Name: Kevin M. Baird
Course: PhD; ACCG
Department: Department of Accounting and Finance
Staff Supervisor: Graeme Harrison
Email Address: kbaird@mq.edu.au
Thesis Title
An empirical analysis of the contextual and organisational factors that impact on the adoption and success of activity based management practices (Awarded 2005)
Abstract
The purpose of this study is to assess the extent to which activity based management (ABM) practices are adopted by organisations, and the success attained by organisations adopting such practices. The research consists of two parts, the first of which examines the impact of organisational size, corporate culture, strategy, the decision usefulness of information, and structure on the decision by organisations to adopt ABM practices. The impact of these factors on the particular level of ABM adopted is also examined. Three levels of ABM practices are considered: - Activity Analysis (AA); Activity Cost Analysis (ACA); and Activity Based Costing (ABC). In addition, ABC is examined as a model or as a system.
The second part of the study evaluates the effect of corporate culture, top management support, resources adequacy, link to quality, implementation training, and the link to performance evaluation and compensation on the success of the ABM practices adopted. A broad based measure of success, largely based on the Foster & Swenson (1997) measure, is developed to evaluate the impact of these factors on ABM success.
The methodology involved the distribution of a survey to the financial controllers of both manufacturing and service industry organisations within Australia. Both discriminant analysis and logistic regression analysis were used to analyse the impact of the hypothesised factors on ABM adoption, while regression analysis was used to evaluate the relationship between the hypothesised factors and ABM success.
High adoption rates were recorded in relation to each level of ABM suggesting the continuing relevance of ABM as a management accounting practice both in the manufacturing and service industries. Support was provided for the relation between the following independent variables and the adoption of ABM practices: - organisational size, decision usefulness, and the corporate culture dimensions of innovation, outcome orientation, attention to detail, and tight control. The relationship between the organisational / contextual variables and the specific level of ABM adopted was less significant with product diversity, tight control, and organisational structure the only three variables found to exhibit such a relationship.
When considered in isolation, seven factors (top management support, resources adequacy, training, link to quality, link to performance evaluation and compensation, and the corporate culture dimensions of team orientation and outcome orientation) were found to be related to the success of each of the three levels of ABM. However, subsequent multiple regression analysis revealed that different factors were related to success at different levels of ABM. Specifically, three factors (outcome orientation, resources adequacy, and link to quality) were related to AA success, five factors (outcome orientation, link to quality, link to performance evaluation and compensation, training, and top management support) were related to ACA success, and three factors (outcome orientation, top management support and link to performance evaluation and compensation) were related to ABC success.
The results of the study provide important implications for organisations seeking to enhance the success of their ABM practices. While the results indicate that ABM practices have generally been successfully adopted in Australian organisations, the finding of significant relationships between different organisational / contextual factors and success at different levels of ABM highlights that organisations may need to focus on specific organisational/ contextual factors based on the particular level of ABM they are seeking to adopt.
