Activity Based costing system received substantial attention by accounting researchers, ABC having been studied from a wide range of perspective. this include the drivers of adoption (Anderson, 1995; Anderson and young, 1999; Al-Omiri and Drury, 2007), factors associated with successful implementation (shields, 1995; foster and Swenson, 1997; Mcgowan and Klammer, 1997; Al-Omiri and Drury, 2007; Abdul Majid and Sulaiman 2008) and benefits that have been associated with ABC adoption (Kennedy and Graves, 2001; Cagwin and Bouwman, 2002; Cohen et al. 2005, Sartorius et al. 2007). The rise of ABC adoption has been linked to the improvement technology and strong competition which make traditional costing system unable to determine accurate costs of products and services. (Raffish 1991)
numerous studies criticize traditional cost accounting systems because it is adhere to the assumption that product causes cost (Green and Flentov 1995), while cooper (1988) and Derya (1996) stated that it is often allocate costs based on single-volume measures such as direct-labor costs, or machine hours, and they argued this does make wrong in determining some type of cost, also Gunasekaran, (1999) added that traditional cost system does not give accurate measure for activity performance and the reports do not give us any information about the value -adding activities.
However the studies on activity based costing system (ABC) still takes a central place in the accounting studies, since the early empirical study of Cooper and Zmud (1990) to examine whether certain factors affect implementation stage differently, researchers have developed different interpretative perspective to know and highlight the factors influencing to ABC adoption and implementation (shield, 1995; Maelah and Ibrahim 2006; Malami, 1999; Swenson, 1995) or the stage of it is application processes (Anderson, 1995; Gosselin, 1997; Krumwiede 1998; Brown et al. 2004), but most of these studies arrived to ambiguous, different and divergent results, Because the term "implementation" has been subject to different interpretations with some studies defining it as "actual ABC implementation" and others defining it as "consisting of either actual implementation or a desire to implement it ( Sartorius et al. 2007) Furthermore, the basis for comparisons of factors influencing the implementation of ABC have differed with some studies comparing those companies that have considered the implementation of ABC (have shown interest) with those that do not considering the implementation of ABC (have shown no interest) in ABC. Moreover, the extent of the ABC implementation in a range of different countries varies widely: some countries report increasing in the adoption rate of ABC and other countries report the exact reverse. Also the researchers in the same country have reported widely different results (Baird et al., 2004; 2007; Brown et al., 2004; Booth and Giacobbe, 1997). It is, therefore, difficult, to compare the results from the various studies, particularly relating to usage rates or ability of factors to discriminate between implementers and non-implementers when the term "implementation" have been subject to different definitions (Al-Omiri and Drury, 2007).
The literatures shows different perspectives to the factors that influencing to activity based costing system shields (1995) found success to be strongly linked with behavioral and organizational variables, but not to technical variable, Anderson (1995) argued that the factors influence implementation are context specific .Anderson concluded that the extent to which specific organization and technical factors, individual and task characteristics ,and environmental factors influence implementation success vary across the stage of implementation Krumwied , (1998 ) found that the different factors affected the various stages of ABC adoption and implementation and degree of importance of each factors varies according to the stage of implementation. He concludes that firms considering or implementing the ABC system should take organization and contextual factors into account.
(Anderson 2002; Arnaboldi and Lapsley 2005; Abdul Majid and Sulaiman 2008) argued that the technical factors was neglected in the previous studies, so they segmented the adoption and implementation of ABC to stages, they suggested the need for more research in this factors to know how this factors or technical difficulties encountered during the implementation of ABC system, also Numerous studies stated that there is a need to segment the stage of ABC adoption when researching success by examining sites at ABC maturity, the result of ABC implementation may be achieved after the using stage specially the improvement in financial performance, Previous literature such as (Baird et al, 2004; Krumwiede, 1998; Gosselin, 1997) have been number of studies that have segmented the ABC implementation to stages and the number of stages was different between the different researchers as his research question in the study requirement . More generally, this should be a consideration for any study examining a new system implementation, so in the current study the researcher will segment the adoption and implementation of ABC to stages this stages, are non-consideration, consideration, adoption, implementation and usage stage.
