The Impact of Strategic Management Accounting on The Financial
Performance of Low-Cost Airlines
JORGE SUAREZ TIRADO1, INESE MAVLUTOVA2
1Faculty of Accounting,
Externado University of Colombia,
12 Street # 1-17,
COLOMBIA
2Department of Economics and Finance,
BA School of Business and Finance,
Kr. Valdemara 161, LV-1013,
LATVIA
Abstract: - Strategic management accounting is the last stage of evolution in management accounting, seeking to
contribute strategic information to support strategic decision-making and strategic management; this information is
obtained from the application of several strategic management accounting techniques for collecting superior
information. This paper aims to determine the role of strategic management accounting in the financial
performance of low-cost airlines, seeking to encourage its adoption, implementation, and use for these types of
companies. It relies on a literature review regarding strategic management accounting and the airline industry,
especially with documents obtained from Scopus and Web of Science. Besides, a questionnaire was applied to
experts in this industry, along with the application of a spline regression model for data analysis. The study
revealed that the contribution of strategic management accounting in the financial performance of the analyzed
low-cost airlines is influenced by decision-making and decision-implementation processes, management
accountants who provide external, non-financial, and forward-looking information are the main actors in the
adoption, implementation, and the use of strategic management accounting in the analyzed low-cost airlines.
Key-Words: Strategic management accounting, strategic management accounting techniques, airline industry, low-
cost airlines, financial performance, spline regression model.
Received: February 25, 2023. Revised: June 7, 2023. Accepted: July 9, 2023. Published: August 1, 2023.
1 Introduction
In the dynamic business environment of the last
century, companies have been facing several
challenges derived from deregulation, globalization,
high international competition, changes in
manufacturing processes, advances in information
technology, and service industry growth. In this
context, strategic management accounting
(hereinafter SMA) arose to face the demands of
companies for information strategically oriented, to
support strategic decision-making, integrating
developments from management accounting
(hereinafter MA), strategy, strategic management,
marketing, production, and finance. This topic has
been studied since 1981 and researched seeking to
establish its assistance in the strategic management
processes, with a particular focus on the financial
performance of companies. Despite the lack of
consolidation and implementation of SMA, its
progress continues, and its impacts seem to depend
on specific factors faced by the diverse industries.
Concerning the airline industry is a dynamic one
where two main business models operate: i) Full-
service airlines (FSAs), and ii) Low-cost airlines
(LCAs). Airlines face a competitive business
environment characterized by high fixed costs, low
levels of profitability, and high complexity in the
operational area. Until now, the role and application
of SMA with strategic information to support
decision-making have not been sufficiently studied in
the LCA industry.
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This paper aims to determine the contributions of
SMA to the financial performance of LCAs, seeking
to encourage its adoption, implementation, and use
for these types of companies.
This research and its findings and results are
limited to the twelve analyzed LCAs and the SMATs
and theories included in the study, such as is
explained by, [1], [2], when the non-probabilistic
sample is used. Besides, it is not appropriate to
generalize the obtained conclusions because the
contingency theory highlights that there is not a
universal solution for all the problems in all
companies. Likewise, [3], affirmed that it is not
appropriate to generalize findings and conclusions
obtained from case studies. In that sense, the article is
divided into four sections: i) this introduction, ii) the
literature review, iii) the research methodology and
results, and iv) the conclusions.
2 Literature Review
The literature review on SMA corresponds to 92
papers in Science Direct and Scopus, for the period
1981-2022. Based on the obtained papers, it is
identified that this is an emergent topic still in the
process of maturation, even though their
contributions to the strategic management of
companies and its strengths identified and proposed
by several authors. The most common theory to
research on SMA is the Contingency Theory (CT).
Additionally, [4], stated that CT arose during the 70s
to explain the diversity of MA practices. In that way,
all research in MA is fundamentally contingent
because it seeks to identify when it is appropriate to
apply determined practices in particular conditions
faced by organizations.
In summary, the CT is appropriate to study SMA
because its implementation and contributions vary by
industry and company, where the existence of factors
such as uncertainty, competitiveness, and company
size determine the set of practices that best fit. Other
theories used to carry out studies on SMA are
strategy -how companies compete and create a
competitive advantage-, [5], [6], the Contestable
Markets Theory -how markets work-, [7], [8], the
Grounded Theory -theories resulting from the
research process-, [9], [10], [11], and the Upper-
echelons theory -companies reflecting the traits of
their top managers- [12], [13].
