Employee Training, Managerial Commitment And The Implementation Of Activity Based Costing; Impact On Performance Of SMEs

Abstract

This article examines the implementation of activity-based costing (ABC) in the SMEs sector in a developing country. The consequences of ABC on the evolution of management accounting and its impact on the accounting processes, particular as it relates to organizational cost performance has been a subject of discourse in the past two decades. This study provides some insight into the conspicuous paradox that in spite of the theoretical benefits of ABC, very few SMEs in South Africa adopt it and that a material number of those that employ ABC do not actually implement it. It is a preliminary study which begins by describing the differences between the traditional and the ABC cost systems; particularly examining the impact of employee training and managerial commitment to ABC implementation. An overview of some literature on ABC and the value of ABC implementation in SMEs sector is provided, reporting some experiences of South African SMEs in implementing ABC. A framework for the implementation of ABC in SMEs and impact on their performance is presented. Using survey data collected from SMEs (n = 149), the results and discussions indicate the prominence of both employee training and managerial commitment as precursors to effective implementation of ABC and that its implementation impacts on SME performance. Implementation of ABC precedes the creation of a costing system that provides management with reliable cost information. The paper concludes by providing, managerial implications, limitations and proposed future research.

Factors Influencing the Implementation of Activity-Based Costing: A Study on Malaysian SMEs

“…As per previous research, this study has also found that user attitude has a positive significant relationship with the implementation of ABC among SMEs (Khozein & Dankoob, 2011;Dubihlele & Rundoro, 2014). Human capital development is essential for SMEs to provide them with the necessary knowledge, skills to employees to change user attitude and allow for a better usage of the ABC system in SMEs.…”

“…According to Khozein and Dankoob (2011), user denial is one of the reasons affecting the implementation of ABC in their organisations. In the study by Dubihlele and Rundoro (2014) on 149 SMEs in South Africa, it was found that user attitude; managerial commitment was a precursor to the implementation of ABC of SMEs in South Africa. As a result, the following hypothesis was developed:…”

Total rewards and its effects on organisational commitment in higher education institutions

“…In addition, Korir and Kepkebut (2016) state that committed employees have a sense of identification and belonging with an organisation. Dubihlela and Rundora (2014) affirm that an increase in global competition has forced businesses to ensure increased employee commitment in order to enable them to have a high level of excellence and competitiveness. Wasiu and Adelajo (2014) suggest that the importance of total rewards cannot be over emphasised.…”

Activity-Based Costing: Helping Small and Medium-Sized Firms Achieve a Competitive Edge in the Global Marketplace

“…At the same time, growing awareness of the importance of SMEs, which as reported earlier, represent more than ninety per cent of all employment around the world, has provided the impetus for further investigation of the potential for ABC to help SMEs become competitive and thrive in today's competitive market environment [64], [70][71][72][73][74][75][76][77][78][79][80][81][82] and for the development and use of software to implement ABC, such as 3Com Technology [83] or SAS (OROS System) [84]. The literature recognizes a number of potential benefits to SMEs from ABC.…”

“…More accurate product costing and a meaningful financial and non-financial measure that aids in cost management and performance assessment [64,75,[85][86][87].…”