invaluable in other ways (Ezekielet al., 2020).

Strategic Management Accounting Practices

According to Sinnaiahet al. (2023), strategic management accounting (SMA) involves the provision and analysis of financial information related to a firm’s products, markets, and competitors’ costs and cost structures. It also includes the ongoing monitoring of the organization’s strategies as well as those of its competitors over several accounting periods. This monitoring emphasizes the long-term nature of the financial information required and incorporates external stakeholders, such as clients, into any external analyses of the market. Sinnaiahet al. (2023) highlight the importance of understanding the broader competitive environment and its influence on strategic decision-making.

Theoretical Review

The contingency theory of leadership, initially proposed by Austrian psychologist Fred Edward Fiedler in his 1964 article “A Contingency Model of Leadership Effectiveness,” is relevant to the application of SMA. This theory posits that the effectiveness of management accounting practices is influenced by various factors such as the environment, technology, size, and structure of the organization, along with its competitive strategy, strategic goals, and national culture. The theory, grounded in organizational research, suggests that there is no one-size-fits-all approach to organizational structure. Instead, the success of an organization is determined by how well its technological environment, structural characteristics, and information systems align with its strategy. This idea is commonly applied in positivistic research, where hypotheses are formulated and then tested (Suharyanto & Dwi Lestari, 2020; Martinsuo & Geraldi, 2020; Turulja & Bajgoric, 2018). The contingency theory has also been supported by various scholars in management accounting research, including Naiduet al. (2021), Gunarathne and Lee (2021), Park (2020), and Childset al. (2022).

Empirical Review

Fifteen years of study on “sustainability reporting and management control” were studied by Rahiet al. (2022) using the structured literature review technique. The K-alpha analysis confirmed that the consistency of the codes was stable. According to the results, the investigator has just a partial grasp of the management control and sustainability reporting agenda. They may emphasize management reporting or environmental reporting. Few studies examine romantic interactions. In terms of methodology, the study discovered that qualitative case studies and interviews, along with opinion papers, predominate the field. The research suggested a framework (a spider diagram) to visualize the literature synthesis, which depicts a complicated and multifaceted relationship.

Environmental uncertainty, the utility of comprehensive and timely management accounting information, and the use of management accounting principles (MAPs) were all factors that Rui and Martins (2023) looked at. A total of 114 Portuguese manufacturers were surveyed using an online questionnaire. The results showed that there is a correlation between environmental uncertainty and the utility of timely management accounting information, as well as between the usefulness of management accounting information (in a broad sense and in a timely manner) and the use of MAPs (both classic and modern). The results also demonstrated that when there is a harmony between environmental uncertainty, the utility of comprehensive and timely management accounting information, and the application of MAPs, decision-makers are more satisfied with that information. To improve decision-maker satisfaction with management accounting information, businesses must tailor the adoption and use of both modern and classic MAPs to local conditions.

Organizational performance, accounting information relevance, and environmental uncertainty were all factors that Rui and Alves (2022) investigated. This study aimed to contribute, from a contingent perspective to the growing body of literature that examines the connection between the usefulness of accounting data and the effectiveness of businesses. It has not been proven that environmental uncertainty is not a part of this connection. A survey of large Portuguese manufacturers using an online questionnaire yielded 119 valid replies (a response rate of 23%). The findings imply that in the presence of environmental uncertainty, non-financial data becomes more important. However, financial information continues to outweigh its non-financial counterpart in terms of its importance. The findings also indicated that financial and non-financial information are supplementary to one another and can be used together in a variety of contexts.

The effect of strategic management accounting on the economic, social, and environmental sustainability of banks was analyzed by Jumokeet al. (2021). The research used a survey methodology to collect information from 102 accounting and financial experts from 14 different commercial banks in Nigeria. The data was analyzed using descriptive statistics, correlation, and regression. Strategic management accounting was found to have a substantial and favorable effect on economic, environmental, and social sustainability in Nigerian banks. Strategic management accounting was also crucial in ensuring the long-term viability of the Banks. Banele (2022) used Zimbabwean SMEs as a case study to examine the factors impacting the implementation of management accounting in emerging economies. Information was gathered from 88 individuals using semi-structured interviews. Qualitative content analysis was used to understand the data. The study identifies the following as the most important factors: the state of the economy, the size of the business, the expertise of the accounting staff, the financial literacy of the company’s owners, and the state of the art in terms of both accounting and technology.

