The use of planning and control practices in SME's and the relationship with company performance

This paper presents the results of empirical research on the use of management accounting systems in small and medium sized enterprises (SMEs) and the relationship with company performance. The results show that the use of planning and control methods differ significantly according to the size and industry of the firm. Successful companies seem to have more formal long-term plans. While the presence as such of a short-term plan does not appear to be significantly related to firm performance, significant differences appeared regarding the kind of information used and gathered in the preparation of these plans. A longitudinal analysis based on cluster analysis shows that the relation between the use of planning and control practices and performance is not exclusively unidirectional but can also be bi-directional. Finally, weak financial performance drives planning and control in SMEs.