ABC: Evolution, Problems of Implementation and Organizational Variables


This paper will reflect on the evolution of the functionality of ABC model, focusing attention on the variables that determine success or failure in its implementation. To this end the paper, through the empirical and theoretical literature review, will: trace the evolution of the ABC model, while highlighting the implications of the implementation process, analyze the concept of success in its implementation and discuss the determinants that influence the outcome, focusing on the organizational variables that firm have to control in order to succeed with ABC.

Share and Cite:

A. Moisello, "ABC: Evolution, Problems of Implementation and Organizational Variables," American Journal of Industrial and Business Management, Vol. 2 No. 2, 2012, pp. 55-63. doi: 10.4236/ajibm.2012.22008.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] J. Innes and F. Mitchell, “The Process of Change in Manage-ment Accounting: Some Field Studies Evidence,” Management Accounting Research, Vol. 1, 1990, pp. 3-19. doi:10.1016/S1044-5005(90)70042-X
[2] H. T. Johnson, “Beyond Product Costing: A Challenge to Cost Management Conventional Wisdom,” Journal of Cost Management, Vol. 4, No. 3, 1990, pp. 15-21.
[3] D. Swenson, “The Benefits of Activity Based Cost Management to the Manufacturing Indus-try,” Journal of Management Accounting Research, Vol. 7, No. 4, 1995, pp. 167-180.
[4] G. Foster and D. W. Swenson, “Measuring the Success of Activity-Based Cost Management and Its Determinants,” Journal of Management Accounting Research, Vol. 9, 1997, pp. 109-141.
[5] A. S. McGowan and T. P. Klammer, “Satisfaction with Activity-Based Cost Management Implementation,” Journal of Management Ac-counting Research, Vol. 9, 1997, pp. 217-237.
[6] A. Bhi-mani, M. Gosselin and M. Ncube, “Strategy and Activity-Based Costing: A Cross National Study of Process and Outcome Con-tingencies,” International Journal of Accounting, Auditing and Performance Evaluation, Vol. 2, No. 3, 2005, pp. 187-205. doi:10.1504/IJAAPE.2005.007672
[7] L. Cinquini, P. Collini, A. Marelli and A. Tenucci, “An Exploration on Factors Affect-ing the Diffusion of Advanced Costing Technique: A Compara-tive Analysis of Two Surveys (1996-2005),” Proceedings of the 31st Annual Congress of the European Accounting Association, Rotterdam, 23-25 April 2008.
[8] T. Malmi, “Towards Ex-plaining Activity-Based Costing: Accounting and Control in Decentralized Organization,” Management Accounting Research, Vol. 4, No. 4, 1997, pp. 459-480. doi:10.1006/mare.1997.0057
[9] J. Innes, F. Mitchell and D. Sinclair, “Activity-Based Costing in the UK’s Largest Compa-nies: A Comparison of 1994 and 1999 Survey Results,” Man-agement Accounting Research, Vol. 11, No. 3, 2000, pp. 349-362. doi:10.1006/mare.2000.0135
[10] W. D. J. Cotton, S. M. Jackman and R. A. Brown, “ Note on a New Zealand Replication of the Innes et al. UK Activity-Based Costing Survey,” Management Accounting Research, Vol. 14, No. 1, 2003, pp. 67-72. doi:10.1016/S1044-5005(02)00057-4
[11] D. Cagwin and M. Bouwman, “The Association between Activity-Based Costing and Improvement in Financial Performance,” Management Accounting Research, Vol. 13, No. 1, 2002, pp. 1-39. doi:10.1006/mare.2001.0175
[12] B. Pierce, “Activity-Based Costing: The Irish Experience: True Innovation or Passing Fad?” Accountancy Ireland, Vol. 36, No. 5, 2004, pp. 28-31.
[13] R. A. Lawson, “The Use of Activity-Based Costing in the Healthcare Industry: 1994 vs 2004,” Research in Healthcare Financial Management, Vol. 10, No. 1, 2005, pp. 77- 94.
[14] M. Gosselin, “The Effect of Strategy and Organiza-tional Structure on the Adoption and Implementation of Activ-ity-Based Costing,” Accounting Organization and Society, Vol. 22, No. 2, 1997, pp. 105-122. doi:10.1016/S0361-3682(96)00031-1
[15] T. Kennedy and J. Affleck-Graves, “The Impact of Activity-Based Costing on Firm Performance,” Journal of Management Accounting Research, Vol. 13, No. 1, 2001, pp. 19-45. doi:10.2308/jmar.2001.13.1.19
[16] G. Staubus, “Activity Costing and Input-Output Accounting,” R. D. Irwin, Inc., Ho-mewood, 1971.
