QUALITY AND PERFORMANCE IN SMALL ACCOUNTING FIRMS

The purpose of this study is to investigate the relationship between three central dimensions of quality in small accounting firms and firm performance. The three dimensions of quality investigated are: human resource (HR) quality, information technology (IT) quality and service quality. Firm performance is measured in two different ways: perceived performance and return on sales (ROS). We tested the hypotheses in a sample of 506 small Norwegian accounting firms. The results indicate that service quality relate positively to perceived performance and ROS. Human resource quality is positively related to perceived performance, but not ROS. IT quality is not related to perceived performance and negatively related to ROS. This study contributes to the literature by providing empirical evidence for a positive relationship between service quality and firm financial performance and has important implications for accounting firms and their clients.