Environmental management accounting system (EMAS) adoption and its impact on sustainability performance were studied by Nooret al. (2023) using a triple bottom-line framework. The 205 PLCs in Malaysia that participated in the survey were selected at random. Data analysis was performed using a structural equation model with partial least squares. According to the data, Malaysia is still in the early stages of implementing EMAS, which is consistent with a moderate level of adoption. This study indicated that implementing EMAS has a major effect on economic, environmental, and social outcomes. Companies, governments, and environmental regulators can learn a lot about the state of EMAS implementation in Malaysia from this study.

Based on the review, the studies examined the effect of strategic management accounting practices on social-environmental performance and sustainability in different countries and sectors, and they found a mixed/inconclusive result on the effect between the dependent and independent variables. The major gap(s) are qualitative studies (Rahiet al., 2022; Sinnaiahet al., 2023), other countries (Rui & Martins, 2023; Rui & Alves, 2022; Banele, 2022), limited measurement for SMA practices (Jumokeet al., 2021; Nooret al., 2023). The study of SMA practices measured by strategic costing, strategic planning, control and performance measurement, strategic decision-making, competitor accounting, customer accounting, and strategic thinking on social value creation in deposit money banks have been rare. Thus, this study hypothesized that:

H₀1: Strategic management accounting practices have an insignificant effect on the socio-cultural value creation of listed deposit money banks in Nigeria.

Materials and Methods

The study examined the effect of strategic management accounting practices on the socio-cultural value creation of listed deposit money banks in Nigeria. The study is field survey research, and the data used is mainly primary data. The data was obtained through the administration of a structured questionnaire. The population of the study was all the 1,115 management staff of all the thirteen deposit money banks listed on the Nigeria Exchange Group (NGX) as of 30^th December 2022, out of which 304 sample sizes were drawn using Taro Yamane formulae. The research instrument was administered electronically using the Google form to the management staff of all the banks using a simple random sampling technique. The relationship between strategic management accounting technique and socio-cultural value creation was examined using the ordinary least square regression analytical technique. The regression equation is specified in a model as follows: where strategic management accounting practices are the independent variable measured as strategic costing, strategic planning, control and performance measurement, strategic decision-making, competitor accounting, customer accounting, and strategic thinking, and social-cultural value is the dependent variable.

$$\begin{array}{rl}SCVi& =\beta 0+\beta 1SCOSTi+\beta 2SPCPMi+\beta 3SDMi\\ & +\beta 4COMPAi+\beta 5CUSTAi+\beta 6STHINKi\\ & +\epsilon iEqn\end{array}$$

Results and Discussions

The results of the regression analysis evaluating the impact of strategic management accounting practices on socio-cultural value creation are shown in Table I.

Table I. Result of Regression Analysis

Model	Β	SE	t-stat	Sig.	ANOVA (Sig.)	R	Adj. R2	F (6,297)
(Constant)	0.770	0.281	2.745	0.006	0.000b	0.630	0.385	32.623
SCOST	0.162	0.053	3.071	0.002
SPCPM	0.129	0.054	2.395	0.017
SDM	−0.115	0.063	−1.840	0.067
COMPA	0.434	0.081	5.388	0.000
CUSTA	0.273	0.072	3.814	0.000
STHINK	−0.067	0.077	−0.870	0.385

