The diffusion of an accounting innovation : activity-based costing in Australian firms

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NO FULL TEXT AVAILABLE. Access is restricted indefinitely. ----- The primary motivation for this research was the contrast between benefits of ABC found in a range of studies and the relatively low adoption rate. This raised the question: Why have so few firms adopted ABC? Only a limited number of studies have directly addressed this question by considering the factors associated with ABC adoption, and for the most part this research has focused on the more functional explanations for adoption. Overall, the results of this research have at best been equivocal, and at worst contradictory. The lack of consistent evidence provided by empirical studies on factors that lead to ABC adoption led to the question: Are there other factors that may not be of a technical nature or specific to the functional characteristics of ABC, that explain why ABC is adopted by firms? By incorporating factors explored in information systems research, a more complete explanation of ABC adoption was developed. The final list of factors examined were: top management support, presence of a champion, organisational structure (level of centralisation, formalisation and vertical hierarchy), organisation size, dominance of overhead, product diversity/complexity, perceived relative advantage of ABC over previous costing system, level of competition in the business environment, number of sources of external communication about ABC, use of consultants and competitive strategy followed by the company. Additionally, a 10 stage model of adoption was used to compensate for the too aggregate dependent variable models used in prior research. In order to test the proposed model, a cross-sectional survey of Australian manufacturing and non-manufacturing firms was undertaken. The factors that most consistently influenced movement through the adoption stages were: the influence of a champion supporting ABC, and the perceived relative advantage of ABC over previous costing systems. Some of the other factors had varying effects contingent upon stage of the model. This lends support to the argument raised that organisations do not adopt ABC for purely functional reasons. On the basis of these issues, future accounting research should incorporate theory and empirics from other disciplines. More attention should be paid to the design of the conceptual or theoretical models used, and how they are operationalised, so that richer data sets result and more insight can be gained. Finally, attempts should be made to replicate and extend previous exemplary research in order to further validate findings and consolidate the body of knowledge in the accounting discipline.
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