The relationship between product diversity, usage of advanced manufacturing technologies and activity-based costing adoption

This paper examines the associations between product diversity, usage of advanced manufacturing technologies (AMT) and activity-based costing (ABC) adoption. Theory strongly suggests that product diversity is a major determinant of the demand for ABC systems. To date, the results of empirical research on the relationship between product diversity and ABC adoption have generally been inconclusive, however, suggesting that there either may be no strong relationship, or that methodological issues may have prevented researchers from consistently finding it. Using a dataset of survey responses from 191 Dutch, medium-sized manufacturing firms, this paper re-examines the relationship between product diversity and ABC adoption. Improving upon the measurement of product diversity and distinguishing between ABC adoption and use, it examines whether the relationship is curvilinear (inverted U-shaped) and/or moderated by usage of AMT. The paper contributes to the literature by showing that, consistent with the underlying theory, product diversity, on average, is positively related to both ABC adoption and ABC use, but also that these relationships are indeed inverted U-shaped and that the relationship with ABC use is negatively moderated by usage of AMT.     

A commentary on the applications of activity-based costing

Activity-based costing (ABC) has, within the last decade, generated a voluminous literature which has paralleled its increase in popularity with practitioners. This paper reviews ABC's potential by examining applications of it which extend throughout the core areas of management accounting. Consideration is given not only to how it has positively contributed to practice in these areas but also to its rationale and limitations to particular applications. Assessment is also made of how it interacts with longer established management accounting issues such as the variable versus fixed costing debate for income measurement and decision-making, the use of contribution margin analysis, organizational slack in the budgetary control process and conventional variance analysis. Some conclusions are drawn on its value to practitioners and researchers.     

The impact of contextual and process factors on the evaluation of activity-based costing systems

This paper investigates associations between evaluations of activity based costing (ABC) systems, contextual factors, and factors related to the ABC implementation process using interview and survey data from 21 field research sites of two firms. Structural equation modeling is used to investigate the fit of a model of organizational change with the data. The results support the proposed model; however, the significance of specific factors is sensitive to the evaluation criterion. The model is stable across firms and respondents, but is sensitive to the maturity of the ABC system.     

Assessing self-selection and endogeneity issues in the relation between activity-based costing and performance

Studies investigating the relation between ABC adoption and performance are inconclusive and plagued with econometric problems. This study extends prior research to investigate the association between ABC adoption and four manufacturing plant performance measures (cycle-time improvement, quality improvement, cost improvement, and profitability) and to assess selection bias and the endogenous nature of their relationship. I use the Heckman (1979) model to assess sample selection bias and the Wooldridge (2002) 2SLS-IV approach, to investigate endogeneity. After controlling for sample selection bias and endogeneity, the coefficient of ABC under the Heckman method and ABC_fit under the 2SLS-IV method becomes significantly higher compared to the coefficient of ABC under the OLS method. In addition, both the inverse Mills ratio, under the Heckman model, and Hausman F-test, under the Wooldridge 2SLS approach, are positive and significant, confirming the presence of both sample selection bias and endogeneity. Overall, I find that controlling for sample selection bias and endogeneity is essential in properly assessing the significance of ABC-performance association.     

The role of manufacturing practices in mediating the impact of activity-based costing on plant performance

We study the impact of activity-based costing (ABC) on adoption of world-class manufacturing (WCM) practices and plant performance. In contrast to earlier research that estimates the direct impact of ABC on plant performance, we develop an alternative research model to study the role of world-class manufacturing practices as a mediator of the impact of ABC. Analysis of data from a large cross-sectional sample of US manufacturing plants indicates that ABC has no significant direct impact on plant performance, as measured by improvements in unit manufacturing costs, cycle time, and product quality. We find, however, that WCM practices completely mediate the positive impact of ABC on plant performance, and thus advanced manufacturing capabilities represent a critical missing link in understanding the overall impact of ABC. Our results provide a different conceptual lens to evaluate the relationship between ABC adoption and plant performance, and suggest that ABC adoption by itself does not improve plant performance.     

