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The implementation of Activity-Based Costing in China: An innovation action research approach

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  • Liu, Lana Y.J.
  • Pan, Fei

Abstract

Research on Activity-Based Costing and its applications has mainly been focused on organisations in developed countries. Little has been learnt as to whether ABC techniques can be implemented successfully in organisations in developing countries. With the adoption of an innovation action research approach, we have successfully developed an ABC system jointly with a large Chinese manufacturing company, Xu Ji Electric Co. Ltd. (Xu Ji), for the period 2001–2005. The research provides a unique opportunity to examine some key success factors pertinent to ABC implementation within a Chinese organisational and cultural setting. The findings indicate that top management support, which has been identified as an important success factor in ABC literature, is evidently the predominant success factor in this organisation. In addition, Xu Ji's corporate culture of “top–down” instigation of the adoption of a series of management innovations (e.g., Economic-Value Added®, Balanced Scorecards and Six Sigma) and its hierarchical command and communication structure, coupled with active involvement of a high proportion of dedicated professionals, can be seen as another success factor in achieving a relatively high level of diffusion of this accounting concept within the organisation. This study also reveals a different insight of internal resistance to change, which is contrary to the evidence presented in the existing ABC literature.

Suggested Citation

  • Liu, Lana Y.J. & Pan, Fei, 2007. "The implementation of Activity-Based Costing in China: An innovation action research approach," The British Accounting Review, Elsevier, vol. 39(3), pages 249-264.
    • Handle: RePEc:eee:bracre:v:39:y:2007:i:3:p:249-264
    DOI: 10.1016/j.bar.2007.05.003
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    References listed on IDEAS

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    Cited by:

    1. Trevor Hopper & Mathew Tsamenyi & Shahzad Uddin & Danture Wickramasinghe, 2009. "Management accounting in less developed countries: what is known and needs knowing," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 22(3), pages 469-514, March.
    2. Francesca Francioli & Alberto Quagli, 2021. "Management accounting change and the rise of Vespa (1884-1965)," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2021(suppl. 2), pages 313-338.
    3. Victor Jiménez & Paulo Afonso & Gabriela Fernandes, 2020. "Using Agile Project Management in the Design and Implementation of Activity-Based Costing Systems," Sustainability, MDPI, vol. 12(24), pages 1-23, December.
    4. Lee, Jessica & Elbashir, Mohamed Z. & Mahama, Habib & Sutton, Steve G., 2014. "Enablers of top management team support for integrated management control systems innovations," International Journal of Accounting Information Systems, Elsevier, vol. 15(1), pages 1-25.
    5. Kabinlapat, Panravee & Sutthachai, Siriluck, 2016. "An application of activity-based costing in the chicken processing industry: a case of joint products," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 20(1), January.
    6. Li, Xinxiang & Soobaroyen, Teerooven, 2021. "Accounting, Ideological and Political Work and Chinese multinational operations: A neo-Gramscian perspective," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 74(C).
    7. Pike, Richard H. & Tayles, Mike E. & Mansor, Nur Naha Abu, 2011. "Activity-based costing user satisfaction and type of system: A research note," The British Accounting Review, Elsevier, vol. 43(1), pages 65-72.
    8. Al-Sayed, Mahmoud & Dugdale, David, 2016. "Activity-based innovations in the UK manufacturing sector: Extent, adoption process patterns and contingency factors," The British Accounting Review, Elsevier, vol. 48(1), pages 38-58.
    9. Marcella Bernardo & Renato da Silva Lima, 2017. "Using Action Research to Implement Selective Waste Collection Program in a Brazilian City," Systemic Practice and Action Research, Springer, vol. 30(6), pages 593-608, December.

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