Exploring the impact of environmental uncertainty and strategic management accounting on competitive advantage and performance: Empirical insights from SMEs in Indonesia

Small and medium-sized businesses (SMEs) in Indonesia have suffered significantly because of the COVID-19 pandemic that led to unpredictability of operational performance. Hence, SMEs must formulate the right strategies and innovative techniques to be able to hurdle the challenges. In this study, the numerous factors influencing SMEs’ performance are evaluated to determine their impact on internal business procedures. Performance, environmental uncertainty, the use of strategic management accounting, and competitive advantage with a focus on product differentiation are the variables examined. This study employs a quantitative methodology and questionnaire-based data collection approaches. Furthermore, structural equation modelling is used to process the gathered data. According to the data collected from 167 respondents across 67 firms, environmental uncertainty has a negative impact on business performance, but has no effect on the usage of strategic management accounting. While having a positive impact on the competitive advantage that focuses on product differentiation, the use of strategic management accounting has no impact on performance. Furthermore, performance is positively impacted by a competitive advantage that emphasizes product differentiation. The results of this research contribute to the development of accounting science, especially management accounting. Meanwhile, the practical contribution for SMEs is in terms of increasing their competitive advantages.