Target Costing, Business Model Innovation, and Firm Performance: An Empirical Analysis of Chinese Firms

Abstract

Market orientation theory was used to relate the implementation of target costing systems and business model innovation to firm performance using a sample of 189 electronics and information industry manufacturers in China. As expected, the implementation of target costing was positively associated with both business model innovations and firm performance. Further, the diversity of product development teams was also crucial. It positively moderated the association between target costing and business model innovation. Finally, the business model innovation was positively related to firm performance.

The impact of digitalization on business models

“…Extant quantitative studies are within the strategic and innovation management domain. From these studies, conceptual papers on entrepreneurship (Doganova and Eyquem-Renault, 2009), strategic management (Zott et al, 2011) or IS literature (Schneider and Spieth, 2013), as well as empirical papers on BMI and performance (Aspara et al, 2010;Aziz and Mahmood, 2011;Clausen and Rasmussen, 2013;Huang et al, 2012) have often unclearly defined BMs and BMI (Foss and Saebi, 2017). Although we agree with Wirtz et al (2016) that BMI requires a crucial transformation of the existing value proposition and/or value constellation, the problem is that core characteristics, components or concepts of the value constellation are often ambiguously defined, depending on the specific ontology used (Hartmann et al, 2016;Souto, 2015).…”

Investigation of the relationship between contemporary cost management methods and improvement in financial performance

“…Of the 175 companies surveyed, none from that category applied TC. Huang, Lai, Kao, and Chen (2012) in their research confirm that the implementation of TC in electronics and information industry firms in China was positively associated with their performance. This leads to the first hypothesis of this article: On the basis of given mentioned literature, the following hypothesis can be derived:…”

Target Costing Implementation and Organizational Capabilities: An Empirical Evidence of Selected Asian Countries

“…While [2] found around 80 per cent of Japanese assembly companies have applied TC, [13] reveal that 70.3 per cent of Japanese manufacturing companies listed in Tokyo Stock Exchange adopt this technique. Similar to Japanese higher adoption of TC, [14] revealed a higher rank of TC adoption among Chinese companies; ranked 4 out of 39 sampled companies. In contrast, the adoption of TC in Thailand and Malaysian has received a lower rank than Japan and China.…”

“…In contrast, the adoption of TC in Thailand and Malaysian has received a lower rank than Japan and China. In Thailand, [14] revealed a medium rank of TC adoption among Thai companies, 16 out of 31 sampled companies, whereas in Malaysia TC has been ranked 20 out of 27 companies as addressed in the study conducted by [15] and the literature reviewed by [12]. Table I summarizes the main studies implicating TC implementation with its variables used in the three selected Asian countries; Japan, Thailand and Malaysia.…”