This article defends the possibility of carrying
out research on SMA relying on Behavioral theory.
In that context, the provision of accounting
information affects and determines the type of
decisions and their direction. The main topics related
to Behavioral Accounting have been i) how
accounting information impacts human behavior, ii)
managerial control -budget participation, non-
financial measures, leadership, and Balanced
Scorecard-, iii) auditing -auditor-client negotiations,
auditors’ judgments, and decision-making-, and iv)
ethics -ethical decision-making, ethical orientation,
and rationalization on unethical behavior-, [14]. The
main contributions of SMA are related to the
provision of some ideas to understand the decision
context, the judgments, perceptions, and feelings of
decision-makers, and how accounting information,
practices, and regulation determine and shape these
decisions.
The study of SMA is associated with components
of organizations that must be characterized by
constantly changing in the environment, and the
presence of a set of forces affecting them -
globalization, local and global competition,
technological developments, and the existence of
Multinational Enterprises
1
-, [15]. The development
and evolution from MA to SMA have been affected
by many critics of the first, such as the lack of
information to support the organization’s strategic
processes, and to respond to the emerging challenges
derivative of technology, [16], some problems in
assessing the strategic aspects of the organization’s
management, [17], and the need to incorporate the
strategy in the organizational analysis, [18]. SMA
emerged characterized by the following key features:
i) environmental orientation, ii) focus on competitors,
iii) long-term information, and iv) forward-looking
orientation, [19]. SMA finally bridged the gap that
existed between MA and strategic management,
moving MA from monetary concerns to a more
multi-dimensional approach, [15], [20], [21], [22],
[23].
SMA is related to providing and analysing
information about diverse internal and external
variables considered strategic
2
. Some additional
definitions that highlight similar factors are [15],
[21], [22], [23], [24], [25], [26], [27], [28], [29].
1
Note by the authors.
2
Market trends, market prices, market share, competitors cost
structure, products and services, profitability margins, strategy,
competitiveness.
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Fig. 1: Main factors related to the concept of Strategic Management Accounting
Source: The authors' study.
In some recent papers, SMA is understood as the
connection of MA with strategic positioning, [30], as
a source of information on the competitive advantage
and performance of the firms, [31], and as a type of
organizational system that delivers information to
support strategic decision-making processes,
integrating accounting and strategy, [32]. SMA
implies a multidisciplinary view that integrates ideas
from accounting, management, and strategic
management, [33], and is a branch of accounting
linked with enterprises’ strategic management, [34].
In addition, SMA contributes information to support
the definition, implementation, and monitoring of the
business strategy, affecting the financial
performance. Figure 1 represents the main factors
related to the concept of SMA. SMA is deployed by
companies through the implementation and use of a
set of SMATs (Figure 2). They imply the presence of
interdisciplinary contributions, with some techniques
taken from management, such as benchmarking and
integrated performance measurement. The study,
[35], encountered that SMA has positive effects on
performance because it amplifies the frame of
information, as well as, [36], [37].
The study, [38], proposed two main SMA roles:
i) the provision of information to assist in the
development of strategic plans, and ii) monitoring the
market, competitors’ price structures, and
competitors’ cost structure. The study, [25],
concluded that it is necessary to continue developing
SMA to improve the methodology, methods,
techniques, organization, and practices of MA. Also,
special attention shall be paid to the professional
training of accounting personnel.
Strategies in the airline industry defer the
objective of LCAs regarding costs to have control
and try to reduce them as far as possible, in search of
maintaining a competitive advantage, [39]. There are
some ways for LCAs to compensate incomes from
low ticket fares, through revenues obtained from
ancillary services: i) catering, ii) priority boarding,
iii) seat reservation, and iv) luggage. Besides, there
are some ways to maintain a competitive advantage
in the sector: i) cutting the cost down continuously,
ii) expanding market share, and iii) revenue
maximization efficiency, [40]. Another interesting
aspect regarding LCAs is pricing, the main
competitive factor for companies that develop a cost
leadership strategy. They rest especially on internal
factors like airlines’ decisions, revenue management,
some operational factors -fuel booking online,
aircraft maintenance, and flight schedules-, and
external factors -the market structure and demand-.