The previous studies such as Shields, (1995); Brown et al. (2004); Cohen et al. (2005); Baird et al. (2007); Al-Omiri and Drury, (2007) examined the factors effecting to the decision to adopt and implement ABC without distinguishing between the industrial and financial sectors or between Manufacturing and Non-Manufacturing industries in which ABC has been adopted. Clarke et al. (1999) suggested that, it is important to distinguish between the types of sector because the non-manufacturing companies are a much more heterogeneous group (Clarke et al., 1999). For instance, educational services are different from bank services, which are different from healthcare services or insurance. In particular, the previous studies such as Shields, (1995); Brown et al. (2004); Cohen et al. (2005); Baird et al. (2007) examined the factors that influence the decision to adopt and implement ABC. They used a wide range of different firm sectors. Thus, it is sometimes difficult to interpret the results (Clarke et al., 1999). For example, information concerning the relationship between company characteristics and ABC adoption may be concealed by sector-related market and technological circumstances. As has been shown by Clarke et al. (1999), adoption rates as well as reasons for adoption or rejection of ABC may differ significantly between industry groups (manufacturing and non-manufacturing). As a result, the current study focuses on a more homogeneous group of companies. Consequently, only manufacturing companies will be examined in the current study.
Another observation about the important of distinguishing between the different sectors shows by many researcher such as, Clarke et al. (1999) Drury and Tayles (2005) and Al-Omiri and Drury (2007) they argued that the cost structures of manufacturing companies are different from those of non-manufacturing and financial companies. For example, in Non-manufacturing companies, the direct labour costs and material costs are very little, this mean that fixed overhead costs are very high and this will increase the proportion of total costs. This may lead to non-manufacturing companies being more likely than manufacturing companies to adopt and implement ABC. For example, Innes et al. (2000) reported that, the financial sector which had the highest level (40.7%) of adoption of the ABC system, whereas, only 14.3% of manufacturing and 12.1%o f non-manufacturing companies used this system. so, the majority of studies examining ABC have been conducted in the industrial sectors where the reasons for adopting and implementing ABC are not clear (Anderson, 1995; Swenson, 1995; Clarke et al., 1999; Krumwiede, 1998; Bjornenak, 1997; Gosselin, 1997).
From the above discussion it can be seen that the Jordanian manufacturing companies will be a main source of data and population for this study, by using suited mixed method because the Previous studies such as Brown et al. (2004); Krumwiede (1998); Cohen et al. (2005); Baird et al. (2007); Al-Omiri and Drury (2007) used only questionnaire survey in their studies. They allowed the respondent to self-specify whether his/her company used (operated) an ABC system or not. (Krumwiede 1998; Al-Omiri and Drury 2007) suggested that studies used only questionnaire survey reported a mistaken, exaggerated or ambiguous results, and do not provide evidence that companies said that they ABC adopters are really they are ABC adopters.
In the current research mixed data collection methods will use. Firstly, questionnaire survey will design by include suitable control questions that allow the researcher to check respondents' claims that their firms are operating ABC systems are really ABC adopter or operators. Secondly, face-to-face interviews will conduct with adopters firms for further clarification and explanations about ABC system. Therefore, the current study will be able to confirm if the respondents those claiming that they use ABC they actually ABC users.
This study focuses on Jordan because it is the home country of the researcher and he can provide a comprehensive picture of ABC diffusion and factors influencing on the process of adopting and implementing ABC in this small number of manufacturing companies. This sector was chosen because according to the Ministry of Planning (2007) there is a clear trend in the social and economic development plans of successive Jordanian governments to support the industrial sector.
