Small Business Economics

, Volume 35, Issue 1, pp 93–112 | Cite as

Using Transaction Cost Economics to explain outsourcing of accounting

  • Patricia EveraertEmail author
  • Gerrit Sarens
  • Jan Rommel


This study explores whether SMEs involved in the outsourcing of accounting tasks differ, in terms of transactional and personal (CEO) characteristics, from others that perform the same tasks within the company. We rely on the transaction cost economics (TCE) model, while controlling for age, educational background, and trust of the SME executive in the external accountant. A survey was developed to investigate the outsourcing by Belgian SMEs both of routine (entry of invoices, interim reporting) and non-routine (period-end accounting, preparation of financial statements) accounting tasks. For the routine accounting tasks, frequency was significantly associated with outsourcing. Meanwhile, for non-routine accounting tasks, asset specificity and frequency were significantly associated. High-frequency tasks were associated with lower levels of outsourcing. Similarly, higher asset specificity was associated with lower levels of outsourcing. Furthermore, the educational background of the CEO, as well as the CEO’s level of trust in the external accountant, was significantly associated with outsourcing, confirming the upper echelon theory. Having a more educated CEO was associated with lower levels of outsourcing, both for routine and non-routine accounting tasks.


Outsourcing Accounting SME Transaction cost economics 

JEL Classifications

C12 C24 C42 D23 M10 M41 


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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Department of Accounting, Faculty of Economics and Business AdministrationGhent UniversityGhentBelgium
  2. 2.Department of FinanceUniversité Catholique de LouvainLouvain-la-NeuveBelgium
  3. 3.Department of FinanceUniversity of AntwerpAntwerpBelgium
  4. 4.Public Management InstituteKatholieke Universiteit LeuvenLeuvenBelgium

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