The main research objectives of this study are to investigate the influence of certain contextual factors on the implementation stages, adoption and infusion of ABC, and also to investigate whether the adoption and infusion of ABC improve Iranian manufacturing firms' performance (financial and non financial)
This chapter provides a discussion to which findings reported in Chapter five are able to provide answers to the research questions and achieve the research objectives set out at the beginning of the research. The findings of this study provide evidences in three distinct perspectives: implementation stages, adoption, and infusion of ABC and in these areas are tested three major contextual facÂtors: environmental factors, technological factors, and organizational factors. Thus, the next three sections discuss the results related to three major contextual facÂtors: environmental factors, technological factors, and organizational factors. Next section provides discussion on hypotheses 7 which predicted that the effects of each contextual factor on ABC implementation stages are changed. Then relationships between implementation stages, adoption, infusion of ABC and organizational performance are presented. Next section provides discussion relationship between implementation stages, adoption, infusion of ABC and organizational performance. The next section the implication of the study, and discusses about both theoretical and practical implications. This is followed by the discussion on the study's potential limitations. For overcoming such limitations, several suggestions are presented for future research. Finally, in the last section, conclusion on the overall findings is presented.
6.1. Technological factors and ABC
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1) Level of information technology quality (IT): Hypothesis one that predicted the positive effect of IT on three perspectives of ABC was not supported. IT did not significantly affect the implementation stages, and infusion ABC. Moreover, it was found that IT to be negatively related to ABC adoption.
As mention in previous chapters, adoption has been the main event in ABC studies. In this study that ABC implementation was considered as the seven stages process, ABC adopter was defined as a firm who meet at least stages 4 or above. It means the ABC adoption is vary from 'plan to adopt ABC' to 'ABC have adopted'. The result indicates the negative effect of IT on ABC adoption. This finding is considered with study by Krumwide (1998b) who find that high level of information system (IT) may push firms to reject ABC before adopting. She argued that firms in high information system quality that are satisfied with information provided from existing system might be reluctant to invest their resources in adopting ABC system. It seems that firms who have not reached the adoption stage also invest in a large amount of resource on IT. Perhaps too much IT takes the focus away from adopting ABC. These results suggest firms without high IT quality maybe more able to adopt ABC.
This study used seven implementation stages and defined infusion ABC as the stage seven "Used extensively". For analyzing "infusion ABC" only ABC adopter firms are included in the sample (n = 33). In the stage seven, ABC information is used outside the accounting department for decision making. This stage is often cited as an important goal or ABC success. However, achieving this goal can be difficult; some researchers believed that organizational factors have effect on infusion ABC more than the other factors (e.g., Shields, 1995; Krumwiede, 1998b). The IT did not play significant role for firms to go higher implementation stages of ABC and achieving infuse ABC. Also this result is non congruence with of Krumwiede (1998b) who find positive effect of IT on infusion ABC, it seems the relatively small sample size for the infusion analysis failed IT playing significant roles.
2) Level of product diversity (DIVER): In this study DIVER relates to the variety of products that are manufactured by a firm. H (2) states that level of product diversity has a positive effect on (a) ABC implementation stages, (b) ABC adoption, and (c) ABC infusion. Hypothesis (1) was partially supported and the results suggest that there is a positive and significant effect of DIVER on ABC implementation and ABC adoption, but evidence shows DIVER did not significantly affect ABC infusion.
This suggests that as product diversity is high, the firms make greater adopting ABC and also they are motivated to meet higher stage of ABC implementation. These finding supported by many researchers (e.g., Bjørnenak 1997; Clarke et al., 1999; Krumwiede, 1998b; Cagwin and Bouwman, 2002; Brown et al., 2004). They believed that high level of product diversity increase the need of more accurate costing systems which is a primary reason for adopting a new costing system such as ABC. This is what Cagwin and Bouwman (2002) where they argued that traditional cost systems has some weakness (e.g., distorted the cost of products) and this weakness in high level of DIVER will be increase. The result suggests that product diversity increased the firms are more likely to using ABC system. So for overcoming this weakness the firms that produce more than five products tend to be more likely to use ABC than firms with fewer products..
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DIVER does not play an important role in infusion ABC. This finding is contestant with Krumwiede (1998b) found similar result. Previous studies (Cooper and Zmud 1990: Shields 1995; Krumwiede, 1998b) suggest that organizational factors are more important than technological factors for reaching the infusion stage. It seems achieve the final stage of ABC (use extensively) is an internal challenges which affected by other variables. Moreover, maybe the relatively small sample size for the infusion analysis failed DIVER playing significant roles.
