The moderating role of environmental factors between institutional isomorphic pressures and the adoption of IFRS for SMEs: application of SEM

Figures & data

Figure 1. Framework of institutional isomorphism.

Source: DiMaggio and Powell (1983).

Figure 2. Conceptual framework for the study variables.

Author’s construct (2023).

Table 1. Sample selection based on the target population.

Regional	No. of SMEs	Percentage (%)	Sample size
Very small enterprises	957	15.65%	71
Small enterprises	3,741	61.19%	277
Medium-sized enterprises	300	4.91%	22
Total	4,998	100%	370

Source: Modified Field Data (2023).

Table 2. Adopted research instrument and the scale of measurement.

Sources	Authors	No of Items	Scales
CISP	Perera and Baydoun (2007)	7	5-point Likert scale
MISP	Al-Omari (2010)	5	5-point Likert scale
NISP	Gelb et al. (2008)	5	5-point Likert scale
ENVI	Aboagye-Otchere and Agbeibor (2012)	4	5-point Likert scale
IFRS for SMEs	Cai et al. (2014), Tsalavoutas (2009)	3	5-point Likert scale

Source: Author’s Compilation (2023).

Table 3. Demographic characteristics of respondents.

Variables		Frequency	Percent	Cumulative percent
Gender	Male	360	52.55	52.55
	Female	325	47.45	100.0
Highest Level of Education	Diploma/HND	283	41.31	41.31
	Bachelor Degree	286	41.75	83.06
	Master Degree	86	12.55	95.61
	Professional	30	4.38	100.007
Age Group	18- 30	20	2.92	2.92
	31- 40	59	8.61	11.53
	41- 50	469	68.41	80.00
	51 and above	137	20.00	100.0
Positions	CEO/Directors	69	10.07	10.07
	General/Op. Managers.	256	37.37	47.45
	Supervisors	125	7.30	65.69
	Accountants	185	28.47	92.70
	Finance Officers	50	16.79	100.00
Number of Work Experience	1–5	25	41.7	41.7
	6–10	20	33.3	75.0
	11–15	10	16.7	91.7
	16 and above	5	8.3	100.0

Source: Modified Field Data (2023).

Table 4. Result of descriptive statistical analysis.

Variables	Mean	St. Dev	Min	Max	Skew	Kurtosis	J-B	Prob
CISP	3.763	0.891	3.20	4.40	0.304	1.916	256.03	0.00
MISP	3.668	0.944	3.00	4.60	0.162	1.897	231.44	0.00
NISP	3.446	0.912	3.29	4.29	0.401	2.017	134.38	0.00
ENVI	4.005	0.832	3.00	4.75	0.153	1.943	201.60	0.00
IFRS	3.063	0.699	3.00	5.00	0.176	2.183	104.46	0.00

Source: Researcher’s STATA version 16 Compilation.

Table 5. Result from Pearson correlation matrix.

Variables	IFRS	CISP	MISP	NISP	ENVI
IFRS	1.000
CISP	0.488	1.000
MISP	0.442	0.595	1.000
	0.000	0.000	….
NISP	0.369	0.543	0.491	1.000
	0.000	0.000	0.000	….
ENVI	0.504	0.388	0.277	0.304	1.000
	0.000	0.000	0.000	0.000	0.000

Source: Researcher’s STATA version 16 Compilation.

Table 6. Summary of results showing factor analysis of the study variables.

Variables	CVE (%)	KMO	Bartlett’s Test (P-value)
Coercive	61.191	.817	0.00
Normative	66.560	.618	0.00
Mimetic	64.352	.614	0.00
ENVI	60.178	.868	0.00
Compliance	85.328	.676	0.00

NB: Acceptable thresholds: CVE = Cumulative Variance Explained, > 50%; KMO = Kaiser-Meyer-Olkin, Minimum value >0.6, Bartlett’s test of Sphericity (p-value < 0.05).

Source: Author’s Construct (2021).

Table 7. Reliability and validity analyses of study variables.