Interpretation

As presented in Table I, the result of the multiple linear regression analysis conducted to examine the effect of strategic management accounting practices constructs on socio-cultural value creation of listed deposit money banks in Nigeria reveals that Strategic Costing (SCOST) (β = 0.162, p = 0.002) and Strategic Planning, Control and Performance Measurement (SPCPM) (β = 0.129, p = 0.017); Competitor accounting (COMPA) (β = 0.434, p = 0.000); and Customer accounting (CUSTA) (β = 0.273, p = 0.000); exerted significant positive impact on socio-cultural’ value creation of listed deposit money banks in Nigeria. On the contrary, Strategic decision-making (SDM) (β = −0.115, p = 0.067) and Strategic Thinking (STHINK) (β = −0.067, p = 0.385) negatively influenced the socio-cultural value creation of listed deposit money banks in Nigeria while only the SDM is significant at 10% chosen significance level. This implies that there is a need for proper management of the six measures of strategic management accounting practices as all the six constructs exerted except strategic thinking have a significant effect on socio-cultural value creation.

The R-value of 63% corroborated the result of the regression analysis, proving that strategic management accounting practices had a strong positive relationship with shareholders’ value creation of listed deposit money banks in Nigeria. The coefficient of multiple determination Adj.R² = 0.385 indicated that only 28.2% of the variation that occurred in the socio-cultural value creation of listed deposit money banks in Nigeria could be accounted for by the components of strategic management accounting practices, while the remaining 71.8% changes that occurred were accounted for by other variables not captured in the model. The predictive and prescriptive multiple regression models were thus expressed: Predictive Model: Prescriptive Model:

$$\begin{array}{rl}SCV& =0.770+0.162SCOST+0.129SPCPM\\ & -0.115SDM+0.434COMPA\\ & +0.273CUSTA-0.067STHINK\end{array}$$

$$\begin{array}{rl}SCV& =0.770+0.162SCOST+0.129SPCPM\\ & -0.115SDM+0.434COMPA\\ & +0.273CUSTA\end{array}$$

The regression analysis revealed that when the components of strategic management accounting practices were held constant, socio-cultural value creation had a baseline value of 0.770, indicating that strategic management accounting practices significantly contribute to added value. The predictive model identified Strategic Costing (SCOST), Strategic Planning, Control and Performance Measurement (SPCPM), Strategic Decision-Making (SDM), Competitor Accounting (COMPA), and Customer Accounting (CUSTA) as significant predictors, leading to the exclusion of Strategic Thinking (STH) due to its insignificance. The results of the multiple regression analysis in the prescriptive model demonstrated that effective implementation of Strategic Costing, SPCPM, Competitor Accounting, and Customer Accounting positively influences socio-cultural value creation. Specifically, enhancements in these areas would lead to improvements of 0.162%, 0.129%, 0.434%, and 0.273% in socio-cultural value creation, respectively. Conversely, it was noted that strategic decision-making negatively impacts socio-cultural value creation and should be re-evaluated to mitigate its adverse effects. The F-statistics (df = 6, 297) = 32.623 at p = 0.000 (p < 0.1) indicated that the overall model was significant in predicting the effect of strategic management accounting practices on socio-cultural value creation. This further suggests that strategic management practices component (Strategic Costing (SCOST); Strategic Planning, Control and Performance Measurement (SPCPM); Strategic decision-making (SDM); (Competitor accounting (COMPA), Customer accounting (CUSTA); except Strategic Thinking (STHINK) are key determinants of socio-cultural values creation.

Based on the findings of this study, it is opined that listed deposit money banks in Nigeria should prioritize their strategies on Strategic Costing, Strategic Planning, Control and Performance Measurement, Competitor accounting, and Customer accounting in order to maximize socio-cultural value creation. Therefore, the null hypothesis, which states that Strategic management accounting practices have no significant effect on the socio-cultural value creation of listed deposit money banks in Nigeria, is rejected.

Discussion of Findings

The negative impact of strategic decisions and strategic thinking on sociocultural values requires serious attention. This is reflected in society’s reaction to banks in the cashless policy crisis, with most banks being attacked rather than protected by the immediate environment and few being protected by their relationships with the communities in which they operate. did. Most banks were destroyed, and hooligans stole valuable assets. Whether individuals or corporations, they exist in isolation. Banks are expected to have a positive impact on the immediate environment in which they operate, and they are expected to have an impact on society as well as on the bank’s presence in the community. This opens up bank management to expect more from banks in the area of corporate social responsibility. It also states that in order for banks to create value for society, effective cost management, appropriate customer interactions to gain customer loyalty, and pursuit of global competitive advantage are essential.

