The Hybridization of Traditional and Contemporary Management Accounting Practices and Organizational Effectiveness of Indigenous Manufacturing Firms in Southwest Nigeria

Abstract

Indigenous manufacturing firms are vital to Nigeria’s economy yet they are struggle with low productivity and structural barriers. While they rely on traditional management accounting practices for control, these methods often fail in dynamic markets. Partial adoption of contemporary tools further constrains strategic decision-making, necessitating a hybrid approach to enhance organizational effectiveness. This study investigates how integration of Traditional Management Accounting Practices (TMAPs) and Contemporary Management Accounting Practices (CMAPs) impacts the Organizational Effectiveness (OE). The specific objectives are: examine the individual effects of TMAPs and CMAPs on performance, evaluating the impact of their hybridization, and identifying the challenges hindering effective integration. Grounded in contingency and Institutional theories. Through a cross-sectional survey design, data from 289 firms were analysed using descriptive statistics and Partial Least Squares Structural Equation Modelling (PLS-SEM) via the measurement model that evaluate internal consistency reliability and convergent validity via Cronbach’s alpha, composite reliability, and Average Variance Extracted (AVE), including discriminant validity using the Fornell-Larcker criterion. Subsequently, the structural model evaluates multicollinearity through VIF and measures model fit and explanatory power using R2and adjusted R2. The findings indicate that: TMAPs (budgeting, standard costing, and cost-volume-profit analysis) exert a significant positive influence on OE. CMAPs yield mixed results; competitor-focused and strategic cost management exhibit weak direct relations, while customer accounting practices show an insignificant effect. Hybridization of both practices significantly enhances organizational outcomes more than using either approach in isolation. However, effective integration faces institutional and structural barriers, including resistance to change and high implementation costs. The study concludes that a hybrid accounting framework is essential for the sustainability of indigenous manufacturing firms. It recommends that management strategically integrate contemporary tools with established traditional methods to enhance performance. Theoretically, this research advances the hybridization perspective within management accounting literature, providing context-specific evidence and a robust analytical framework for developing economies.