Motivation for activity‐based costing implementation

Abstract

PurposeThis paper aims to explore how different motives for implementing activity based‐costing may affect the implementation process. It focuses on the factors that affect different stages of the implementation process.Design/methodology/approachThe paper uses case studies of two different business units of the same company which approached ABC implementation with different motivations. It is informed by administrative theory and institutionalist framework which draws on concepts from both old institutional economics and new institutional sociologists theory.FindingsThe paper shows how administrative and institutional factors affect different stages of the ABC implementation process and that the importance of success factors for implementation may depend on the level of implementation stage, and motivation for change. For instance, the quality of information system is very important at the adaptation and infusion stage.Research limitations/implicationsThe paper uses case studies that focus on two types of motivation for change. Further research work is needed that would examine other types of motivation for adopting accounting innovation to support the findings.Practical implicationsThe empirical evidence results of this study can provide guidelines for companies either planning or implementing ABC.Originality/valueThe theoretical framework developed suggests that administrative theory reveals the practice (action) involved in the implementation, whereas institutional theory reveals the broader (macro) factors which shape the internal (micro) processes of implementation.