Variables	Test items	Final items	Alpha (α)	CR	AVE
CISP	Coerc1	0.974	0.723	0.896	0.685
	Coerc2	0.787
	Coerc4	0.763
	Coerc5	0.768
MISP	Mimetic1	0.801	0.741	0.815	0.595
	Mimetic2	0.723
	Mimetic4	0.787
NISP	Norm1	0.708	0.705	0.784	0.548
	Norm3	0.786
	Norm4	0.724
ENVI	Env1	0.868	0.769	0.890	0.730
	Env2	0.882
	Env4	0.811
IFRS	Comp1	0.768	0.723	0.782	0.643
	Comp2	0.834

Note: α = Cronbach’s Alpha, CR = Composite Reliability, ACE = Average Variance Explained.

Source: Modified Field Data (2023).

Table 8. Result of Fornell-Larcker discriminant validity analysis.

Variables	CISP	MISP	NISP	ENVI	IFRS
CISP	0.712
MISP	0.647	0.702
NISP	0.433	0.477	0.723
ENVI	0.399	0.406	0.465	0.821
IFRS	0.338	0.491	0.342	0.318	0.739

Source: Researcher’s STATA version 16 compilation.

Table 9. Result of measurement model (confirmatory factor analysis).

Fit indices	Cut-off point	Initial measurement model	Modified measurement model	Interpretation
CMIN/DF	≤3.00	2.622	2.481	Excellent
G.F.I	≥0.95	0.806	0.911	Acceptable
C.F.I	≥0.95	0.879	0.914	Acceptable
Pclose	≥0.05	0.038	0.060	Excellent
SRMR	≤0.08	0.022	0.057	Excellent
TLI	≥0.95	0.895	0.913	Acceptable
IFI	≥0.95	0.847	0.867	Acceptable
RMSEA	≤0.06	1.423	0.053	Acceptable

Threshold Sources: Hu and Bentler (1999), and Gaskin and Lim (2016).

Table 10. Variance Inflation Factor (VIF) Index and the Tolerance Level (TL) Index.

Variables	Tolerance level (i.e. 1/VIF)	VIF level
IFRS	0.374	2.674
CISP	0.447	2.237
MISP	0.386	2.591
NISP	0.434	2.304
ENVI	0.472	2.119
Mean VIF		2.385

Source: Researcher’s STATA version 16 compilation.

Table 11. Tests of normality distribution.

	Kolmogorov-Smirnov^a			Shapiro-Wilk
	Statistic	Df	Sig	Statistic	Df	Sig
CISP	0.234	740	0.143	0.845	740	0.345
MISP	0.229	740	0.197	0.891	740	0.423
NISP	0.263	740	0.367	0.770	740	0.541
ENVI	0.213	740	0.233	0.816	740	0.373
IFRS	0.202	740	0.206	0.816	740	0.223

Source: Researcher’s STATA version 16 compilation.

Table 12. Test of homogeneity of variance (Levene’s Test).

Variables	Levene statistics	df1	df2	Sig
IFRS	2.435	2	685	0.247
CISP	2.283	2	685	0.189
MISP	1.256	2	685	0.143
NISP	1.648	2	685	0.236
ENVI	1.566	2	685	0.113

Source: Researcher’s STATA version 16 compilation.

Table 13. Direct and indirect structural equation modeling results.

Dependent variable: IFRS		Direct analysis	Indirect analysis
Hypotheses	Regression Path	Model 1	Model 2	Model 3	Model 4
H01	IFRS←CISP	0.417***	0.492***	0.488	0.353***
		(0.009)	(0.060)	(0.085)	(0.098)
H02	IFRS←MISP	0.279***	0.221***	0.218***	0.269***
		(0.037)	(0.025)	(0.031)	(0.080)
H03	IFRS←NISP	0.249*	0.464**	0.456 ***	0.183***
		(0.087)	(0.146)	(0.153)	(0.080)
	IFRS←MISP	0.198**	0.101**	0.098**	0.144**
		(0.089)	(0.0307)	(0.031)	(0.044)
H04	IFRS←(CISP*ENVI)		0.020***
			(0.067)
H05	IFRS←(MISP*ENVI)			0.024**
				(0.007)
H06	IFRS←(NISP*ENVI)				0.031**
					(0.009)
(Constant)		0.124**	0.572**	0.331**	0.065***
		−0.199	−0.099	−0.099	−0.024
	R-squared (R^2)	0.661	0.891	0.764	0.868
	F	247.29	571.76	242.41	493.385
	P-value	0.000	0.000	0.000	0.000
	D-Watson	2.057	2.101	1.999	2.002

Source: Researcher’s STATA version 16 compilation.

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