1.2. Problem statement
Many industrial firms have shifted from labor intensive to machine intensive in production, this has resulted increment in the overhead cost. Which need accurate allocation to the products so, many firms have shifted from traditional cost accounting to more suited system to account the overhead cost accurately. ABC system provides more accurate overhead cost allocation. (Innes and Mitchell 1995)
Many academics and practitioners are considered Activity-based costing (ABC) as one of the most important innovation in management accounting of the 20th century (Kaplan and Anderson, 2007; Askarany and Yazdifar, 2007 Abdel-Kader and Luther, 2008). In addition, the results of these studies indicate that managers perceive the usefulness of cost information provided by the ABC system to be higher than the volume based costing (shield 1995; Mcgowan and Klammer 1997; Kruemwield 1998; Baird et al., 2007 and Cohen et al., 2005) indicate that most of managers and users (employees) are satisfied with the implementation of ABC, because ABC system has been found as an suited method of allocating overhead costs, evaluating product profitability and managing operating costs.
However, Although many advantage to the activity based costing system adoption rates revealed by studies show that companies practice of ABC have been lower than has been expected, (Omar 2007) For instance, a number of surveys have pointed out that ABC is implemented only by between 20% and 30% of companies (Innes and Mitchell, 1995; and Innes et al., 2000; Kaplan and Anderson, 2004; Askarany and Smith, 2008), another studies such as (Chung et al 1990; Arnaboldi and Lapsley 2003) revealed that many companies that adopt ABC were still at the early stage of ABC implementation, and most of the attempts to implementing it produce only a partial framework for explaining the whole trajectory of ABC development or ended in the narrow application of ABC in marginal services or in unused systems, whereas TCS continues to be very implemented a great deal (Innes et al., 2000; Al-Omiri and Drury, 2007; Askarany and Smith, 2008). This has led to the basic question of why management accounting innovations have been slow to change despite the rapidly changing organisational and technological environment during the last two decades.
Several recent studies have started to address this issue by considering the adoption rate of ABC, the reasons for implementing ABC, the problems associated with ABC and the critical success factors relating to its successful implementation (Gosselin, 2007; Kaplan and Anderson, 2007;Askarany and Smith, 2008). One reason could be that ABC adopters have found it not successful in delivering expected net benefits. If ABC adopters have found it not successful, then that could interpret the low adoption rates (Kennedy and Bull; 2000Drury & Tayles 2005). However, the empirical evidence from ABC research is problematic. Firstly, the extent of the ABC implementation in a range of different countries varies widely: some countries report an increase in the use of ABC and other countries report the exact reverse. Also the researchers in the same country have reported widely different results about the adoption rate (Baird et al., 2004; 2007; Brown et al., 2004; Booth and Giacobbe, 1997). Various possible reasons have been suggested for this relatively low adoption rate, which include the following: Technical Variables such as identifying and aggregating activities, assigning resources to activities, selecting cost drivers (Innes and Mitchell 1995; Clarke et al. 1999; Groot, 1999; Innes et al. 2000; Chongruksut 2002; Pierce and Brown 2004; and Cohen et al. 2005, Sartorius et al. 2007), Behavioral and Organisational variables such as internal resistance, lack of top management support, human resource availability, lack of knowledge, and an expressed satisfaction with current systems (Anderson 1995; Shields 1995; Clarke et al. 1999; Innes et al. 2000; Chongruksut 2002; Pierce and Brown 2004;Cohen et al. 2005; and Abdul Majid and Sulaiman, (2008), and Systems Issues, such as data collection difficulties, inadequate computer software, amount of work and time needed (Clarke et al. 1999; Innes et al. 2000; and Pierce and Brown 2004). Secondly, the reasons for implementing ABC, the barriers to ABC implementation and critical success factors appear to differ widely between different researchers (Brown et al., 2004), since they often measure success in different ways (Swenson, 1995; Cohen et al., 2005; Baird et al., 2007). Therefore, In view of these ambiguous findings, the same issues need to be investigated further in the Jordanian industrial sector where so far little is known about the extent of ABC adoption and implementation and those factors motivate, facilitate and create barriers to implementation (Al-Khadash and Feridun, 2006).
