The paper investigates to what extent owners and managers of SMEs in Saudi Arabia have accepted the introduction of International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs).
The research adopts an interpretive approach, using an institutional logics framework, contrasting “traditionalist” and “modernisation” logics. A total of 52 semi-structured interviews, mainly with owners, managers and advisers of SMEs, were undertaken.
Respondents noted that adopting IFRS for SMEs was part of a general programme of economic development, including introduction of Value Added Tax, greater publicity for business matters and use of company financial statements for determining Zakat (a religious levy). Respondents were aware of the role of Saudi Vision 2030 in proposing economic development, but generally denied that this was a major catalyst for financial reporting changes. Despite a small number of remaining “traditionalists”, initial sceptics about IFRS for SMEs had usually become reconciled to the idea of its substantive implementation, although they sometimes criticised certain aspects of IFRS for SMEs as creating unnecessary costs of compliance.
Responses suggest that most SMEs will comply with financial reporting regulations, especially when they can see this as part of the broader national agenda of economic development.
The paper uses an institutional logics approach to contribute to our understanding of what makes international financial reporting regulation acceptable or undesirable to the owners and managers of SMEs in emerging economies.
