The implementation of Activity-Based Costing in China: An innovation action research approach |
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| Institution: | 1. Accounting and Finance, Business School, Newcastle University, UK;2. Institute of Accounting and Finance, Shanghai University of Finance and Economics, China;1. University of Technology, Sydney, Australia;2. Aalto University, Finland;1. UTS Business School, University of Technology Sydney, PO Box 123, Broadway, NSW 2007, Australia;2. School of Business, Aalto University, PO Box 21220, FI-00076, Helsinki, Finland;1. Department of Accounting, Monash Business School, Monash University, Australia;2. Maastricht University School of Business and Economics, Department of Accounting & Information Management, The Netherlands;1. University of St. Gallen, Dufourstrasse 50, 9000, St. Gallen, Switzerland;2. Clemson University, Clemson, SC, 29634, USA |
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| Abstract: | Research on Activity-Based Costing and its applications has mainly been focused on organisations in developed countries. Little has been learnt as to whether ABC techniques can be implemented successfully in organisations in developing countries. With the adoption of an innovation action research approach, we have successfully developed an ABC system jointly with a large Chinese manufacturing company, Xu Ji Electric Co. Ltd. (Xu Ji), for the period 2001–2005. The research provides a unique opportunity to examine some key success factors pertinent to ABC implementation within a Chinese organisational and cultural setting. The findings indicate that top management support, which has been identified as an important success factor in ABC literature, is evidently the predominant success factor in this organisation. In addition, Xu Ji's corporate culture of “top–down” instigation of the adoption of a series of management innovations (e.g., Economic-Value Added®, Balanced Scorecards and Six Sigma) and its hierarchical command and communication structure, coupled with active involvement of a high proportion of dedicated professionals, can be seen as another success factor in achieving a relatively high level of diffusion of this accounting concept within the organisation. This study also reveals a different insight of internal resistance to change, which is contrary to the evidence presented in the existing ABC literature. |
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