Towards explaining activity-based costing failure: accounting and control in a decentralized organization

Many of the activity-based costing (ABC) systems introduced in recent years are said to fail (e.g. Cooperet al., 1992; Argyris and Kaplan, 1994; Shields, 1995; Roberts and Silvester, 1996). The use of ABC for surveillance by the group management, with no consequent actions, leads us to propose that claims on ABC failure result, in part, from assessing the use and value of ABCs from the decision-making perspective. The decision-making perspective may be insufficient for capturing the multitude of uses to which ABCs are put in practise. As this study shows, in the context of strategic decision-making the success of ABC cannot depend on whether its results require any actions or decisions to be taken, but on its ability to make a correct diagnosis of the situation. Consequently, some of the so-called ABC failures may not be failures. They may merely reflect a limited appreciation of the uses of accounting and control systems in practise. Nevertheless, failures and resistance are real in a number of organizations. This study explored the origins of resistance to ABC in a case setting, looking at diverse interests of organizational stakeholders, and the role of existing control and information systems in ABC implementation. We show that the resistance may have several sources; some related to the cost and benefits of ABC, some associated with organizational power and politics, and some pertinent to organization culture. The practical implication of this study hinged on the notion that although the resistance to ABC may come from various sources, these sources appear fundamentally structural and are unlikely to be dealt with by employing implementation-based strategies.     

IFRS adoption: A costly change that keeps on costing

This paper documents the results of a study exploring the transitionary and ongoing costs incurred by Australian companies from their use of IFRS. A longitudinal survey approach was adopted. Challenging the underlying logic of convergence, survey results highlighted that IFRS is costly for firms both in the lead up to adoption and thereafter. Specifically, the transition to IFRS imposed significant AIS, staff training and development, financial statement user education, and financial statement adjustment costs on many firms. Furthermore, many firms perceived that IFRS adoption has resulted in an ongoing increase of 20% or more on annual accounting and compliance costs.     

Note on a New Zealand replication of the Innes et al. UK activity-based costing survey

Activity-based costing (ABC) is a well known technique for costing products and providing management information. This note reports the results of a faithful replication in New Zealand (NZ) of Innes et al.’s 1999 UK survey of ABC usage and a comparison of the results of the two surveys.Adoption rates were found to be similar, with NZ companies showing slightly lower rates of implementation of ABC than UK companies. However, once they had implemented the method, NZ companies demonstrated greater commitment to ABC across more areas of the firm than UK companies. ABC systems in NZ tended to display less complexity than their UK counterparts. Strong correlations were found in the different uses of ABC by industry sector, but there were contrasting perceptions on the success and importance of some ABC applications.This study provides an insight into ABC in NZ, data on trends in ABC experiences between two countries of widely differing size and geographic location, and suggestions for further research.     

The fragmented communication structure within the accounting academia: the case of activity-based costing research genres

The major purpose of this study is to examine the communication structures within the management accounting academia, with a view to illustrating and thereby possibly alleviating the difficulties of dialogue between the different discussion circles identifiable within the field. Research on activity-based costing (ABC) is used as an illustrating example case. We distinguish three genres of ABC research (Consulting research, Basic research, and Critical research) and analyse their nature as well as their internal and external communication patterns. We are particularly interested in the interests of knowledge, research methods, argumentation styles, and results of these genres. Also, we will pay attention to their effects both on the progress of science and management accounting practice. The theoretical points of support lean on the ideas of Bourdieu, Gadamer, Habermas, Latour, and Stegmüller. Overall, the field of ABC research appears to be fragmented. Our analysis suggests that the current communication pattern between various research genres is not inclined to enhance the accumulation of accounting knowledge. Applying the ideas of Stegmüller (1969), we conclude that the discussion circles within the accounting academia appear to be estranged to an extent to which the arguments of researchers representing different approaches do not frequently meet each other, resulting in the unfruitful development of knowledge.     