The rate exchange also affects costs and prices,
creating currency fluctuation risks. IATA, [41],
highlights that for airlines, the main currency is the
dollar due to many components of the cost being
carried out in this currency such as fuel,
maintenance, revision, payments of new aircraft, and
leasing. Besides, the rate exchange affects
passengers’ decisions, airlines’ decisions -especially
regarding investments and offers-, profitability, and
balance sheet. Table 1 presents some SMATs’
contributions to the key strategic decisions by LCAs.
What is SMA?
Emerging field
Provision and análisis
A set of techniques
SMA for what?
Support the development
and monitoring of
business strategy
Support strategic decisión-
making
Achieve sustainable
competitive analysis
SMA provides
information about:
Business strategy
Competitors
Enterprise and rivals’
strategies
Enterprise and
competitors’ cost
structure
Prices
Market share
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Fig. 2: Techniques of Strategic Management Accounting
Source: the authors' study based on Cadez and Guilding, [13].
Table 1. Strategic Decisions by Low-cost Airlines and Contributions of Strategic Management Accounting
Strategic
Decision
Techniques of SMA
Prices/fares
Attribute costing, quality costing, strategic pricing, customer profitability analysis, target costing, value
chain costing, benchmarking, and brand valuation.
Routes
Competitor cost analysis, life-cycle costing, strategic pricing, benchmarking, integrated performance
measurement, and customer profitability analysis.
Fuel
Target costing, benchmarking.
Capacity
Life-cycle costing, target costing, competitor cost analysis, and customer profitability analysis.
Staff
Quality costing, target costing, benchmarking, integrated performance measurement.
Frequencies
Life-cycle costing, benchmarking, brand valuation, competitor cost assessment, and customer profitability
analysis.
Airports to
operate
Life-cycle costing, target costing, benchmarking.
Handling
Target costing, benchmarking, integrated performance measurement, and competitor cost analysis.
Costs control
Target costing, value chain costing, competitor cost analysis, and customer profitability analysis.
Marketing
Attributes costing, integrated performance measurement, and brand valuation.
Outsourcing
Quality costing, target costing, value chain costing, benchmarking, integrated performance measurement,
and brand valuation.
Source: The authors' study.
3 Research Methodology
3.1 Research Methods
For the quantitative research of this paper, 24 LCAs
were identified following Skytrax awards 2019: 10 in
Europe, 10 in North America, and 4 in Latin
America. Nevertheless, only 12 were studied for
SMA Techniques
Costing
Attribute costing
Life-cycle costing
Quality costing
Target costing
Value-chain costing
Planning, control
and performance
measurement
Benchmarking
Integrated
performance
measurement
Strategic
decisión-making
Strategic costing
Strategic pricing
Brand valuation
Competitor
accounting
Competitor cost
assesment
Competitive
position monitoring
Competitor
performance
appraisal
Customer
accounting
Customer
profitability
analysis
Lifetime customer
profitability
analysis
Valuation of
customers as assets
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several reasons
3
. Financial information was obtained
from the airline’s annual reports, corporate websites,
Statista, and the Education Management Information
System (EMIS). A questionnaire using a seven-point
Likert scale
4
was applied seeking to identify senior
managers and experts in the airline industry
perceptions and points of view on the contributions
that SMA makes to the decision-making processes.
As a first step, some emails were sent to
international institutions of the airline industry,
asking about the possibility to apply the
questionnaire to members of the management team of
airlines associated with each of them. In particular,
the following seven international institutions in the
airline industry were contacted: i) International Air
Transport Association (IATA), ii) International Civil
Aviation Organization (ICAO), iii) European
Aviation Network, iv) Airlines for America, v)
Regional Airline Association, vi) The Airline
Passenger Experience Association (APEX), and vii)
Airlines for Europe.
At the beginning of July 2021, an awareness and
presentation email was sent to the contact of the
diverse chosen airlines; the contact was obtained
directly from the website or financial reports. The
focus group was composed of CEOs, CFOs, Chief of
Accounting, Chief of Strategy, Controller, and Chief
of Planning.
Subsequently, from October 2021 to April 2022,
diverse experts with experience as high directors in
the airline industry were searched on the social
network LinkedIn.