3) Level of overhead (OVER): The measure of OVERE involved with the measurement of firm's cost structure and percentage of overhead calculated and applied as a value of OVER. However, the descriptive statistic result (table 5.15, p.190) shows in 52.7% of firms, more than 24% of total cost is overhead, which is high level of overhead. These findings are quite similar to Xiong et al. (2008) where they found that in Chinese manufacturing firms the percentage of manufacturing overhead expense have increased in recent decades. Moreover, many researchers believed that the overheads allocation method in traditional costing system is not accurate, thus the higher level of overÂhead is the main reason for changing the traditional costing system to new cost accounting systems such as ABC (Narong, 2009; Xiong et al., 2008).
H (3) that was previously expected a positive effect of level of overhead on three perspectives of ABC is marginally supported. However, the finding shows mixes results and propose three different roles for relationships between OVER and implementation stages, adoption, and infusion of ABC system. In implementation stages, OVER is not an important factor determining implementation stages. In ABC adoption, OVER positively influence the ABC adoption. Furthermore OVER effects infusion of ABC negatively.
Kaplan (1991) believed that the overhead allocation system distort the cost in traditional costing systems. The positive effect of OVER on ABC adoption is consistent with many researchers (e.g., Brent, 1992; Sohal and Chung, 1998; Wynder, 2008; Cagwin and Bouwman, 2002; Foster and Swenson, 1997). The result suggested the firms with high OVER are more likely to adopt ABC. Krumwiede (1998a) argued that in low level of overhead cost is a lower potential for cost distortions, and in this condition, the benefits of ABC may be limited. In high level of overhead, potential for cost distortions is high. ABC may reduce product cost distortions substantially; however, this condition might push firms to adopt ABC system.
In contrast firms with low OVER are more likely to complete adoption process and meeting infusion ABC. Also this result is not congruence with of with Krumwiede (1998b) who found that OVER does not affect infusion ABC, is congruence with many researchers who found that the major difficulty faced by adopting ABC successfully was determination of cost drivers and developing an activity dictionary (e.g., Khalid, 2005; Anand et al., 2005). They indicate that the higher the degree of OVER, the higher difficulty is for finding cost drivers is. So it seems the difficulties for finding accurate cost driver within adoption stages hinder the firms to reach infusion ABC (last stage).
However, the finding shows mixes results for OVER and propose three different roles of OVER on three perspectives of ABC. This finding contestant by the innovation theory that indicated a variable may have different effect on different stages (Cooper and Zmud, 1990). The overall result for over indicate the effects of OVER on three perspectives of ABC are changed.
6.2. Environmental factors and ABC
1) Perceived environmental uncertainty (PEU): From expletory factor analysis for PEU, three component factors were extracted: "perceived environmental uncertainty-industrial" (PEU-IND), "perceived environmental uncertainty-financial" (PEU-FIN), "perceived environmental uncertainty-economical" (PEU-ECO). Three dimensions of PEU measurement are based on estimating the predictability in many aspects included: firm's suppliers, competitors, customers, financial/capital markets, government regulatory, labour unions, and economics, politics/technology. As shows by the descriptive statistic (table 5.17, p.191) PEU in all factors have mean scores above 3.00. It means the economical activities of Iran are surrounded by high level of perceived environment uncertainty (PEU). In this condition the firms may not be able to predict future easily thus hinder them to implement ABC or other new innovative accounting system.
Hypothesis 4 that states that PEU has a negative effect on (a) ABC implementation stages, (b) ABC adoption, and (c) ABC infusion is marginally supported. From three dimensions of PEU only PEU-FIN affects negatively ABC implementation, all three dimensions of PEU negatively affect ABC adoption. Moreover, PEU-FIN affects positively ABC infusion.
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As expected, PEU appears to play a major role in the adoption ABC. There are negative and significant relationships between all three dimensions of PEU and ABC adoption, indicating the lower the degree of PEU, the higher intent for adopting ABC is. Also this result is inconsistent with of Anderson (1995) where found that environmental uncertainty promotes ABC adoption, is consistent with Jusoh (2008) who found PEU negatively affect Balanced Scorecard Measures (BSC) usage.