Developing time-driven activity-based costing at the national level to support policy recommendations for radiation oncology in Belgium

We use time-driven activity-based costing (TDABC) to estimate the cost of radiation treatments at the national level. Although TDABC has mostly been applied at the hospital level, we demonstrate its potential to estimate costs at the national level, which can provide health policy recommendations. Contrary to work on reimbursement or charges representing the health care system perspective, we focus on resource costs from the perspective of health care service providers. Using the example of Belgian inputs and results, we discuss development of a TDABC model. We also present insights into the challenges that arose during model design and implementation. Finally, we discuss recent examples of policy implications in Belgium as well as some caveats that should be considered when developing resource allocation models at the national level.     

External auditors' perceptions of cloud computing adoption in Australia

Adopting a multi-theoretical approach, I examine external auditors' perceptions of the reasons why organizations do or do not adopt cloud computing. I interview forensic accountants and IT experts about the adoption, acceptance, institutional motives, and risks of cloud computing. Although the medium to large accounting firms where the external auditors worked almost exclusively used private clouds, both private and public cloud services were gaining a foothold among many of their clients. Despite the advantages of cloud computing, data confidentiality and the involvement of foreign jurisdictions remain a concern, particularly if the data are moved outside Australia. Additionally, some organizations seem to understand neither the technology itself nor their own requirements, which may lead to poorly negotiated contracts and service agreements. To minimize the risks associated with cloud computing, many organizations turn to hybrid solutions or private clouds that include national or dedicated data centers. To the best of my knowledge, this is the first empirical study that reports on cloud computing adoption from the perspectives of external auditors.     

The role of actor-networks and boundary objects in management accounting change: a field study of an implementation of activity-based costing

This field study seeks to illustrate how an organisation's accounting system can be changed by a heterogeneous actor-network of local and global actors and actants. In particular, it focusses on the role of boundary that were able to stabilise and mediate diverse interests. Five types of boundary objects were identified — data repositories, visionary objects ideal type objects, coincident boundaries and standardized protocols. Here, accounting change was anti-heroic — the effort of many as opposed to a powerful few had to be corralled. Also, change was cyclical, as new accounting technologies were adopted on faith, made to ‘work/succeed’ temporarily, and then abandoned.     

Takeover activity in Australia: endogenous and exogenous influences

The present paper analyses the population of takeover bids for listed Australian companies using quarterly data over a 25-year period to re-examine the predictability of takeover activity and to determine if there is a flow on impact on macroeconomic variables. We examine whether takeover activity: (i) is endogenous; that is, determined by own activity; (ii) is jointly determined by macroeconomic and capital market variables; and (iii) has an exogenous spillover impact across the economy. We find that stock prices and takeover activity share a long-term common trend, the relative success of takeover bids is independent of sharemarket activity, and conclude that aggregate takeover activity is driven by fundamental economic factors rather than by speculative activity.     

Adoption of activity management practices: a note on the extent of adoption and the influence of organizational and cultural factors

We examine the extent to which activity management practices are adopted by Australian business units at each of Gosselin's [Gosselin, M., 1997. The effect of strategy and organizational structure on the adoption and implementation of activity-based costing. Acc. Organ. Society 22 (2), 105–122] levels of Activity Analysis, Activity Cost Analysis and Activity-based Costing. We also examine the association between extent of adoption and the organizational factors of size and decision usefulness of cost information, and the business unit culture dimensions of innovation, outcome orientation, and tight versus loose control.Data were collected by mail survey questionnaire of a random sample of business units, with questionnaire design and distribution based on Dillman's [Dillman, D.A., 2000. Mail and Internet Surveys: The Tailored Design Method. John Wiley & Sons Inc., New York] Tailored Design Method. Adoption rates are found to be higher than in prior studies, suggesting the continuing relevance of activity management practices and the advantage of using Gosselin's (1997) levels. All factors were found to be associated with all activity management practices. In particular, business unit size and all three business unit culture dimensions were found to be associated with extent of adoption of Activity Analysis (AA) and Activity Cost Analysis (ACA), while decision usefulness and the cultural dimensions of outcome orientation and tight versus loose control were associated with Activity-based Costing.     