From May 2022 to January 2023, a total of 34
responses by senior managers and experts in the
airline industry were received of which 18 were in
Spanish and 16 were in English
5
. The questionnaire
was composed of 82 questions classified into nine
sections (Table 2) and its internal reliability and
3
Lack of financial information (especially for LCAs in Latin
America), some of them failed in bankruptcy (Wow Air and
Interjet), and the lack of information individually by company
and not for group (Eurowings from Lufthansa, Level and Vueling
from AIG group).
4
From 1= not used at all, to 7= extremely used.
* One for each SMAT.
5
To increase the number of answers, some of the steps suggested
by [42], were deployed: i) sending follow-up emails, ii)
informing the respondents about the questionnaire, and iii)
presenting an introductory letter or paragraph. They also
recommend a small monetary incentive; it was not considered in
this research. Nevertheless, an executive report with the main
conclusions and findings of the study was offered.
consistency were validated through Cronbach alpha,
the opinion of two researchers -one in English and
the other in Spanish-, two Financial Directors -CFO-,
and two English native speakers -one American and
one British-. Python language was used to carry out
the descriptive and inferential statistics through
several figures and some spline regression models.
Cronbach Alpha is frequently employed to measure
validity and reliability, the questionnaire used in this
study resulted in a Cronbach Alpha of 0.937 > 0.6,
confirming that it has good internal consistency.
Table 2. Structure of the Applied Questionnaires
Number of Questions
Six (6)
Three (3)
Sixteen (16), one for
each SMA technique
Sixteen (16), one for
each SMA technique
Sixteen (16), one for
each SMA technique
One (1)
Nine (9)
Five (5)
Ten (10)
Eighty-two (82)
Source: The authors' study
Considering that a total of 62 questionnaires
were sent to experts interested in attending it, the
answer rate was 54.8%. Furthermore, contrary to
probabilistic samples, this researcher applied a non-
probabilistic one with a focus on a particular group
such as in the case of convenience sampling which
according to, [43], is appropriate for exploratory
research. It implies choosing the closest people, the
ones of easy access who own a particular
characteristic or the conveniently available to fill out
the questionnaire.
3.2 Hypothesis Development
One of the key variables to be studied in business is
performance. In the airline industry, it can be
measured by financial -profitability, revenues, return
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on assets, return on equity, and others-. For any
industry, some factors affecting financial
performance are technology, degree of centralization,
type of control, or style of leadership, [44], and costs,
assets, and revenues, [45]. Financial performance is
affected by the appropriate decisions taken by senior
managers and the information they employ to support
them. In that regard, it is not clear how accounting
information supports decision-making processes and
what kind of information fits better for these
objectives. Moreover, SMA seeks to provide
strategic accounting information for supporting
decision-making which could improve financial
performance.
MA practices that offer vast information are
positively related to company performance, such as
the case of SMA which permits the improvement of
the financial performance of companies that operates
in high-complexity environments, [46]. Based on the
previous ideas, in the study about the airline industry,
in particular the impact and direction in which SMA
is a determinant of the financial performance of
LCAs, it is appropriate to raise the following
hypothesis:
H: Strategic Management Accounting has a direct
impact on the financial performance
6
of low-cost
airlines, this impact can be measured, and the
direction of the impact can be identified.
The hypothesis can be divided into three auxiliary
ones: Ha: Strategic Management Accounting
techniques related to Costing have a direct
impact on the financial performance of low-
cost airlines, its impact can be measured, and
the direction of impact can be identified.
Hb: Strategic Management Accounting
techniques related to Planning, control, and
performance measurement have a direct
impact on the financial performance of low-
cost airlines, its impact can be measured, and
the direction of impact can be identified.
Hc: Strategic Management Accounting
techniques related to strategic decision-
making have a direct impact on the financial
performance of low-cost airlines, their
6
Financial performance was measured through Profitability,
ROA, and ROE; nonetheless, the last two did not generate
statistically significant results because of a huge variance in data.
impact can be measured, and the direction of
impact can be identified.