The significant impact of SMAP on socio-cultural value creation supported the propositions that implementation of corporate governance practices will sustain and facilitate a healthy corporate social responsibility and financial performance relationship (Rodriguez-Fernandez, 2016; Hamid & Ibrahim, 2020; Datet al., 2021). The findings align with Alamri’s (2019) study on the relationship between strategic management accounting facets and organizational performance, confirming the critical role of strategic management accounting in enhancing organizational outcomes. This conclusion is further supported by Alabdullah’s (2019) research on management accounting and performance in service companies within emerging economies and Cescon (2019) investigation into strategic management accounting in large manufacturing firms, both of which highlight the importance of strategic management accounting for effective managerial decision-making and improved performance. Similarly, (Gangiet al., 2018) found that strategies supporting corporate social responsibility enhance financial performance and serve as a reputational driver of value creation. Additionally, Ojra (2014) emphasized that the success of strategic management accounting practices depends on how well organizations align these practices with their strategy and environment, as demonstrated in Palestinian companies.

Implications

The negative impact of strategic decision-making and strategic thinking on socio-cultural value calls for serious attention. This is reflected in the societal reactions to the banks during the crisis of cashless policy, as the majority of the banks were attacked instead of being protected by their immediate environment, and only a few were protected based on their level of relationship with their operating communities. The majority of the banks were vandalized, and hooligans carted away their valuable resources. No one, individual or corporate body, exists in isolation; the banks are expected to have a positive impact on the immediate environment in which they are operating as well as the society having an impact on the bank’s existence in their communities. This will be an eye-opener to the management of the banks, as more is expected of the banks in the area of corporate social responsibilities. It is also observed that effective cost management, treating customers well to gain their loyalty, and striving to achieve global competitive advantage are germane for the banks to create value for their society.

Conclusion and Recommendations

This paper studied the effect of strategic management accounting practices on socio-cultural value creation, and the result revealed that Strategic Costing, Strategic Planning, Control and Performance Measurement, Competitor accounting, and Customer accounting impacted socio-cultural value creation positively and significantly. On the other hand, strategic decision-making and strategic thinking influenced socio-cultural value creation negatively, though only strategic decision-making exerted significant negative effects. The significant result of the F-statistics for this hypothesis (hypothesis four) revealed that strategic management accounting practices as a whole play a significant role in the achievement of socio-cultural value creation. This paper concluded that intensifying quality strategic management accounting practices by banks is highly important in enhancing socio-cultural value. Based on the findings and conclusion of this study, some recommendations were drawn:

Management of banks should redirect their strategic decision-making and strategic thinking in a manner that enhances sociocultural value instead of negatively influencing it. It is glaring that more is required from the banks to give back to society as corporate socio-responsibilities are, and the banks should use their CSR to create more awareness about their products to society. Banks should prioritize sociocultural values and strategically watch out for them, as no entity exists in isolation.

Also, the management of banks should improve their strategies to gain a more competitive advantage within the domestic environment and globally, as this positively impacts socio-cultural values. Banks should engage in operations that will give them an edge over their competitors at the global level. In addition, the findings of this study have shown that customers are kings who need to be nurtured, well-appreciated, and respected in any business, especially in the banking sector. The management of the banks should improve on their customers’ accounting as it boosts socio-cultural value creation.

In addition, society should value and protect businesses around them, especially the banks, in times of crisis, as banks’ existence in their communities is also to their advantage, serving them and meeting their financial service needs. Furthermore, to effectively attain an edge over the competitors in the market and enhance customer loyalty, bank management must adopt suitable strategic management accounting techniques while also considering their operational environment. In essence, bank management should pay close attention to the specific contingencies of their operational settings to optimize performance and achieve strategic objectives.