[17] G. Shillinglaw, “Managerial Cost Ac-counting,” R. D. Irwin, Inc., Homewood, 1982.
[18] H. T. Johnson and R. S. Kaplan, “Relevance Lost Rise and Fall of Management Accounting,” Harvard Business School Press, Boston, 1987.
[19] R. Cooper and R. S. Kaplan, “How Cost Accounting Distorts Product Costs,” Management Accounting, Vol. 69, No. 10, 1988, pp. 20-27.
[20] R. Cooper, “The Rise of Activity-Based Costing—Part Three: How Many Cost Drivers Do You Need and How Do You Select Them?” Journal of Cost Management, Vol. 2, No. 4, 1989, pp. 34-46.
[21] C. D. Me-cimore and A. T. Bell, “Are We Ready for Fourth Generation ABC?” Management Accounting, Vol. 76, No. 1, 1995, pp. 22-26.
[22] R. B. Troxel and M. G. Weber, “The Evolution of Activity Based Costing,” Journal of Cost Management for the Manufacturing Industry, Vol. 7, No. 2, 1990, pp. 14-22.
[23] E. Noreen, “Conditions under Which Activity-Based Cost Systems Provide Relevant Costs,” Journal of Management Accounting Research, Vol. 3, No. 4, 1991, pp. 159- 168.
[24] T. C. Jones and D. Dugdale, “The ABC Bandwagon and the Juggernaut of Modernity,” Accounting, Organization and Society, Vol. 27, No. 1&2, 2002, pp. 121-163.
[25] R. S. Kaplan and S. R. Anderson, “Time-Driven Activity Based Costing,” Harvard Business Review, Vol. 82, No. 11, 2004, pp. 131-138.
[26] P. Everaert and W. Bruggeman, “Time-Driven Activity- Based Costing: Exploring the Underlying Model,” Cost Management, Vol. 21, No. 2, 2007, pp. 16-20.
[27] M. Namazi, “Perfor-mance-Focused ABC: A Third Generation of Activity-Based Costing System,” Cost Management, Vol. 23, No. 5, 2009, pp. 34-46.
[28] P. B. Turney, “Activity-Based Costing: An Emerging Foundation for Performance Management,” Cost Management, No. 4, 2010, pp. 33-42.
[29] L. Cinquini and F. Mitchell, “Success in Management Accounting: Lessons from the Activity-Based Costing/Management Experience,” Journal of Accounting and Organizational Change, Vol. 1, No. 1, 2005, pp. 63-78. doi:10.1108/18325910510635290
[30] K. Baird, G. Harrison and R. Reeve, “Success of Activity Management Practices: The Influence of Organizational and Cultural Factors,” Accounting & Finance, Vol. 47, No. 1, 2007, pp. 47-67. doi:10.1111/j.1467-629X.2006.00195.x
[31] M. D. Shields, “An Empirical Analysis of Firms’ Implementation Experiences with Activity-Based Costing,” Journal of Management and Accounting Research, Vol. 7, No. 4, 1995, pp. 148-166.
[32] S. W. Anderson, “A Framework for Assessing Cost Management System Changes: The Case of Activity-Based Costing Imple-mentation at General Motors, 1986-1993,” Journal of Man-agement Accounting Research, Vol. 7, No. 4, 1995, pp. 1-51.
[33] K. R. Krumwiede, “The Implementation Stages of Activity-Based Costing and the Impact of Contextual and Or-ganizational Factors,” Journal of Management Accounting Research, Vol. 10, 1998, pp. 239-277.
[34] R. Cooper, “Im-plementing an Activity-Based Cost System,” Journal of Cost Management, Vol. 4, No. 1, 1990, pp. 33-42.
[35] R. G. Eiler and J. P. Campi, “Implementing Activity-Based Costing at a Process Company,” Journal of Cost Management, Vol. 4, No. 1, 1990, pp. 43-50.
[36] I. K. Kleinsorge and R. D. Tanner, “Ac-tivity-Based Costing: Eight Questions to Answer before You Implement,” Journal of Cost Management, Vol. 5, No. 3, 1991, pp. 84- 88.
[37] L. F. Jones, “Product Costing at Caterpillar,” Management Accounting, Vol. 71, No. 8, 1991, pp. 34-42.
