Management accounting-strategy coalignment in Islamic banking

Sugiyarti Fatma Laela, Hilda Rossieta, Setyo Hari Wijanto and Rifki Ismal

International Journal of Islamic and Middle Eastern Finance and Management, 2018, vol. 11, issue 4, 667-694

Abstract: Purpose - This paper aims to examine the effect of management accounting–strategy coalignment on the maqasidShariah-based performance of Islamic banks in Indonesia. The study also examines the role of the corporate life cycle of Islamic banks in influencing the relationship between management accounting–strategy coalignment and performance. Design/methodology/approach - Management accounting practices, management control systems, strategy and maqasidShariah-based performance are measured using questionnaires which were distributed to 97 directors and heads of Islamic banks. The model of this study is analyzed using structural equation model. Findings - This study finds that the coalignment between low cost-oriented strategy, strategic management accounting practices and mechanistic management control system has positive impact on improving maqasidShariah-based performance. However, this study is unable to verify that corporate life cycle strengthens the positive relationship between management accounting–strategy coalignment and performance. Research limitations/implications - Limited indicators of management accounting practices in this study illustrate less comprehensive management accounting practices. Further studies may add other relevant management accounting as described by the International Federation of Accounting Committee to provide a more comprehensive management accounting practices. Practical implications - This study provides recommendations to the management of Islamic banks to design management accounting practices and management control systems that fit to their strategic orientation. Originality/value - This paper fulfils limited empirical studies on management accounting practices and strategy in Islamic banking industry.

Keywords: Strategy; Islamic banking; Management accounting; Coalignment; Management control system; Maqasid Shariah (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:imefm-04-2017-0088

DOI: 10.1108/IMEFM-04-2017-0088

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