To test the hypotheses, three regression models
are proposed. Model 1 was used for testing
hypothesis Ha, where Y = Financial performance,
β0= Intercept (effect of Ryanair), β1X = effect of
Attribute costing, βℎ𝑊= effect of a selected LCA,
β𝑗𝑍
𝑗, Spline effect where j is the number of basis
functions of the spline, and Ɛ = Error:
Model 1 Costing:
Y = 𝛃𝟎+ 𝛃𝟏𝑿 + 𝛃𝒉𝑾 + 𝛃𝒋𝒁𝒋 + Ɛ. (1)
Model 2 was used for testing hypothesis Hb,
where Y = Financial performance, β0= Intercept
(effect of Ryanair), β1 ƛ = effect of Benchmarking,
βℎ𝑊= effect of a selected LCA, β𝑗𝑍
𝑗, Spline effect
where j is the number of basis functions of the spline,
and Ɛ = Error:
Model 2 PCPM
7
:
Y = 𝛃𝟎+ 𝛃𝟏ƛ + 𝛃𝒉𝑾 + 𝛃𝒋𝒁𝒋 + Ɛ. (2)
Model 3 was used for testing hypothesis Hc,
where Y = Financial performance, β0= Intercept
(effect of Ryanair), β1µ = effect of Strategic costing,
βℎ𝑊= effect of a selected LCA, β𝑗𝑍
𝑗, Spline effect
where j is the number of basis functions of the spline,
and Ɛ = Error:
Model 3 Strategic decisión-making:
Y = 𝛃𝟎+ 𝛃𝟏µ + 𝛃𝒉𝑾 + 𝛃𝒋𝒁𝒋 + Ɛ. (3)
3.3 Validation of Models’ Assumptions
Shapiro-Wilk is a statistical test of normality. In this
case, the Shapiro-Wilk test generated a statistic of
0.8660 and a p-value of 1.9265e-08 > 0,05. Results
reveal significance; therefore, we reject the null
hypothesis of normality since its p-value is less than
0.05. Nevertheless, this is not conclusive proof since
Figure 3 indicates that there is robust normality. The
problem of significance in the test is the existence of
an outlier that makes the test for normality significant
since this test is based on the Skewness and Kurtosis
of the data. In that vein, the outlier affected both
asymmetry and kurtosis of data.
7
Planning, control, and performance measurement.
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This can be verified in Figure 3B Data
distribution, which looks like a symmetrical bell-
shaped density, but with a longer tail to the right.
Besides, in Figure 3C Q-Q plot, almost all the data
are aligned quantile by quantile, since the theoretical
quantiles of the normal and the observed quantiles
are aligned on the ideal red line.
3A: Spline regression
3B: Data distribution
3C: Q-QPlot
Fig. 3: Normal results
Source: Authors' study
Breusch Pagan is a test of Homoscedasticity. It
focuses on the constant variance of the errors. In this
case, the Breusch Pagan test generated a statistic of
1.6648 and a p-value of 0.0766 > 0,05. It implies that
this Homoscedasticity test turned out to be not
significant, therefore, we do not reject the null
hypothesis of homoscedasticity, since its p-value is
less than 0.05, but the value obtained is very close to
significance. It may be because of the existence of
some outliers that affect the target variable over time,
such as the negative financial performance by
Norwegian Air for years 2014 and 2017, and Air
Baltic in years 2011, 2012, and 2019.
Finally, Durbin-Watson is an error
autocorrelation test. It takes a value between 0 and 4.
Values close to 2 indicate that there is no correlation.
On the one hand, values from zero to close to 2
indicate the existence of a positive correlation. On
the other hand, values from above 2 to 4 indicate a
negative correlation. In this case, the Durbin-Watson
test generated a statistic of 1.58. It turned out to be in
the range between 1.5 and 2.5, therefore, there does
not exist a significant autocorrelation of errors
affecting the current model.
4 Research Results and Discussion
This section analyses the data obtained from the
thirty-four (34) respondents -sixteen in English and
eighteen in Spanish-, and the financial information -
profitability- collected from twelve LCA: i) Ryanair,
ii) EasyJet, iii) Norwegian Air, iv) Wizz Air, v)
Jet2.com, vi) Air Baltic, vii) Southwest Airlines, viii)
Spirit Airlines, ix) Allegiant Air, x) WestJet, xi)
Volaris, and xii) Viva Aerobus. Regarding the
current use of the sixteen SMATs by, [35], SMATs
with high importance for the analyzed LCAs by the
mean score are: i) strategic pricing (5,7), ii)
benchmarking, competitive position monitoring, and
competitor performance appraisal (5,6), and iii)
integrated performance measurement and strategic
costing (5,3). These results are aligned with the ideas
of, [40], [47], [48], Southwest Airlines’ annual report
(2019)
8
, and Spirit Airlines’ annual report (2019)
9
.
