The Effects of Organizational Culture and Structure on the Success of Activity-Based Costing Implementation

Abstract

Purpose

We examine the interactive effects of organizational culture and structure on the success of implementing activity-based costing (ABC) in Chinese manufacturing firms.

Methodology/approach

We applied contingency theory of management accounting and used a questionnaire survey of 106 respondents.

Findings

The results indicate that a formalized organizational structure significantly affects the success of implementing ABC. The organizational culture factors, outcome orientation and attention to detail, were significantly associated with the success of implementing ABC. Further, interactions between centralization and outcome orientation and formalization and innovation were associated with success in implementing ABC.

Research implications/limitations

While this study is constrained to Chinese manufacturing firms, its findings have ramifications for organizations in both developed and less-developed economies as the study demonstrated that organizational structure and culture interact with each other to affect the implementation success of a management accounting system.

Originality/value

This paper presents the first attempt to demonstrate the interactive effect of organizational culture and structure on the success of implementing ABC in organizations.

Citation

Zhang, Y.F., Hoque, Z. and Isa, C.R. (2015), "The Effects of Organizational Culture and Structure on the Success of Activity-Based Costing Implementation", Advances in Management Accounting (Advances in Management Accounting, Vol. 25), Emerald Group Publishing Limited, Leeds, pp. 229-257. https://doi.org/10.1108/S1474-787120150000025008