The Effect of Accounting Services Outsourcing on SMEs performance in Nigeria: evidences from Garment, Apparel and Footwear Enterprises. D. Mohammed* Department of accounting, Adamawa State University PMB 25 Mubi, Nigeria. danjuma71@fgs.cmb.ac.lk , mohammed509@adsu.edu.ng +94766702598, +2348036358831 And Dr. Ahmed Bawa Bello Department of Accounting, Modibbo Adama University of Technology Yola, Adamawa State Nigeria. ahmedbawabello@yahoo.com , abbawa2009@gmail.com +2347036942635. 04/11/2016

Introduction Empirical evidences from the extant literatures revealed that there is affirmative effect of accounting services outsourcing (ASO) on quite a few measures of financial and non-financial firm performance (Kamyabi and Devi, 2011a; Espino Rodríguez and Padrón-Robaina, 2004, Jiang et al., 2006). However, due to the nature of business environment and size of enterprises, performance indicators both financial and otherwise used in companies are not found to be suitable in SMEs competitive business environment. Consequently, the association between ASO and financial and non-financial performance is still not unravel to point out evidently (Görg and Hanley, 2004; Espino Rodríguez and Padrón-Robaina; 2004). 04/11/2016

Introduction Small and Medium Enterprises is derived by the motives behind the objectives of the owners/managers in setting up the enterprise therefore performance is subject to these goals (Kamyabi and Devi, 2011a). Thus, the aspiration to maximize profit coupled with other business targets such as expansion and diversification are merged (Sarapaivanich and Kotey, 2006). According to this authors therefore, SME performance could be measured by both financial and non-financial goals. In view of this, the study identify five SMEs performance indicators such as profitability, productivity, sales, independence and customer satisfaction. Moreover, independence and customer satisfaction were basically used to address the issue of non-financial goals in the sampled SMEs. Afterwards, SME performance was established in terms of financial and non-financial objectives in the business environment (Sarapaivanich and Kotey, 2006). 04/11/2016

Introduction This study utilized objective data generated from the data base of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). Akin to previous research (Hafeez and Andersen, 2014) and antagonized other studies (Kamyabi and Devi, 2011; Sarapaivanich and Kotey 2006; Dyer and Ross, 2008). This study however, extract a data set from the quantitative reported data of Nigerian SMEs in the website of SMEDAN. Consequently, this contrasted the study from most of the previous studies which applied subjective data through questionnaire survey. However, this study perceived that performance cannot be measured adequately and accurately using only subjective data. Therefore, the objective of this study hence is to examine the direct effect of accounting services outsourcing on SME performance in Garment Apparel and Footwear enterprises in Nigeria. 04/11/2016

Research problem Outsourcing in recent time has brought success stories to entrepreneurs and economies. Nigeria being the largest economy in Africa and Micro, Small and Medium Enterprises (MSMEs) is the largest subsector in the manufacturing sector became quite area of concern. Garment subsector emerging as positive contributor to the manufacturing sector in terms of revenue generations and improving foreign direct investment. However the direct effect of outsourcing on the performance of this subsector is still contemplated whether it is significantly positively related to drive the yearnings of the stakeholders and the economy at large. Therefore the need to explore and find out this relationship for policy implication recommendation arises, in this present study. 04/11/2016

Research Objectives The main focus of this research study is to examine the direct effect of accounting services outsourcing on SME performance in Garment Apparel and Footwear enterprises in Nigeria. Supported by the factors affecting accounting services outsourcing decision in Nigerian SME’s using Transaction Cost Economics (TCE) theory assumptions. 04/11/2016

Research Questions What are the factors affecting accounting services outsourcing decision in the Nigerian Small and Medium Enterprises? Does outsourcing has a significant impact on SMEs performance in garment, apparel and footwear industries? 04/11/2016

