The intensity of market competition is a contingent factor that shapes the internal processes in SMEs. SMEs must be able to adapt to market competition conditions to be able to maintain their business. This adaptability is determined by intellectual capital, which is a proxy for internal processes. Intellectual capital is formed and develops evolutionarily. Intellectual capital is one of the determinants for SMEs to win the market competition. [16] prove that in conditions of turbulence in the business environment, intellectual capital can improve SMEs’ performance. The results of this study indicate that to face the uncertainty of the business environment, SMEs use their intellectual capital to produce innovative products that consumers need. The turbulence of the business environment has the same analogy as the intensity of market competition. SMEs tend to face perfect market competition, so SMEs must be able to carry out their operational activities in an innovative manner. This is made possible through intellectual capital, sometimes not realized by SMEs in their formation and growth. Therefore, this study proposes a hypothesis:

H₁: SMEs that face intense market competition tends to increase their intellectual capital.

Management accounting practice (MAP) is a set of management accounting methods to support business decision-making. This management accounting method includes costing and accounting, planning, implementation, control, and strategy analysis [17]. The practice of management accounting has developed along with the development of technology and ways of doing business. The development of MAP is divided into four stages based on the change process according to changes in the business environment [18]. Table 1 below shows the stages of MAP.

Table 1 above shows the development of MAP from stages 1 to 4. Stages 1 and 2 have the same focus, namely, cost control to achieve efficiency. Financial performance measures are essential for management in decision-making. Stages 1 and 2 are also known as traditional MAP. While stages 3 and 4 focus on efforts to make predictions in the future so that the company can use its resources optimally, which results in the reduction of the remaining raw material resources. Stages 3 and 4 focus on production techniques on the pull manufacturing system. This manufacturing system allows the company to manage its inventory efficiently because production is carried out based on customer demand that is known with certainty. MAP stages 3 and 4 are called contemporary MAP. Contemporary MAP focuses not only on financial performance measures as a control mechanism but also on non-financial performance measures.

[13], in their concept article, propose a thesis that intellectual capital in companies influences the use of MAP. Intellectual capital is knowledge developed by the organization into, among other things: an efficient operational work system, an extensive external network, the number of new products from innovative ideas, and much more. Therefore, intellectual capital will encourage traditional and contemporary management accounting methods. Traditional MAP focuses on financial control; this is supported by intellectual capital that seeks to find mechanisms and ways to make the production process run efficiently.

H₂: Intellectual capital encourages SMEs to increase the use of traditional MAP.

[12] prove that increasing intellectual capital investment will increase the use of contemporary MAP. Contemporary MAP focuses on financial and non-financial performance indicators. At the same time, business organizations such as SMEs cannot only pay attention to financial performance measures. The intensity of market competition provides various alternative products that consumers can choose from. This forces SMEs to increase their intellectual capital to provide the products and services that consumers need. Consumer satisfaction is an indicator that business organizations must consider. Consumer satisfaction is sought to be achieved through the optimal use of resources. Therefore, SMEs with high intellectual capital tend to use a variety of performance indicators, both financial and non-financial. These performance indicators are the focus of contemporary MAP.

H₃: Intellectual capital encourages SMEs to increase the use of contemporary MAP.

SMEs that use both traditional and contemporary MAP has the hope of improving their business performance. Traditional and contemporary management accounting methods aim to produce information that can support accurate decision-making. Previous studies have proven that the data produced by both traditional and contemporary MAP supports decision-making effectiveness [14], [15].

H_4a: Traditional MAP produces information that can support the effectiveness of SME business activities.

H_4b: Contemporary MAP produces information that can support the effectiveness of SME business.

The exogenous variable of this research is the intensity of market competition (IMC). The intensity of market competition is a condition in which increased market competition occurs when competitors’ actions challenge SMEs or when SMEs recognize an opportunity to improve their market position [19]. The intensity of market competition is measured by several variable indicators, namely: the number of SMEs in the industry, changes in technology, product diversity, product quality, competitive prices, and changes in consumer tastes [20]–[22].