On the other hand, the four SMATs with low
importance are i) Lifetime customer profitability
analysis (3,7), ii) valuation of customers as assets
(3,8), and iii) customer profitability analysis, and
brand valuation (3,9). Regarding brand valuation,
during the literature review and company reports, it
was not identified any strategy related to brand
strengthening in airlines. In addition, the three
SMATs related to customer accounting seem to be
not important for airlines. In LCAs, it could be for
the non-existence of loyalty programs to retain
8
Southwest Airlines. (2019). 2019 Annual report to
shareholders.
https://www.southwestairlinesinvestorrelations.com/financials/co
mpany-reports/annual-reports
9
Spirit Airlines. (2019). Form 10-K/A.
https://sec.report/Document/0001498710-20-000083/
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customers and the absence of high-level customer
service.
Table 3. Results Spline regression for the seven models
Hypothesis
Model
R2
Coeff
P-value
Result
Ha
M1: Attribute Costing
0,7144
0,0204
0,000
Accepted
Hb
M2: Benchmarking
0,7144
0,0156
0,000
Accepted
Hc
M3: Strategic Costing
0,7149
0,0162
0,000
Accepted
Source: The Authors' study
The hypotheses were tested using Spline
regression models, as nonlinear regression models, a
minimization method for obtaining the least square
estimates of regression parameters. Concerning the
three models, Spline regression generates results in
Table 3. After identifying multicollinearity within
each model for Model 1 (M1), within the group of
five SMATs related to costing, Attribute costing was
chosen because it has the smallest average score
(4,0). For Model 2 (M2), within the group of two
SMATs related to planning, control, and performance
measurement, Benchmarking was chosen because it
has the biggest average score, [15], [25]. For Model 3
(M3), Strategic costing was chosen because it has the
middle position by mean score among the SMATs
related to strategic decision-making, [24], [25].
According to the results presented in Table 3, all
the analyzed SMATs positively and significantly
affect the financial performance of the studied LCAs.
These results are supported by the results of the
spline regression models in Appendix 2.
One common way of validating results is
triangulation. It relies upon the use of two or more
methods of data collection in the study of some
aspects of human behavior, continuing with a
contrast between the information obtained from each
of them. The obtained results can be compared with
the ones of previous studies researching the
relationships between SMA and financial
performance. Based on the literature review, studies
that have identified strong and positive relationships
between SMA and financial performance are [3],
[50], [51], [52], [53], [54], [55], [56].
On the contrary, some studies have identified
weak, contradictory, or not relationships between
SMA and financial performance, such as [46], [49],
[56].
The results confirmed that the most applied
SMATs currently in the studied LCAs by the mean
score were Strategic pricing, Benchmarking,
Competitive position monitoring, and Competitor
performance appraisal and stated the most crucial
factor for LCAs. Strategic price is a key variable
because several costs are common and non-
controllable for all the airlines either FSAs or LCAs -
i.e., fuel, leasing of aircraft-; in that context, the price
is the key variable, and airlines tend to watch for
changes to these all the time. Moreover, prices are
commonly a strategic factor in any industry, and
LCAs use additional charges i.e., luggage, to control
passengers’ behavior and to facilitate operational
efficiencies.
Concerning Benchmarking and SMATs related
to competitor accounting, are crucial because airlines
aggressively compete for a small margin, and they
must go for every segment. The market position is
essential, and airlines must change prices and then fix
cost and profitability by kilometer, but always
comparing with competitors.
Regarding the financial performance of LCAs
and the best measurements to assess it, along with
some reasons investors for continuing investing in
companies in the airline industry which offer low
levels of profitability, one of them declares that some
particularities in the industry determine investment in
it; the profitability is low (1%, 2%, 3%) and cost
efficiency is a strategy for getting higher
profitability. It is an industry facing different
perspectives on risks, and it could give low
profitability in the long-term but for sure, that could
originate some security. Finally, it is a basic service
that is supported by governments. ROE depends on
debt, high or low, and the shareholders' expectations.
Besides, ROA could be controversial because assets
in an LCA are very expensive. The best index to
measure profitability in LCAs must be Cash Balance.
This variable has a huge fluctuation in the industry
and LCAs must pay obligations in cash.
