schizas & jarvis icsb presentation 18 jun stockholm
TRANSCRIPT
The global body for professional accountants
Trust and confidence in SMEs’ use of advisers.
Prof. Robin Jarvis (Brunel University; ACCA)Emmanouil Schizas (ACCA)
The global body for professional accountants
THE AGENDA IN BRIEF
• Accountants are the most likely advisers of SMEs in many countries
• Traditional compliance work reduced• The future: business advisers (cross)
selling value-added services
The global body for professional accountants
Advice sought for
growth threat or
regulation
Adviser displays technical
skill
Social rapport
established
Adviser wins trust
and privileged
access
Client requests ad-hoc
services Adviser builds new
service line
Adviser acts as
broker to expert
partners
Adviser buys or
develops in house expertise
Adviser provides minimal advice
Blackburn, Carey & Tanewski (2010)
Jarvis & Rigby (2011)
The global body for professional accountants
BUT WE ALSO KNOW THAT...
• Few practitioners can market advice• Accountants and clients disagree re:
importance of rapport v. competence• Many SMEs don’t take advice at all• Few SMEs are willing to pay for advice• Studies are mostly qualitative, small n
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QUANTITATIVE VALIDATION IS HARD
• The subject is the client only• Easiest to measure use, not trust etc• How would we know if we’re
measuring trust? • Previous studies were qualitative for a
reason!
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OTHER REQUIREMENTS
• Trust and competence must be separate
• Variations in perceived expertise of adviser types by subject
• Compartmentalised trust• Trust and competence must interact
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Distinguishing between Trust, Confidence and Familiarity (Luhmann 2000)
Dimension Trust Confidence Familiarity
Focus of disappointment (Barber 1983)
Fiduciary duty Effectiveness Natural / moral order
Dimension of 'trust' (1)(Mouzas et al, 2007)
Individual trust Business trust N/A
Dimension of 'trust' (2)(Tyler & Stanley, 2007)
Affective trust Calculative trust N/A
Nature of contingency Risk Danger Danger
Assumed characteristic Benevolence / affinity Competence Continuity
Attribution of outcomes Internal External Nonpersonal
Perception of alternatives High Low None
The global body for professional accountants
• 1,777 businesses with < 250 employees
• 6 countries: Canada, China, Italy, Singapore, S. Africa, UK
• 28% micros, 41% small, 31% medium
• Commissioned by ACCA, CGA-Canada and CNDCEC (Italy)
• Collected Nov 2010• Sourced from the
Forbes readership• VC bias, esp. in non-
English-speaking countries
THE FORBES INSIGHTS DATASET
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• Friends and family• Trade & Prof. Assoc• Local bus. Assoc,
Chambers of Commerce
• Professional colleagues and network
• Accountants• Attorneys• Banks etc• Online resources• Others
• Taxation• Financing• Financial
Management• Legal and
regulatory• Marketing• Operations• Technology
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KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .664Bartlett's Test of Sphericity
Approx. Chi-Square 17324.081
Df 2926
Sig. .000
Factor AnalysisPromax rotation (oblique)Input: all 7x11 adviser use dummiesOutput: 6 factors explaining much of the variation in use of advice by SMEs
Proxies for the need for confidence and trust
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Table 7: A summary of factor loadings (see Table A.1 for details)
Component 1 2 3 4 5 6
InterpretationCommunity
crossover Use of Experts Internet UseFamily and
friends ‘Reading up’Business
associationsVariables with high loadings
Friends and family - Tax
Accountants - Tax
Internet - tax Friends and family -
Marketing
Government - Tax
Business association - Tax
Trade, prof assoc - Financing
Bank - Financing Internet - financing
Friends and family -
Operations
Government - Regulatory
Business association -
Financing
Business assoc. - Financial
Management
Accountants - Financial
management
Internet - Financial
management
Friends and family -
Technology
Internet - Marketing
Business association - Marketing
Prof. Network - Regulatory
Attorney - Legal and Regulatory
Internet - Regulatory
Books and magazines - Marketing
Business association - Operations
Accountant - Marketing
Internet - Technology
Internet - Marketing
Books and magazines - Operations
Business assocation - Technology
Attorney - Operations
Bank - Technology
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TESTING THE ‘TRUST’ FACTOR
• Two tests against Luhmann (2000)
• Greater ‘need for trust’ should create more internal attributions for failure
• Greater ‘need for trust’ should lead to a wider use of ‘alternative’ advisers
The global body for professional accountants
Distinguishing between Trust, Confidence and Familiarity
Dimension Trust Confidence Familiarity
Focus of disappointment (Barber 1983)
Fiduciary duty Effectiveness Natural / moral order
Dimension of 'trust' (1)(Mouzas et al, 2007)
Individual trust Business trust N/A
Dimension of 'trust' (2)(Tyler & Stanley, 2007)
Affective trust Calculative trust N/A
Nature of contingency Risk Danger Danger
Assumed characteristic Benevolence / affinity Competence Continuity
Attribution of outcomes Internal External Nonpersonal
Perception of alternatives High Low None
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RESULTS
• ‘Community crossover’ behaves like ‘trust seeking’ in determining attributions for failure to receive funding
• ‘Community crossover’ behaves like ‘trust-seeking’ in determining alternatives to expert advice
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EstimateStd. Error Wald df Sig.