The intervening endogenous variables are intellectual capital (IC) and traditional and contemporary management accounting practices (MAP_TD and MAP_KT). Intellectual capital is a collection of knowledge possessed by individuals in the organization to provide a competitive advantage [23]. Intellectual capital in this study refers to [6], which is divided into three elements: human capital, organizational capital, and relational capital. Human capital is the accumulation of the level of education, experience, and motivation of an entrepreneur to increase productivity. Organizational capital is a combination of company characteristics and business strategy. The effectiveness of the company is determined by the features of the company, which include: length of business and company size. In addition to business characteristics, the strategy also plays a role in determining the success of SMEs. This business strategy includes the entrepreneur's decision to use its resources. Relational capital is a network owned by SMEs, including suppliers, consumers, and the government.

Management accounting practices (MAP) are accounting techniques that produce information for management to plan, evaluate, and control [24]. This study divides MAP into traditional (MAP_TD) and contemporary (MAP_KT). MAP_TD is a management accounting technique that focuses on using financial performance indicators. Variable indicators, namely measure MAP_TD: depreciation for costing, selling price fixing techniques, budget realization, sales and cost records, budgeting, BEP analysis, and best-selling sales [14], [24], [25]. MAP_KT is a management accounting technique that uses various performance indicators, both financial and non-financial. MAP_KT is measured by several indicators, namely: method of budgeting and allocation of overhead costs to SMEs that produce various products, product quality, investment analysis, selling price determination method, profitability analysis per product segment, non-financial performance analysis, and industry analysis [14], [24], [25].

The endogenous variable of this research is business performance (KB). Business performance is the achievement of operational activities carried out by SMEs [14]. Business performance is measured by financial and non-financial performance. The financial performance consists of sales growth, increased cash flow, and profit. The non-financial performance consists of an increase in the number of consumers, products, and consumer services.

Likert scale 1 (strongly disagree) – 5 (strongly agree) was used to measure respondents' answers to all indicators of exogenous, endogenous intervening, and endogenous variables.

Research model to test the hypotheses shown in Figure 2 below.

where:

IMC = Intensity market competition

IC = Intellectual Capital

MAP_TD = Management Accounting Practices Traditional

MAP_KT = Management Accounting Practices Contemporary

KB = Business Performance

= Constanta

= Regression Coefficient

= Error term

H₁ is proven if 1 in equation (1) is significant and positive. H₂ is confirmed if 1 in equation (2) is significant and positive. H₃ is proven if 1 in equation (3) is significant and positive. H_4a (H_4b) is proven if 1 (ɣ2) in equation (4) is significant and positive.

They were collecting data using a survey method through the distribution of questionnaires. The questionnaire was made in the form of a google form to make it easier for respondents to fill it out. The questionnaire was distributed twice through social media WhatsApp, line, and Instagram. The first questionnaire was sent in November 2020. The respondents who returned the questionnaire were 114 conventional and 46 digital SMEs. The second questionnaire was sent in December 2020 with 13 conventional and six digital SMEs as respondents. This study conducted a non-response biased test to ensure no change in results due to changes in the number of respondents. The non-response biased test uses the Wilcoxon test. Table 2 below shows the results of the non-response biased test.

Note:

IMC = intensity market competition

HC = human capital

OC = organizational capital

RC = relational capital

TD = Traditional MAP

KT = contemporary MAP

KK = Financial Performance

KNK = Non-financial performance

Table 2 Panel A shows no difference in the answers of conventional SMEs in November with December 2020. Panel B also offers the same results. This concludes that the research results will not change if there is a change in the number of respondents.

This study conducted a different test of the answers of conventional SMEs with digital. This test aims to ensure that the same research questionnaire can be used for both types of SMEs. Table 3 below shows the results of the independent sample t-test.

Note:

IMC = intensity market competition

HC = human capital

OC = organizational capital

RC = relational capital

TD = Traditional MAP

KT = contemporary MAP

KK = Financial Performance

KNK = Non-financial performance

Table 3 above concludes that there is no difference in understanding of the questionnaire used as the research instrument for both conventional and digital SMEs.

The object of this research is conventional and digital SMEs. Table 4 below shows an overview of conventional and digital SMEs.

