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The essential investments in new product development (NPD) made by industrial companies entail effective management of NPD activities. In this context, performance measurement is one of the means that can be employed in the pursuit of effectiveness.

To empirically test for an impact on profit performance when activity-based costing (ABC) is used in companies with customer service and low-price strategies. We also investigate whether the profit impact of ABC usage is affected by higher-quality information systems.

Survey.

We find a positive impact on profit performance when ABC is used by companies with customer service as a strategic priority but not when ABC is used by companies with lower emphasis on customer service. For companies emphasizing low-price strategies, we find a positive impact on profit performance, especially when ABC is used together with high-quality information systems.

This study develops a method of measuring strategic priorities of a firm. It divides firms into strategy groups based on their degree of emphasis on three strategic priorities: low price, flexibility, and customer service.

Identifies certain contexts when ABC is especially beneficial.

If the use of ABC information leads to better strategic and operational decisions, firm performance should improve. However, prior research on the impact of ABC on firm performance has found little to no connection and usually only when it is used with other practices. This is the first study to find an impact on profit performance for firms with customer service and low-price strategies and high-quality information systems.

The purpose of this paper is to describe the interactions between accounting and marketing activities in a Taiwanese telecommunication firm by demonstrating the dramatic impact that improved costing methods had on the firm’s customer portfolio management activities and consequently on the firm’s bottom line.

The paper presents a case study of a firm in the highly competitive telecommunications industry in Taiwan. The case study was constructed by interviewing key individuals within the organization over an extended period and supplementing those reports with an analysis of internal company documents.

The firm dramatically increased profitability through the integration of activity-based costing into their customer portfolio framework requiring marketing and accounting functions to work closely together. In this rapidly evolving market, cost allocation and customer portfolio management are indispensable. Identifying accurate costs and keeping key customers is a critical issue for the case company. While theoretically the approach is simple, in practice considerable hurdles needed to be overcome.

While considerable literature suggests that customer profitability drives the management of an organization’s customer portfolio, critical to the success of such an endeavor is the accurate calculation and allocation of costs to individual customers. As an interdisciplinary study, this paper provides insights for both accounting and marketing highlighting their reliance on each other in a sound firm. The results of this paper will serve as a supplement to past customer portfolio management research as well as a reference for any firm seeking to enhance their approach to portfolio management.

This study examines the impact of environmental activity management (EAM) on triple bottom line (TBL) performance and the role that sustainability strategies play in mediating these relationships. Data were collected using a survey of Australian managers and analysed using structural equation modelling (SEM). The findings indicate that each of the three levels of EAM – Environmental Activity Analysis, Environmental Activity Cost Analysis, and Environmental Activity Based Costing – influence-specific aspects of performance, either directly and/or indirectly through environmental and social sustainability strategies. The findings suggest that managers could enhance their use of EAM practices through the use of sustainability strategies in order to enhance performance. This study provides empirical insight into the impact that EAM practices and environmental and social sustainability strategies have on all three aspects of TBL performance.

Purpose: The purpose of this study is to assess the main and interaction effects of activity-based costing (ABC), internal information systems integration (IISI), and external information systems integration (EISI) on manufacturing plant operational performance, controlling for plant characteristics.

Methodology/approach: The study uses survey data from a cross-section of 369 U.S. manufacturing plants. Data were analyzed using hierarchical regression model.

Findings and implications: The results indicate partial support for the main and two-way interaction effects on plant operational performance. The three-way interaction effects are significant and positive, suggesting that deploying all three resources (i.e., ABC, IISI, and EISI) leads to the higher plant operational performance.

Originality/value: The paper significantly extends prior research and contributes to the understanding of the main and interaction effects of ABC, IISI, and EISI on manufacturing plant operational performance. The paper would also be of interest to practitioners interested in keeping up with academic literature.

This study extends the theoretical analyses of Duration-Based Costing (DBC), an alternative cost measurement system to Activity-Based Costing (ABC). DBC is simpler than ABC and uses the production cycle time to assign costs. This simplicity should allow DBC to be a better costing method for multiproduct firms that exhibit nonconstant returns to scale.

Data simulations for 1,000 cases and Data Envelopment Analysis (DEA) are used to analyze the production functions inside DBC and ABC models to determine their relative technical efficiency.

The results show that, for a given set of simulations, DBC shows more nonconstant returns to scale than does ABC. This corroborates prior research and suggests that a more complex costing system, such as ABC, may not always match the production technology of a multiproduct firm. Thus, DBC may have a higher level of accuracy than does ABC for firms that exhibit nonconstant returns to scale.

Since DBC has only recently been theoretically developed, this study is the first to analyze the relative technical efficiency of DBC compared to ABC.

This study should bring some further awareness of the implications of alternative costing methods. The limitation of DBC is that it does not capture other factors not driven by the production cycle time that could be necessary for management decision making. However, DBC is better for multiproduct firms than a more complicated costing system and does help decision makers determine whether the production process is operating efficiently. It is imperative that firms choose which costing methods fit the firm’s needs and economic structure.

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

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

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.

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.

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

Theeuwes and Adriaansen (1994), among others, have asserted that activity-based costing (ABC) is inappropriate for operational decision-making. In this article, ABC is modified to reflect separate flexible and committed cost driver rates for an activity. This enables the model to reflect the difference in the behavior of an activity’s flexible and committed costs needed for operational planning decisions. The modified ABC facilitates determining the resources required to produce the product mix developed from the firm’s strategic plan and the excess capacity that will result. The modifications made to ABC aid in determining an optimal product mix when the firm has excess capacity, while the traditional ABC may not. Equally important, it facilitates measuring the financial implications of the resource allocation decisions that comprise the firm’s operational plan. As the operational plan is implemented, operational control is used to ensure that it is performed in an efficient and effective manner. The modified ABC enables the firm’s managers to compute the different types of deviations that arise from using flexible and committed resources at the unit, batch, and product levels of the firm’s operations. This aids in understanding problematic aspects of the firm’s operations and identifying where management resources are needed to improve operational efficiency.