Home⇛LPU - Laguna Journal of Business and Accountancy⇛vol. 4 no. 3 (2023)

Effect of Outsourcing Accounting Functions on the Profitability of Small Enterprises in Calamba City, Laguna

Camila Mae M. Aldueza | Princess Dana R. Manguiat | Nicaellah Danes L. Tibayan

Discipline: accounting

 

Abstract:

Outsourcing accounting functions has become a strategic practice among small enterprises to improve operational efficiency, reduce costs, and gain access to specialized expertise. However, its effect on profitability remains inconclusive. This study examined the impact of outsourcing accounting functions on the profitability of small enterprises in Calamba City, Laguna, with emphasis on the mediating role of firmographic factors. Using a quantitative descriptive-correlational research design, data were collected from small enterprises through a survey questionnaire and analyzed using descriptive and inferential statistical tools. The study assessed outsourced accounting functions in terms of routine, non-routine, and advisory services, while profitability was measured through value enhancement, competitive advantage, and profitability margin. Findings revealed that non-routine accounting services were the most outsourced functions, particularly financial statement preparation and audit-related services. Small enterprises generally perceived outsourcing as beneficial in improving operational efficiency, financial reporting, and business performance. However, results showed no significant overall direct relationship between outsourcing accounting functions and profitability. Moreover, firmographic variables demonstrated limited mediating effects on the relationship between outsourcing and profitability. The study concludes that while outsourcing accounting functions offers operational and strategic advantages, its direct effect on profitability remains limited and may depend on other business-related factors. These findings provide practical insights for small enterprises in making informed outsourcing decisions and contribute to the growing literature on accounting outsourcing and business profitability.



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