Abstract:
This study analyses the reasons Small and medium sized enterprises ( SME‘s) engages in
outsourcing accounting services and the sequel of outsourcing on performance in terms of
Transaction Cost Economics (TCE) Theory in the context of SME‘s in Nigeria. The use of
questionnaires to collect data was employed. Three hundred and sixty (360) questionnaires
was administered to the sampled SMEs and two hundred and fifty seven was duly completed
and returned. Simple linear regression analysis was run to determine key factors affecting
accounting services outsourcing in Nigerian SME‘s. The study reveals that the predictor
variable outsourcing has a significant impact on firm performance (Coefficient=0.7859,
p<0.001) and Asset Specificity Trust in Accountant and Behavioral Uncertainty is
significantly related to SMEs performance (Coefficient= 0.6725, 0.8534 and 0.7537
respectively). The study recommends that SME owners/managers through their Decision
Making Units (DMU) to engage in accounting services outsourcing since it has positive
effect on firm performance and this will allow them to concentrate on their core
competencies.