Results reveal that SMA positively and
significantly improves the financial performance of
the analyzed companies, and interviewees confirm
findings and results, with some additional comments
about particularities that characterize this industry. In
addition, for the analyzed LCAs, it was identified
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DOI: 10.37394/232015.2023.19.74
Jorge Suarez Tirado, Inese Mavlutova
E-ISSN: 2224-3496
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Volume 19, 2023
that most of the SMATs are used for them above
average.
SMA can be understood as the last stage in the
development of MA, seeking to provide information,
which is external, financial and non-financial, long-
term, and forward-looking. Besides, it is an
interdisciplinary concept that integrates
developments from MA, strategy, strategic
management, finance, marketing, and production,
trying to face diverse critics and weaknesses of MA.
The adoption of a set of SMATs could affect the
financial performance and improve the decision-
making processes, due to the provision of strategic
information supporting decisions and how companies
are managed.
Concerning the airline industry is centered on the
air transport of passengers and cargo. It is also
characterized by the presence of several airlines’
business models, such as FSAs and LCAs. The LCA
business model seeks to generate benefits and
profitability by maximizing efficiencies and
minimizing costs.
In the empirical part of the study, respondents
recognized the possibilities of SMA helping that key
function in LCAs, while Spline regression models
were used obtaining both positive and significant
results at 99%, showing a good fit between the
available data for this research This is confirmed by
the fact that the three most used SMATs by the
analyzed LCAs are strategic pricing, competitive
position monitoring, and competitor performance
appraisal. In that sense, the airline industry needs to
pay attention to the strategies and actions deployed
by other airlines to go up against competitors, from
the other side customer service and the attributes of
the offered services are not enough important within
their essential strategies.
5 Conclusions
The main contribution of this paper is the
identification of the impacts of SMA on the financial
performance of the studied LCAs which are
determined and confirmed through the triangulation
of information obtained from data analysis,
questionnaires, interviews, and financial data of the
LCAs.
Regarding the direct impact that SMA has on the
financial performance of the studied LCAs, it was
inferred from the data analysis that the chosen
SMATs related to Costing -Attribute costing-,
Planning, control, and performance measurement -
Benchmarking-, and Strategic decision-making -
strategic costing-, are the best predictors of changes
on financial performance when it is measured in
Profitability, generating positive and significant
results at 99%.
From an academic perspective, academics and
researchers must continue studying and researching
SMA because it provides essential information to
support decision-making by companies and to
decrease the uncertainty of the business context,
which ultimately could positively affect financial
performance. Nevertheless, as stated by contingency
theory, the analysis in MA depends on specific
factors that characterize every industry and even
company. Besides, there is a lack of research on
several industries, such as automotive,
pharmaceutical, supermarkets, and start-ups, among
others, that could be studied in the future to identify
which SMATs best fit their information needs.
From a professional perspective, for accountants,
the training processes on SMA are essential to create
awareness and to encourage the adoption and
implementation of SMA by companies, processes
that could be led by accountants. According to some
interviewees, it is critical for management
accountants to understand how the business
environment works and to analyze and interpret
accounting information in a broader context. Based
on the experience of the author of the study there is a
lack of training on SMA in Latin American countries.
From an industrial perspective, for senior managers
of LCAs, based on the results, better customer
service could be a differential factor and a driver of
competitive advantages for LCAs in the future. In
that vein, it is expected that LCAs will use more
SMATs related to customer accounting, such as
customer profitability analysis, valuation of
customers as assets, and lifetime customer
profitability analysis. Besides, strategic pricing and
competitor accounting will continue to be important
for the analyzed LCAs.
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Contribution of Individual Authors to the
Creation of a Scientific Article (Ghostwriting
Policy)
Jorge Suarez-Tirado has written the original draft and
provided an empirical study.
Inese Mavlutova has reviewed and edited, as well
supervised.
Sources of Funding for Research Presented in a
Scientific Article or Scientific Article Itself
No funding was received for conducting this study.
Conflict of Interest
The authors have no conflicts of interest to declare
that are relevant to the content of this article.
Creative Commons Attribution License 4.0
(Attribution 4.0 International, CC BY 4.0)
This article is published under the terms of the
Creative Commons Attribution License 4.0
https://creativecommons.org/licenses/by/4.0/deed.en_
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DOI: 10.37394/232015.2023.19.74
Jorge Suarez Tirado, Inese Mavlutova
E-ISSN: 2224-3496
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Volume 19, 2023