An empirical examination of factors affecting the adoption and infusion of activity-based costing

Author

Kip R. Krumwiede

Date of Award

5-1996

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Business Administration

Major Professor

Harold R. Roth

Committee Members

James M. Reeve, Bruce K. Behn, David L. Sylwester

Abstract

The purpose of this study is to empirically test the effect of certain factors on the adoption and infusion of activity-based costing (ABC). For this study, adoption is defined as the stage when approval has been granted to devote the necessary resources to implement ABC. Infusion is defined as the stage when ABC information is used outside the accounting department for decision making. The study is motivated by the low adoption and infusion rates for ABC in spite of the improved product cost information it may provide. Data are collected through a survey instrument sent to members of the Cost Management Group of the Institute of Management Accountants. Strong support is found for the hypothesis that ABC adoption is more likely to occur in environments where there is high potential for cost distortions and high decision usefulness of cost information. Also, larger organizations are found to have a higher adoption rate than smaller units. Infusion is found to be significantly related to two organizational factors, top management support and training, although a negative relationship between training and infusion is contrary to what was expected. However, an important finding of this study is that IT sophistication is also associated with ABC infusion. The association is found to be strongest for firms that have reached a high level of IT sophistication. This study contributes to the literature regarding implementation problems for cost and other system innovations. Recent studies suggest that organizational issues are more important than rational factors for reaching the infusion stage. This study provides evidence that at least one rational factor, the sophistication of existing information technology, is also important for infusion. In addition, this research develops new measures for various rational factors and is the first to empirically apply an implementation stage model to a management accounting innovation.

Recommended Citation

Krumwiede, Kip R., "An empirical examination of factors affecting the adoption and infusion of activity-based costing. " PhD diss., University of Tennessee, 1996.
https://trace.tennessee.edu/utk_graddiss/9901