Although the relationships between environmental uncertainty and the implementation stages, adoption, and infusion ABC have not tested in the survey studies before, the extent of literature in other cost innovation system (e.g., target costing and balanced scorecard) and management accounting systems (MAS) supported these relationships (e.g., Gul, 1991; Lat and Hassel 1998; Jusoh, 2008; Chenhall and Morris, 1993; Hussain, 2003 Ax et al., (2008). The common conclusion of these studies is that when the environmental uncertainty is considered high, managers having less access to information needed to make decisions and cannot assign probabilities to the outcomes of the decisions. It seems under uncertain conditions, manager (maybe for reducing the risk of the changing system) does not provide resources for implementing new innovation system such as ABC. The low rate of using ABC in Iran (6.91 %) may explain with this finding.
In contrast, only one PEU diminutions, PEU-FIN positively affect ABC infusion. This result indicated that after firms adopt ABC system, the higher PEU-FIN motivates them to complete the implementation process and involve to last stage (used extensively) or final goal. PEU-FIN related to predictability of financial/capital markets aspect, it seems in uncertain environment financial resources are instable thus; firm tent to quickly reach the final goal of implementation process, if they wait the cost might increase dramatically. Moreover, these firms need to use ABC as main system cost accounting system to improve their cost accounting information. These getting results are consistent with Anderson (1995) who indicated that environmental uncertainty promotes ABC. Moreover, more recently Ax et al. (2008) found that the implementation of target costing was correlated with the level of PEU.
The overall finding indicates from three diminution of PEU, PEU-FIN has significant effect on three on three perspectives of ABC. However, an important finding of this study is that PEU-FIN is also associated with ABC infusion. There is significant effect with only one diminution of PEU on infusion ABC. -- Some pervious researchers propose that organizational factors (e.g., firm size, training, and management support) may affect the infusion ABC process more than the technological and environmental variables (e.g., Shields, 1995; Cooper and Zmud 1990; Krumwiede, 1996).
2) Level of competition (COMPT): Competition refers to the degree of competition a firm faces in a particular market. Hypothesis 5 which predicted the positive effect of COMPET on (a) ABC implementation stages, (b) ABC adoption, and (c) ABC infusion is partially supported. The COMPET positively affect implementation stages and adoption but COMPET is not an important factor determining infusion ABC.
Malmi (1999) argued that competition influences the requirement of accurate cost accounting information. The wrong cost information in highly competitive industries mistakes made, these mistakes may exploit by competitors immediately. Moreover, Anderson and Young (1999) believed that in highly competitive condition, firms focus on sale price and cost reduction. They argued that in this condition new cost data such as ABC are most valuable. Moreover ABC may provide accurate and clear information that may help firm to reduce the cost. The finding that COMPET positively affect implementation stages and adoption quit similar to survey result conducted by Cagwin and Bouwman (2002) who found that non-competitive situations such as monopoly can lead to use traditional cost accounting than with ABC. Furthermore, Anderson (1995) found competition played an important role in bringing cost systems under management inspection and improved the search for finding new cost management approaches so high level of competition encourage firms to adopt ABC.
In contrast, COMPET is not an important factor determining infusion ABC. Previous studies (Cooper and Zmud 1990: Shields 1995; Krumwiede, 1998b) believed that organizational factors are more important than environmental or technological factors for reaching the infusion stage. It seems achieve the final stage of ABC (use extensively) is an internal challenges which affected by organizational factors. Moreover, maybe the relatively small sample size for the infusion analysis failed COMPET playing significant roles.
3) Business strategy: the accounting literature suggests that firms use particular accounting system, is depending on which strategy they adopt. Gosselin (1997) asserted that Miles and Snow's typology is more appropriate for examining the issue of innovation management accounting systems such as ABC. This study examined the degree to which firms emphasize each of the business strategy types proposed by Miles and Snow (1978 ) who identified four strategic types of organizations according to the rate of change products and markets: prospectors (STRA-P), defenders (STRA-D), analyzers (STRA-A), and reactors (STRA-R). Prospectors are characterized by their dynamism in seeking market opportunities. Defenders have a strategy which is the polar opposite from prospectors they operate within a narrow product-market domain characterized by high production volume and low product diversity. Analyzers stand between these two categories, sharing characteristics of both prospectors and defenders. Reactors do not follow a conscious strategy. As shows by the descriptive statistic (see table 5.18, p.192), most firms (32.4) adopt reactor strategy, prospector strategy is least adopted by firms (19.1%).