95% Confidence Interval
Lower Bound Upper Bound
Got all of the finance applied for 1.232 .299 16.990 1 .000 .646 1.819 Got most of the finance applied for .849 .275 9.551 1 .002 .311 1.388 Got some of the finance applied for .514 .274 3.518 1 .061 -.023 1.052 Got none of the finance applied for 0a . . 0 . . . Community cross-over .233 .241 .935 1 .334 -.239 .705 Expert -.011 .279 .002 1 .968 -.557 .535 Internet -.066 .071 .846 1 .358 -.206 .074 Friends and Family .018 .082 .051 1 .822 -.142 .179 Reading up -.058 .075 .590 1 .442 -.206 .090 Business Association -.196 .073 7.243 1 .007 -.339 -.053 Got all finance * Community -.896 .302 8.816 1 .003 -1.488 -.305 Got most finance * Community -.597 .273 4.793 1 .029 -1.132 -.063 Got some finance * Community -.596 .280 4.520 1 .033 -1.146 -.047 Got no finance * Community 0a . . 0 . . . Got all finance * Expert .153 .316 .233 1 .630 -.467 .773 Got most finance * Expert .146 .303 .232 1 .630 -.447 .739 Got some finance * Expert .150 .303 .246 1 .620 -.443 .743 Got no finance * Expert 0a . . 0 . . . Note: The regression analysis also controlled for employment, turnover, legal status, type of customer (B2B v. B2C), Turnover growth (past and expected) and country. Note also that the dependent variable was coded as (1 = total agreement … 5 = total disagreement).
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Est.Std.
Error Wald df Sig.
95% Confidence Interval
Lower Bound
Upper Bound
Community cross-over 1.097 .080 190.002 1 .000 .941 1.252
Expert .047 .064 .546 1 .460 -.078 .173 Internet .752 .061 153.554 1 .000 .633 .871
Friends and Family .546 .068 64.034 1 .000 .412 .679
Reading up .455 .063 52.023 1 .000 .331 .578
Business Association .736 .063 135.503 1 .000 .612 .860
Less than $2m turnover -.518 .325 2.536 1 .111 -1.156 .120 $2m to $4.9m turnover -.266 .326 .667 1 .414 -.905 .373 $5m to $9.9m turnover -.573 .334 2.946 1 .086 -1.227 .081 $10m to $24.9m turnover -.380 .348 1.189 1 .276 -1.063 .303
Over $25m turnover 0a . . 0 . . . No employees -.683 .375 3.317 1 .069 -1.418 .052 1 to 9 employees -.662 .221 8.989 1 .003 -1.094 -.229 10 to 49 employees -.323 .179 3.241 1 .072 -.674 .029 50 to 99 employees .041 .206 .040 1 .841 -.362 .444 100 to 249 employees 0a . . 0 . . .
Note: The regression analysis also controlled for employment, legal status, type of customer (B2B v. B2C), Turnover growth (past and expected) and country; only significant effects are highlighted on this table.
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-5 -4 -3 -2 -1 0 1 2 3 4 5
-5
-4
-3
-2
-1
0
1
2
3
4
5
Canada
China
Italy
Singapore
South Africa
UK
Need for trust
Need for con-fidence
Transaction
Casual/no relationship
Partnership
Conversation
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Tax
Financing
Fin. Managment
RegulationMarketing
Operations
Technology
-0.5
0.5
1.5
2.5
Confidence
Trust
What accountants are good at v. what they are trusted with
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Friends & family
Trade or prof. Body
Local business association
Prof. colleagues or network
Accountants
Attorney
Finance providers
Internet resources
Books and magazines
Government
-2.5 -2 -1.5 -1 -0.5 0 0.5 1 1.5 2 2.5
ConfidenceTrust
Trust and confidence in advice on regulation
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What about that interaction?
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CONTACTManos [email protected]