1.3. Research Aim and Objectives
The aim of the current research is to know barriers and problems of ABC implementation in the Jordanian industrial sector and the factors that motivate and facilitate implementation of activity based costing systems, by answering the research questions. In addition, the current study intends to achieve the following sub objectives:
To examine the extent of ABC implementation system within the Jordanian industrial sector.
To identify the reasons for Non-considered ABC system.
To determine factors that impact against ABC implementation.
To determine the factors that have facilitate the process to implement ABC system.
To determine the main factors that have motivated the implementation of ABC system.
To identify the problems faced ABC implementation.
To ascertain the views of the users companies on the degree of success of ABC system and encourage who do not using ABC to use it.
Examine if their significance differences between ABC users and non-users based on company characteristics.
1.4 Research Questions
To achieve the above aim and objectives, the current study will seek answers the following research questions:
What is the current state of ABC implementation among the Jordanian industrial companies?
For companies that are Not-considering using ABC, what are the main reasons for not considering it?
For companies that are Considering/Adopting ABC, what are the main factors against ABC implementation?
For companies that are currently Implementing/Using ABC, what are the main factors that facilitate its implementation?
For companies that are currently Implementing/Using ABC, what are the main factors that motivate its implementation?
For companies that are currently Implementing/Using ABC, what are the main barriers to ABC implementation that the companies have encountered?
For companies that are currently Using ABC, what is the degree of ABC success?
Is there any significance differences between ABC users and non-users based on company characteristics?
1.5 Significance of the study
Significance of this study stems from the fact that it is studies the ABC system in industrial sectors in Jordan, which need to find a new method to reduce costs in the new environment, (Kasharmeh 2002) This suggests that it may be a good idea for ABC to be more extensively adopted in Jordan, The first contribution of this study will enable to know the extent of ABC within the Jordanian manufacturing sector by segment ABC adoption and implementation to different stages. Most previous studies focused only on the implementation of ABC in western developed countries such as Ireland (Clark et al. 1999; Pierce and Brown 2004), UK (Innes and Mitchell 1991, 1995; and Innes et al. 2000), USA (Anderson 1995; Groot 1999) Australia (Booth and Giacobbe, 1997, Nguyen and Brooks 1997; Brown et al. 2004) and New Zealand (Cotton et al, 2003). The results of this study make a contribution to existing knowledge in the area of the implementation of ABC, especially in eastern developing countries like Jordan and determined the factors that motivate, facilitate and create barriers to ABC implementation.
The second contribution of this study is developed a conceptual model of ABC implementation in manufacturing firms. It allows for the development of a more sophisticated understanding concerned with the factors motivate, facilitate and create barriers to ABC implementation based in an eastern developing country perspective, also it contributes in cutting off various issues about the factors influence to activity based costing implementation which is various issue between the researcher.
Finally, Most of the previous studies have allowed to the respondents to self-rating if their company using ABC or no. In this study several control questions were included in questionnaire to check the respondent' claims that they were operating ABC system is really ABC users. In addition, semi-structure interviews will conduct with four companies for further explanation, supplementation and discover of new factors may influence to ABC adoption and implementation. Therefore, compared with previous studies, there is a much higher probability with this study that those respondents claiming to use ABC were actually ABC users.
Organization of the study
This study will contain from sex chapters. In chapter one will conclude the introduction of the study, including the background and problem statement, objectives of the study, research questions significant of the study. Chapter 2 will include the literature review which organized by major studies which related to the problem and described above. Chapter 3 will describe the research methodology selected to solve the problem statement. Chapter 4 will shows the survey analysis .chapter 5 will show a case study analysis. Chapter 6 will summarizes the conclusions and contributions of the research also will address the limitations, and presents implications for future research.
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