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Critical success factors of strategic cost reduction

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  • Alexander Himme

Abstract

Cost reduction is usually confronted with conflicts and resistance. Besides planning and controlling measures the management accounting literature discusses behavioral and organizational factors (e.g., top management commitment, participation, cost culture) in order to overcome this resistance. Thus, from a theoretical perspective different concepts exist for implementing an effective long-term cost reduction. However, only little empirical research can be found that investigates the relative importance of “soft” behavioral and implementation factors compared to general planning and control measures. This study examines the role of behavioral and organizational (“soft”) factors in comparison to planning and control (“hard”) factors in cost reduction projects. Target costing or activity-based costing projects represent examples for strategic cost reduction projects which are considered in this study. The sample comprises 131 chief management accountants of medium-size and large German companies which were involved in such strategic cost reduction projects. Structural equation modeling is used for deriving the results. The results show that cost culture, top management commitment, and participation are of particular importance for the success of cost reductions. Their influence drives significantly planning and controlling measures which in turn determine the effectiveness of cost reduction measures. Copyright Springer-Verlag Berlin Heidelberg 2012

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  • Alexander Himme, 2012. "Critical success factors of strategic cost reduction," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 23(3), pages 183-210, December.
    • Handle: RePEc:spr:metrik:v:23:y:2012:i:3:p:183-210
    DOI: 10.1007/s00187-012-0157-8
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    2. Christian Nitzl & Wynne W. Chin, 2017. "The case of partial least squares (PLS) path modeling in managerial accounting research," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 28(2), pages 137-156, May.
    3. Rafael Araujo Sousa Farias & Valdirene Gasparetto, 2016. "Inhibiting Factors of Interorganizational Cost Management Complementary Study," International Business Research, Canadian Center of Science and Education, vol. 9(8), pages 91-105, August.
    4. 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.
    5. Abdul Azeez Badir Alnidawi & Fatimah Musa Omran, 2016. "Human Resources Management Activities Adopted in the Value Chain Model and their Impact on the Organizational Sustainability-An Empirical Study in the Jordanian Pharmaceutical Companies," International Business Research, Canadian Center of Science and Education, vol. 9(8), pages 106-117, August.
    6. Ulf Diefenbach & Andreas Wald & Ronald Gleich, 2018. "Between cost and benefit: investigating effects of cost management control systems on cost efficiency and organisational performance," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(1), pages 63-89, March.

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