Organizational and environmental influences in the adoption of computer-assisted audit tools and techniques (CAATTs) by audit firms in Malaysia

Despite the usefulness of computer-assisted audit tools and techniques (CAATTs) in increasing audit productivity and reducing costs, their adoption by audit firms is low in developing countries. The aim of this study is to investigate whether organizational and environmental factors can help explain CAATTs adoption in less developed countries, such as Malaysia. The research framework was developed based on the Technology-Organization-Environment framework (TOE). The results reveal that for environmental factors, the complexity of clients' accounting information systems (AIS) and perceived level of support of professional accounting bodies (PABs) affect CAATTs adoption. For organizational factors, firm size, top management commitment and employee IT competency were found to be significant factors. Moreover, firm size partially moderates the influence of clients' AIS complexity on CAATTs adoption. This paper contributes to existing adoption theory by extending our understanding of the impact of factors unique to CAATTs adoption.     

The adoption of IFRS in Australia: The case of AASB 138 (IAS 38) Intangible Assets

AASB 138 Intangible Assets, adopted by reporting entities in Australia for annual reporting periods beginning on or after 1 January 2005, required derecognition of internally generated intangible assets. Prior to its adoption, the standard was widely expected to have a substantial impact on the reports of affected listed entities. On the basis of information available in the 2004/05 annual reports, this paper projects the expected effects of AASB 138 on reported intangible assets and on key financial measures. It compares these projected measures to the realised measures, reported under both Australian GAAP and AIFRS in the 2005/06 reports. While reported intangible assets and the debt to equity ratio were expected to change significantly as a result of AASB 138, the reported AIFRS results show a significant change in only the debt to equity ratio. The paper considers reasons why the pre-adoption expected changes did not eventuate, and also how the actual changes were reported to stakeholders in the management discussion sections of the annual reports. The conclusion draws implications regarding the transparency of communication in annual reports.     

Budgeting and standard costing practices in New Zealand and the United Kingdom

The findings of a survey of budgeting and standard costing practices in New Zealand (NZ) and United Kingdom (UK) manufacturers are reported. The results suggest that some commentators' predictions of a demise in standard costing and variance analysis are overstated. It has been found that standard costing systems continue to be popular and that the majority of accountants surveyed do not envisage abandonment of standard costing and variance analysis in advanced manufacturing technology environments. Comparisons between budgeting and standard costing practices used in NZ and the UK reveal a high degree of consistency. In the case of the few differences that have been observed, it appears that there is a greater lag behind prescribed practice amongst NZ manufacturers. The main differences noted are: a greater proportion of performance reports used in NZ budget centers fail to distinguish between controllable and non-controllable costs; NZ manufacturers are more reliant on historic data when setting standard costs; when distinguishing between variable and fixed costs, there is a greater tendency in NZ to simply treat direct costs as variable and overhead costs as fixed.     

Managed care,technology adoption,and health care: the adoption of neonatal intensive care

Managed care may influence technology diffusion in health care. This article empirically examines the relationship between HMO market share and the diffusion of neonatal intensive care units. Higher HMO market share is associated with slower adoption of mid-level units, but not with adoption of the most advanced high-level units. Opposite the common supposition that slowing technology growth will harm patients, results suggest that health outcomes for seriously ill newborns are better in higher-level units and that reduced availability of mid-level units may increase their chance of receiving care in a high-level center, so that slower mid-level growth could have benefitted patients.