ABC: adopters, supporters, deniers and unawares

Abstract

PurposeDespite the great interest in activity based costing (ABC), companies seem to be reluctant to adopt it. Our research aims at examining the rate of adoption of ABC by Greek companies that belong to all three sectors of the Greek economy, i.e. manufacturing, retail and services, as well as investigating the reasons that influence a firm's decision to change its current cost accounting system.Design/methodology/approachAn empirical survey via questionnaires was conducted during 2003 on a sample of 88 Greek leading companies and four company categories were identified in respect to their perceptions towards ABC (ABC adopters, ABC supporters, ABC deniers and ABC unawares).FindingsOur findings indicate that ABC diffusion in Greece is quite satisfactory. Furthermore, we present evidence that firms that have implemented ABC (ABC adopters) have experienced multidimensional management facilitating benefits from the system. However, the adequacy of resources was found to be the variable that is positively and statistically correlated with the majority of problems encountered during ABC implementation process. On the other hand, the companies that include ABC in their future plans (ABC supporters) seem to be familiar with the corresponding expected benefits and potential problems of its adoption. We present evidence that the possibility of future ABC adoption is related to the degree of satisfaction from the currently used cost accounting system. Companies that do not intend to adopt ABC (ABC deniers) were found to be more satisfied with their existing cost accounting system in comparison to ABC supporters. We also report the characteristics of companies that still have complete ignorance of the ABC technique (ABC unawares).Originality/valueThe paper not only proceeds in a thorough analysis of the benefits perceived in relation to ABC as they have been presented in similar research, but also moves a step further and groups these benefits into distinct categories as well as ranks them in order of perceived importance. Furthermore, it analyzes the basic characteristics of the firms that have complete ignorance of ABC (ABC unawares), a group that is rarely met in ABC research papers.

Quality in management accounting: approach by activities in large companies

“…Using the Cramer's V, the link may be considered strong (V Cramer=0.405;). These results are consistent with the findings of Cohen et al (2005), and Machado (2012Machado ( , 2013, which state that the older officers do not know the more advanced methods of management accounting.…”

“…Regarding the second group of variables responsible for disseminating the management accounting methods, several authors (Clarke et al, 1999;Cohen et al, 2005;Machado 2012Machado , 2013 have analyzed some financial officers' characteristics such as the educational background, gender and age. Clarke et al, (1999) concluded that the officers' poor educational background is one of the main inhibitors to change in the methods used by the Irish companies.…”

“…Clarke et al, (1999) concluded that the officers' poor educational background is one of the main inhibitors to change in the methods used by the Irish companies. Cohen et al, (2005) found a high percentage of financial officers who do not know the most modern methods of management accounting, and concluded that this phenomenon is due to their high age range and lack of update in their educational background. Machado (2012Machado ( , 2013 concluded that there is a link between knowledge of the more advanced methods of management accounting and two characteristics of the financial officers: age and educational background.…”

“…continuing this approach to merit the attention of researchers. Thirdly, several authors (Clarke et al, 1999;Cohen et al, 2005;Haldma and Lääts, 2002;Machado 2012Machado , 2013Nunes and Machado, 2014) consider that it is important to know the contingency variables responsible for the dissemination of knowledge on management accounting methods, associated with the company and the financial officers' characteristics. Jha and Nanda (2013) concluded that they are large organizations that are more concerned with the quality of information.…”

Assessing the impact of budgetary participation on budgetary outcomes: the role of information technology for enhanced communication and activity-based costing

“…Advocates tend to describe ABC as an improved approach for the allocation of overhead costs, the management of operating costs, or as a managerial technology for the costing and monitoring of activities which involves tracing resource consumption and costing final outputs (Baird et al 2004;Cohen et al 2005;Gosselin 2007). Contemporaneously, they suggest that the use of ABC changes-and potentially illuminates-the processes of cost estimation, the level of detail of cost input to the budgeting process, and the obtainable variance feedback (e.g., Drake and Haka 2008).…”