Hypothesis 6 (H6) suggested that prospectors are more likely to be (a) in higher stages of ABC implementation stages, (b) ABC adopters, and (c) ABC infuser. H (6) is not supported. Although firms who adopt ABC employ a particular strategy, opposite with expected, analyzers are more likely to be in higher stages of ABC implementation and ABC adopters Moreover result indicated that infusion ABC does not employ a particular strategy.
Although, the result did support hypothesis related to business strategy, it shows analyzer strategy with sharing advantages of both prospector and defender is the best type of strategy to adopt ABC and to go to higher ABC implementation . It seems in uncertain environment that Iranian firms faced, analyzers firms have more tolerance and they can predict necessary elements to make ABC adoption decision, and to go to higher ABC implementation stages. These significant finding is consistent with a statistical study conducted by Bhimani et al. (2005) where they found that strategy influenced the decision to experience ABCM, strategy influenced the success of ABCM implementation They asserted that firms will place more emphasis on particular accounting techniques or information, depending on which strategy they adopt.
In contrast, the result indicated that for meeting the last stage (ABC infusion stage) firms no need to employ a particular strategy. This is what Moll (2005) found in her study in that ABC user firms did not follow a particular strategy. As mention in previous discussion, organizational factors are more important than environmental or technological factors for reaching the infusion stage. It seems achieve the final stage of ABC (use extensively) is an internal challenges which affected by organizational factors. Moreover, maybe the relatively small sample size for the infusion analysis failed STRA playing significant roles.
6.3. Organizational factors and ABC
1) Firm size (SIZE): SIZE is measured as the level of annual sales revenue of the respondent's firms. H (8) that proposed SIZE has a positive effect on (a) ABC implementation stages, (b) ABC adoption, and (c) ABC infusion strongly supports. The results suggested the SIZE significantly affect implementation stages, adoption, and infusion of ABC. As expected, the larger the company, the more likely it is to adopt ABC, and succeeding to higher implementation stages even last stage (stage 7 infusion stage). Larger companies may also have more resources to invest for innovations like ABC. This finding is consistence with two statistical studies by Krumwiede (1998b) and Krumwiede and Suessmair, (2005). Krumwiede (1998b) found that SIZE was a significant variable in the ABC adoption analysis and Krumwiede and Suessmair (2005) found size positively affect infusion and reach to high level of German cost accounting methods (GPK). Bjørnenak (1997) argued that large firms have the required resources, such as time, funds, and personnel to finance the infrastructure and, therefore, are more capable of adopting ABC. Additionally, large firms with economics of scale are more likely to afford the implementation of ABC. Further, according to Van Nguyen and Brooks (1997) larger firms are more likely to have greater access to the knowledge of design and implement ABC.
2) Top management support: (TMSUP): Krumwiede (1996) asserted the top management support have connection with firms that have begun adoption ABC, thus it only tested for infusion analysis together with both other technological and environmental factors. H (9) that stated top management support has a positive effect on ABC infusion is strongly supported. The literature has identified that if top management support the ABC, the risk of the project is reduced, access to resources is increased and reducing project uncertainty and thereby making adoption is easier (e.g. Shields, 1995; Cooper et al., 1992; Krumwiede, 1998b; Brown et al., 2004; Krumwiede and Suessmair, 2005; Melah and Nasir Ibrahim, 2006). These significant finding is consistent with a statistical study conducted by Dosch and Wilson (2007) where they found that the most important factors to ABC success was top management support. Shields (1995) argued that the role of top managers' support for ABC implementation success is important because can deny resources for adoption an innovation if they do not support. Moreover they can provide the political help needed to motivate or push aside individuals and coalitions who resist the innovation if they support.
3) Level of training (TRAIN): Because the Level of training have connection with firms that have begun adoption ABC, it is not considered for the early adoption ABC, and they only tested for infusion analysis together with other factors. Hypothesis 10 that asserted training has a positive effect on ABC infusion is not supported. The lack of significance for effect of training on ABC infusion is also surprising. The finding that quit similar to survey result conducted by Maelah and Nasir Ibrahim (2006) who did not find found significant influence of training on AB. Furthermore, Krumwiede (1998b) found a negative effect of train on ABC infusion
It seems the lack of significance for relationship between training and infusion ABC is related to small sample size for the infusion analysis (n = 33). Moreover, from this small sample, more firms (n = 20) firms are at the initial stage of ABC adoption. Therefore, the training in relation to ABC was not appearing as an important factor among these organizations.