Conventional SMEs are dominated by retailers and food and beverage production with 49.,6%, and 36.2%, respectively, as shown in Panel A Table 4. Other business fields in conventional SMEs are services, education, packaging, organic fertilizer production, fly glue production, and electronic equipment production. Panel B Table 4 shows that digital SMEs are dominated by IT-service (26.9%), marketplace (17.3%), and Edu-tech (13.5%). Other business fields in digital SMEs are home design, export companies, food start-ups, information portals, listings, intelligent city apps, and new fields not mentioned by respondents. Panels A and B of Table 4 show that conventional and digital SMEs are young companies because they have an average length of business under five years. Meanwhile, conventional SMEs’ capital comes from their capital, and digital SMEs’ money comes from investors.

Statistical descriptions for each variable in this study are presented in Table 5.

Table 5 above shows that the intensity of market competition (IMC) has the same minimum, maximum, mean, and standard deviation values between conventional and digital SMEs. This indicates that the intensity of market competition faced by conventional and digital SMEs is relatively tight.

Human capital (HC) in conventional SMEs (digital SMEs), which is one element of intellectual capital, has a mean value of 4 (4.3). This indicates that human capital in conventional SMEs is relatively the same as in digital SMEs. However, the minimum value has a significant enough difference because conventional SMEs (digital SMEs) have a minimum value of 2 (3). This may be due to differences in education levels.Figure 3 and Figure 4 show the education level of conventional and digital SMEs.

Figure 3 shows that the education level of conventional SMEs is dominated by SMA/SMK (28%) and undergraduate (56%). At the same time, the education level of digital SME players is dominated by undergraduates, as much as 80%. This shows that the minimum value of human capital in digital SMEs is higher than in conventional ones. The conclusion is that human capital in the context of capabilities in digital SMEs is more elevated than in conventional ones.

Organizational capability (OC) as an element of intellectual capital has a relatively similar mean value. Conventional SMEs have a mean value of 4.2 and digital SMEs 4.4. The minimum, maximum, and standard deviation values are relatively the same. This indicates that the organizational capabilities of conventional and digital SMEs are not much different.

Relational capital (RC), as the last element of intellectual capital, has the same mean value of 3.8. However, the minimum value for conventional SMEs (digital SMEs) is 1 (2). This indicates that the external network of digital SMEs is more comprehensive than conventional SMEs. This confirms the source of funding for digital SMEs.

Traditional management accounting practices (TD) in conventional SMEs have a mean value of 3.8. Meanwhile, for digital SMEs, the mean value is 3.9. This indicates that the frequency of using information generated by traditional management accounting practices in conventional and digital SMEs in supporting decision-making during the pandemic is the same.

Contemporary management accounting practices (KT) in conventional (digital) SMEs have a mean value of 3.9 (4.1). This indicates that the information generated by contemporary management accounting practices in digital SMEs for decision-making is more frequent than in conventional SMEs during the pandemic. However, compared to the mean value of TD, the mean value of good KT in digital SMEs is higher. Digital SMEs tend to use contemporary management accounting practices. Whereas in conventional SMEs, the mean value between TD and KT is not much different. Conventional SMEs consider the information generated by TD and KT important in decision-making.

Business performance as measured by financial performance (KK) in conventional (digital) SMEs has a mean value of 3.6 (3.5). This shows that the achievement of financial performance, both conventional and digital, tends to be low during the pandemic. The pandemic has made it difficult for SMEs to sell their products.

As measured by non-financial performance (KNK) in conventional SMEs, business performance has a mean value of 4.1, higher than digital SMEs, which is 3.8. However, the mean value of KNK for both conventional and digital SMEs is higher than that for KK. The achievement of non-financial performance is better than financial performance.

The results of the H₁ test are supported empirically. Three times are tested for all research objects. Only conventional and digital SMEs showed the same results, namely, the intensity of market competition forcing SMEs to increase the use of their intellectual capital. SMEs, both conventional and digital, strive to maintain their survival. The intensity of market competition during the pandemic is a threat factor for SMEs. The market competition faced by SMEs is perfect. Regulations to enter this sector are relatively not strict, so there are a lot of SME players or actors. Consumers have many alternative product choices in the market. SMEs are "forced" to conduct research and innovation in producing products needed by consumers.

Product innovation can be done by SMEs situationally. Based on the interview with one of the respondents in catering services, during the pandemic, the need for catering services for covid patients who do independent isolation at home. It indicates that SMEs use their intellectual capital to capture business opportunities during the pandemic. This means SMEs are trying to find new markets where the intensity of market competition is still low.

