Management Accounting Change: ABC Adoption and Implementation

Abstract

The current research tries to contribute to the successful design and implementation of ABC in the context of Jordanian Manufacturing Companies. In order to satisfy the research objectives, both quantitative and qualitative data are gathered. For the quantitative data, a questionnaire survey was developed for the determination of the present scenario involving ABC adoption and implementation. For the qualitative one, semi-structured interviews were utilized to find out the factors impacting the adoption and implementation of ABC. Data analysis included within company and cross-company analysis. ABC's adoption and implementation rate were determined through the use of three criteria; namely, adopters, implementers and users or implementers. The primary findings revealed that ABC implementation in the context of Jordanian Manufacturing Companies is approximately 19.5% measured according to the third criteria which is implementers or users. Findings from the semi-structured interviews reveal that factors including fashion, forced decision, fad and efficiency are directly related to ABC implementation decision in the target companies. In addition, factors that both facilitate and motivate ABC implementation are: top management support, non-accounting ownership, higher information technology, education, globalization of consumer, increased competition, growing costs, allocation problems, inability of the traditional cost systems to provide relevant information in the new environment and financial crisis. The findings from the interviews also revealed that the barriers to ABC implementation are associated to behavioral and technical problems.

The historical evolution and popularity of activity-based thinking in management accounting

“…In the Jordanian context, Nassar et al (2011) found that about 25% of the respondents were using ABC, whereas about 10% were using ABM. Similarly, Fadzil and Rababah (2012) also found that about 20% of Jordanian manufacturing companies were using ABC. A survey among large Norwegian manufacturing companies (Berg et al, 2018) showed that only 20% used ABC to a large extent and 40% did not use ABC at all.…”

Reasons for not changing to activity-based costing: a survey of Irish firms

“…Fei and Isa (2010) noted that the majority of research on ABC/M implementation uses a quantitative research approach. Consistent with this view, this investigation uses a survey questionnaire to extract data on the adoption of ABC and ABM, a methodology often used in studies of a similar focus (Al-Omiri and Drury, 2007; Askarany and Yazdifar, 2012; Bhimani et al ., 2007; Bjornenak, 1997; Innes et al ., 2000; Fadzil and Rababah, 2012; Schoute, 2011).…”

“…They noted that Chinese companies were not as advanced in terms of office and accounting computerisation as those in the West. Fadzil and Rababah (2012) studied the contribution of effective design and application of ABC within the framework of Jordanian manufacturing companies. They found that 19.5 per cent of Jordanian manufacturing companies had a high level of satisfaction with ABC.…”

The influence of Company Characteristics Factors to Activity Based Costing System Implementation

“…Other studies (e.g. Arnaboldi & Lapsley, 2003;Byrne, Stower & Torry, 2009;Chung, Schoch & Teoh, 1997;Faudziah & Rababah, 2011, 2012Rasiah, 2011;Velmurugan & Nahar, 2010). They also evidenced that those companies who adopted ABC are still in the infancy phase of implementation as most companies who tried implementing it ultimately succeeded in employing its narrow application in trivial services and in unused systems.…”