Factors influencing the adoption of activity-based costing | |
| Author | Kraiwit Leekpai |
| Call Number | AIT Diss. no.DBA-SOM-23-05 |
| Subject(s) | Activity-based costing Cost accounting Managerial accounting |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Business Administration |
| Publisher | Asian Institute of Technology |
| Abstract | Purpose – Activity-based costing (ABC) serves organization’s needs by making aggregated costs and component costs more explainable. However, the adoption rate of ABC has been reported low compared to expectations. The reasons of the slow adoption rate could be that the adoption of ABC was made on partial consideration and understanding of factors. This study aimed at developing a comprehensive list of factors of ABC adoption process, finding the relative importance of factors, and checking if the relative importance of factors is different among types of organizations.Design/methodology/approach – The research was designed to be mixed-method research. The qualitative method was used in aggregating existing factors from previous literatures, checking if any existing factors were no longer required or if any other factors were still missing by performing in-depth interviews. It was done until no new factor found any more. Eventually up to 7 organizations were interviewed and the comprehensive list of factors for ABC adoption was developed.The quantitative method started by using the comprehensive list of factors from the qualitative part in developing a questionnaire. It was distributed among the accountants of organizations. Totally 558 respondents answered the questionnaire. Among them, 270 said their organizations have made decisions to adopt the ABC, which 209 have implemented the ABC after the decisions, and 174 of those with ABC implemented have got benefits from ABC. Those of them in the organizations with ABC implemented and their adoption experience scored the ABC adoption factors’ relative importance. Statistical analysis, using Mean, was carried out to find the average scores of the relative importance for all factors. It also checked if there is difference in terms of factors’ relative importance among types of organizations (manufacturing, trading, and servicing) by using another statistical analysis, Kruskal-Wallis Test.Findings – The study developed the comprehensive list of factors for ABC adoption, including all 3 stages of ABC adoption in organization. The comprehensive list consists of 30 factors (5 for adoption decision, 11 for implementation and 14 benefits), including 7 new factors found (1 for adoption decision, 3 for implementation and 3 benefits) in addition to the factors from previous literatures.The study also found that most of the factors influencing ABC adoption have different importance. Generally, for all organizations, ‘worthiness of ABC benefits compared to resources consumed’, ‘readiness to implement ABC’ (the new factor found for this stage), and ‘diversity of products or customers’ are the top 3 factors influencing ABC adoption decision. For implementation, ‘management support’, ‘cooperative behavior in organization’, and ‘management repetitive expression of demand on ABC’ (one of the new factors found), are the top 3 success factors. Among ABC benefits, ‘supporting planning and budget control’, ‘supporting proper resource allocation’, and ‘improving the quality of financial accounting reports’ (one of the new factors found), are the top 3 benefits.The research found no difference of factor’ relative importance degree in factors influencing ABC adoption decision among organization types. However, it found the differences of relative importance degrees in 4 success factors of ABC implementation, ‘management support’, ‘cooperative behavior in organization’, ‘management repetitive expression of demand on ABC’, and ‘linking ABC information to performance measurement and compensation’. It also found the differences of importance degrees in one of ABC benefits, ‘supporting cost reduction’ among types of organizations.Research limitations – The research was done only with organizations in one country, Thailand. Other countries might be different.Practical implications – The comprehensive list of factors for ABC adoption supports management to make informed decision on the adoption of ABC. The factors influencing ABC adoption decision tell when to adopt the ABC. The success factors of ABC implementation tell what are required to implement ABC successfully. ABC benefits tell where the organizations may expect afterwards. The management can also pay special attention to factors with high relative importance in all organizations or in its type of organization in order to increase the chance to success.Originality/value – It provides a comprehensive list of factors influencing ABC adoption in organization, which includes the factors for all three stages of the adoption – adoption decision, implementation, and benefit realization -- and their relative importance. Not only for overall organizations, the study gives the relative importance of factors for different types of organizations – manufacturing, trading, and servicing. |
| Year | 2023 |
| Type | Dissertation |
| School | School of Management |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Doctor of Philosophy in Business Administration (Publication code = DBA-SM, SM) |
| Chairperson(s) | Islam, Nazrul |
| Examination Committee(s) | Huynh, Trung Luong;Badir, Yuosre F. M. |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 2023 |