Research Methodology The population used in this study consist of SMEs in the Garment, Apparel and Footwear enterprises excluding micro enterprises with less than 10 employees whose outsourcing decision is very difficult if not impossible. These enterprises are registered with the corporate affairs commission of Nigeria. Three hundred and sixty SMEs were drawn through convenience sampling technique to be the sample size. Data relating to productivity, profitability, sales growth, factor intensity, technology, export share, import share, inventory, independence and customer satisfaction was extracted from the archives of SMEDAN. For the purpose of this study, non-financial performance indicators such as independence and customer satisfaction was measured based on the patent and copy right for the former and market share for the later. However, the study hypothesized that “accounting services outsourcing is positively associated with SMEs performance” and the direct effect is tested using simple regression to falsify or otherwise the statement of hypothesis. 04/11/2016

Data collection/analysis The study design is an exploratory quantitative approach employing secondary source of data to obtain an objective information on Key Performance Indicators (KPI) peculiar to Nigerian SMEs; this is a three years’ time series analysis from 2010 to 2012. Three Hundred and Sixty (360) SMEs was sampled and data obtained from the data base of Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). 04/11/2016

Results and Discussion The study revealed that the key driver of this productivity growth was the product of Other Woven Fabric (OWF), which dominates the activity with output valued at NGN 683 million in 2010, output value improved by NGN 283 million in 2011, to reach NGN 966 million of the manufacturing total. In 2012 OWF production increased further, attaining NGN 1,369 million of the total output of the manufacturing sector in that year. Leather Shoes (LS) followed after OWF, though with a fluctuating growth. LS contributed NGN 36.03 million in 2010, impressively NGN 81.04 million in 2011 but declined to NGN 74.05 million in 2012. 04/11/2016

Results and Discussion Descriptive Statistics: table 1 shows the correlations between the respective variables used in this study and indicating the mean and standard deviation of each variable as they correlate. Direct Effects: predictor variables regression coefficient and standard error is showed in table 2 where in the same table multiple linear regression analysis indicates support for H1 (p<0.01) that accounting services outsourcing is significantly positively associated with SME performance. Table 1: Descriptive Statistics and correlation coefficient Variables means S.D 1 2 3 4 5 6 Productivity 5.850 0.813 1 Profitability 3.965 0.673 0.138* 1 Sales (turnover) 3.893 0.858 0.151* 0.167* 1 Independence 4.125 0.671 0.140* 0.046* 0.110* 1 Customer satisfaction 4.252 0.653 0.223* 0.134* 0.211* 0.103* 1 Outsourcing intensity 5.450 0.599 0.107* 0.338* 0.061* 0.185* 0.153* 1 *Correlation is significant at the 0.01 level (2- tailed) 04/11/2016

Results and Discussion Table 2: Result of regression analysis of direct effect Variables outsourcing model 1 coefficient (S.E) firm performance model 1 coefficient (S.E) Productivity 0.518 (0.212) ** _ Profitability 0.640 (0.271) ** _ Sales (Turnover) Independence Customer satisfaction 0.551 (0.342) ** _ Outsourcing intensity _ 0.787 (0.191) ** Constant 4.339 (1.969) 6.325 (1.056) R2 0.657 0.671 Adjusted R2 0.649 0.643 F-value 99.201 60.208 Df 5 1 Note: ** significant at 0.01, (S.E) is standard errors and n=360. 04/11/2016

Results and major recommendation The results of the regression analysis reveals that there is positive correlation between all the performance variables and the outsourcing intensity. Furthermore, it also uncover a positive association between ASO and SMEs performance. This is supported by regression coefficient of model 1 outsourcing R2 = 0.657, adjusted R2 = 0.649 and model 1 firm performance R2 = 0.671, adjusted R2 = 0.643 . Hence, the hypothesis is being supported to establish a positive link between ASO and SME performance. Thus, the study recommends that outsourcing strategy be embraced by SMEs to take advantage of improved performance to ensure continuity, expansion and strategic positioning in the competitive business environment. 04/11/2016

Thank you for sparing your time to listen. Remarks. Thank you for sparing your time to listen. 04/11/2016