[38] H. K. Drumeller, “Making Activity-Based Costing Practical,” Journal of Cost Management, Vol. 7, No. 2, 1993, pp. 21-27.
[39] G. J. Beaujon and V. R. Singhal, “Understanding the Activity Cost in an Activity Based Cost System,” Journal of Cost Management, Vol. 4, No. 1, 1990, pp. 51-72.
[40] M. Al-Omiri and C. Drury, “A Survey of Factors Influencing the Choice of Product Costing Systems in UK Organizations,” Management Accounting Research, Vol. 18, No. 4, 2007, pp. 399-424. doi:10.1016/j.mar.2007.02.002
[41] C. Argyris and R. S. Kaplan, “Implementing New Know- ledge: The Case of Activ-ity-Based Costing,” Accounting Horizons, Vol. 8, No. 3, 1994, pp. 83-105.
[42] S. W. Anderson, J. W. Hesford and S. M. Young, “Factors Influencing the Performance of Activity-Based Costing Teams: A Field Study of ABC Model Development Time in the Automobile Industry,” Accounting, Organization and Society, Vol. 27, No. 3, 2002, pp. 195-211. doi:10.1016/S0361-3682(01)00057-5
[43] S. W. Anderson and S. M. Young, “The Impact of Contextual and Process Factors on the Evaluation of Activity-Based Costing Systems,” Accounting, Organizations and Society, Vol. 24, No. 7, 1999, pp. 525-559. doi:10.1016/S0361-3682(99)00018-5
[44] M. S. Velmurugan, “The Success and Failure of Activity-Based Costing Systems,” The Journal of Performance Management, 2010.
[45] R. E. Miles and C. C. Snow, “Fit, Failure and the Hall of Fame,” Free Press, New York, 1994.
[46] L. D. Parker, “The Dynamics of ‘New’ Management Control Systems: International Perspec-tives,” Accounting Research Journal, Vol. 10, No. 2, 1997, pp. 116-124.
[47] S. P. Landry, L. M. Wood and T. M. Lindquist, “Can ABC Bring Mixed Results?” Management Accounting, Vol. 78, No. 2, 1997, pp. 28-33.
[48] M. Gering, “Activi-ty-Based Costing Lessons Learned Implementing ABC,” Man-agement Accounting, Vol. 77, No. 5, 1999, pp. 26-27.
[49] R. Drake, S. F. Haka and S. P. Ravencroft, “Cost System and In-centive Structure Effects on Innovation, Efficiency and Profit-ability in Teams,” Accounting Review, Vol. 74, No. 3, 1999, pp. 93-112. doi:10.2308/accr.1999.74.3.323
[50] G. Norris, “User Perceptions of an Application of Activity-Based Costing,” Ad-vances in Management Accounting, Vol. 3, 1994, pp. 139-177.
[51] J. A. Ness and T. G. Cucuzza, “Tapping the Full Potential of ABC,” Harvard Business Review, Vol. 73, No. 4, 1995, pp. 130-138.
[52] M. Nair, “Helping Ensure Successful Implementations of Activity-Based Management,” Journal of Corporate Accounting & Finance, Vol. 13, No. 2, 2002, pp. 73-86. doi:10.1002/jcaf.1226
[53] A. M. Moisello, “Managerial an Accounting Aspects of Transfer Prices: A Case in the Shipping Sector,” The Inter- national Journal of Knowledge, Culture & Change, Vol. 10, No. 12, 2011, pp. 143-153.
[54] R. H. Chenhall, “The Role of Cognitive and Affective Conflict in Early Implementation of Activity-Based Management,” Behavioral Research in Accounting, Vol. 16, No. 1, 2004, pp. 19-44. doi:10.2308/bria.2004.16.1.19
[55] M. S. Velmurugan and W. N. A. B. W. Nahar, “Factors Determining the Success or Failure of ABC Implementation,” Cost Management, No. 5, 2010, pp. 35-46.
[56] A. R. Drake, S. F. Haka and S. P. Ravenscroft, “An ABC Simulation Focusing on Incentives and Innovation,” Issues in Accounting Education, Vol. 16, No. 3, 2001, pp. 443-471. doi:10.2308/iace.2001.16.3.443
[57] K. R. Krum-wiede, “ABC: Why It’s Tried and How It Succeeds,” Journal of Management Accounting Research, Vol. 79, No. 4, 1998, pp. 32-38.

Copyright © 2023 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.