The results of this study support the research results of [16]. Research by [16] examines the role of intellectual capital in SMEs in Pakistan in dealing with environmental turbulence. Environmental turbulence, as well as the intensity of market competition, is a threat factor for SMEs. SMEs must be able to maintain their sustainability by using intellectual capital.

The results of the H₂ test of this study are empirically supported both in all SMEs, conventional SMEs, and digital SMEs. Intellectual capital in SMEs will encourage SMEs to use traditional MAP. Traditional MAP consists of management accounting methods focusing on accounting numbers or cost control. SMEs with high intellectual capital tend to use the information generated by traditional MAP to support decision-making.

Cost control is an essential factor for SMEs to maintain cash flow stability. In conventional and digital SMEs, almost all transactions use cash transactions. Therefore, SMEs must manage their costs well.

The result concludes the importance of intellectual capital in the context of the competence of SMEs to manage their operational costs. Digital SME players ask for client cooperation in terms of faster payments than usual, although in practice, there are clients who delay payments. Likewise, conventional SME players convert fixed costs in the form of driver salaries into variable costs in the form of courier costs. What has been done by conventional and digital SME players shows an effort to control costs.

The results of this study support the results of [12]. Business organizations with high levels of intellectual capital tend to take advantage of the information needs generated by management, accounting for decision-making.

The results of the H₃ test of this study were proven empirically. Three times the test shows the same results, SMEs with a high level of intellectual capital tend to use the information generated by contemporary MAP. Contemporary MAP focuses on the efforts of business organizations to create product value to meet consumer needs examples of profitability analysis per product segment, activity analysis, and so on. Profitability analysis per product segment provides information on top sales products. This information helps help SMEs to focus on the products that consumers most need.

The interview with one of digital SMEs as one of the research samples indicates that profitability each product segment was analysed. This analysis is discussed periodically, namely every semester. This shows that the intellectual capital in SMEs encourages the use of information produced by contemporary MAP to improve services, especially for products that consumers most need. Meanwhile, the results of interviews with conventional SMEs indicate that there is an analysis of activities to produce time or length of production so that consumers can receive the product promptly. These conventional SMEs use their intellectual capital when evaluating delivery delays. The result of this evaluation in the form of reflection is information on the length of production time.

The results of this study support [12]. The results of this study indicate that increasing intellectual capital investment supports the various performance measures that exist in contemporary MAP. The results of this study have shown the thesis of [13] empirically. Intellectual capital consists of non-financial aspects, namely human capital, organizational capital, and relational capital, so the performance measurement system cannot be traditional anymore.

The information produced by traditional MAP can support the effectiveness of decision-making. Efforts to change costs from fixed to a variable as the results of interviews with conventional SMEs. This can help SMEs in controlling their prices so that there is an increase in business performance. The increase in the business performance of conventional SMEs was contributed mainly by non-financial performance, as shown in Table 5 statistical description. The mean value of non-financial performance is higher than the mean financial performance. Achievement of performance during this pandemic is quite tricky for SMEs. The results of interviews with conventional SMEs in the food and beverage production field are as follows.

The results of the H_4a test are proven empirically in the test for all research objects and conventional SMEs. However, in testing digital SMEs, the results are not significant. This indicates that conventional SMEs tend to use traditional MAP. This can be seen from the statistical description in Table 5, which shows that the mean conventional MAP value is higher than contemporary MAP.

The results of this study support the research of [14], [15]. These studies also prove that MAP affects the performance of SMEs.

The results of this study prove H_4b empirically in the third test, which is only digital SMEs. This indicates that digital SMEs tend to use contemporary MAP to support the effectiveness of their business decisions.

Business performance that is the focus of SMEs is non-financial performance. This can be seen in Table 5 where the mean value of non-financial performance in digital SMEs is higher than financial performance. Financial performance is difficult for digital SMEs to achieve, because the results of interviews with digital SMEs have decreased turnover. The decline in turnover was due to a large number of bankrupt clients.

The results of the interview confirm the statistical description in Table 5. Achieving financial performance is not an easy thing during this pandemic. Therefore, the focus on achieving its performance shifts from financial to non-financial performance. The results of this study support the research of [14], [15].