Strategic Management Accounting Usage in the Sri Lankan Service Sector

Abstract

Strategic Management Accounting (SMA) has emerged as a vital tool for organizations navigating dynamic and competitive business environments. While extensively studied in developed economies, research on SMA adoption in emerging markets, particularly in service-oriented economies like Sri Lanka, remains scarce. This study examines the extent of SMA usage in Sri Lankan service firms and investigates the impact of demographic factors such as firm size, industry type, and managerial experience on SMA adoption. Using a quantitative survey-based approach, data was collected from 202 service sector firms spanning industries such as banking, insurance, healthcare, hospitality, and information technology (IT). The results indicate that strategic pricing (M = 5.04), competitor position monitoring (M = 4.97), and customer profitability analysis (M = 4.96) are the most frequently employed SMA techniques, whereas life-cycle costing (M = 3.93) and lifetime customer profitability analysis (M = 3.98) are underutilized. Findings also reveal that listed firms and larger organizations demonstrate higher SMA adoption rates, whereas smaller firms face challenges due to resource constraints and a lack of expertise. This research contributes to the limited body of SMA literature in developing countries by offering empirical insights into the Sri Lankan service sector. The findings hold practical implications for policymakers, professional accountants, and industry leaders, emphasizing the need for targeted training programs, regulatory support, and digital transformation strategies to enhance SMA adoption.