6.4 Changes the effect of contextual factor
Hypothesis 7 (H7) stated that the effect of these contextual factors: level of information technology quality, level of product diversity, level of overhead, perceived environmental uncertainty, level of competition, business strategy, and firm size change in ABC implementation stages. Result shows (see table5.31, p.210) from 7 variable only 2 variable (SIZE and STRA-A) have same effect on the ABC implementation stages and the H (7) partially supported.
This finding also is consistence with many ABC studies (e.g., Anderson, 1995; Krumwiede, 1998b; Gosselin, 1997) which found that the effect of selected factors vary from stage to stage. Although they use a different stage model and different factors, they found same result that different factors associated with the different stages. Moreover, this finding is consistence with information systems (IS) innovation theory (Kwon and Zmud, 1987) which widely accepted by the most of ABC researchers. The theory suggested that change occur in stages and degree of importance for each contextual factor is differ in several ABC implementation stages.
6.5 Organizational performance
Two types of performance measures are typically used to evaluate a firm's performance: financial and non financial measures. Hussain (2003) asserted multidimensional performance measures improve the performance measurement.
1)Financial performance(PER-FIN): Hypothesis 11 that proposed firms who are (a) in higher ABC implementation stages, (b) ABC adopters, and (c) ABC infuser have greater level of financial performance is fully supported. The results show firms who are in higher ABC implementation stages have greater level of financial performance than firms who are in lower stages. ABC adopters have greater level of financial performance than non adopters firms. Moreover the result indicated ABC infuser has greater level of financial performance than non infuser firms. This is what Cagwin and Bouwman (2002) found in their study in that positive relationship between ABC adoption and improvement their financial performance.
1)Non financial performance (PER-NFIN): Hypothesis 12 that asserted firms who are (a) in higher ABC implementation stages, (b) ABC adopters, and (c) ABC infuser have greater level of non financial performance is fully supported. The results show firms who are in higher ABC implementation stages have greater level of non financial performance than firms who are in lower stages. ABC adopters have greater level of non financial performance than non adopters firms. Moreover the result indicated ABC infuser has greater level of non financial performance than non infuser firms. This significant finding is consistent with a statistical study conducted by Kennedy and Affleck-Graves (2001) where they found that the ABC adoption significantly improves organizational performance including financial and non financial performance.
Moreover, Cooper et al. (1992) argue that "the goal of ABC is to increase profits, not to obtain more accurate costs". Damanpour (1987) believed that managers are involved to the issue of improving their organizational performance by adopting innovations. Cooper and Kaplan (1991) believed that ABC analysis enable managers to understand the sources of cost variability and shows actions they can take to reduce demands on their organizational resources. Gering (1999) argued that activity-based costing by focusing on which customer or product is profitable can improve performance. Cagwin and Bouwman (2002) argued that measures of success of ABC related to improve financial performance.
Some researchers named infusion ABC as an ABC success while adoption is means apply ABC and start point for implementing ABC. Meanwhile, testing ABC infusion shows the clear imaging of ABC adoption success. Regarding the benefits of ABC, however, are most important evidences which indicated that ABC user increased profits and obtained more performance. Some benefits which ABC researchers found as follow: more able to measure cost accurately, better understanding of product costing, and develop performance measurements (Kiani and Sangeladjiai, 2003; Khalid, 2005), better understanding for cost reduction opportunities, and improves managerial decision and also provision of better cost control, higher levels of satisfaction with their organizations costing system (Moll, 2005; Brent 1992), improving the accuracy of cost measured for different products and services by more accurately assigning direct cost, usefulness of cost information for decision (Clausen, 2002; Cooper and Kaplan, 1992), Providing a reliable indication of long-run variable product cost which is particularly relevant to, managerial decision-making at a strategic level (Sohal and Chung, 1998).
6.6. Implications of the study
The findings of this study have both practical and theoretical implications. Attewell (1992) observed that most statistical studies on innovations have used two distinct perspectives for analysis: adoption and infusion. But this study attempt using one more distinct perspective for analysis: implementation stages.
6.6.1. Theoretical implications
At the level of theory, the primary relevance lies in its examination in three distinct perspectives: implementation stages, adoption, and infusion of ABC. This study attempts to contribute to the theoretical body of knowledge in four fields.
In the file of cost accountings innovation, the finding can explain using ABC as an important cost accounting innovation. ABC introduced to overcome weakness of traditional cost accounting system. Although using ABC demonstrates advantages and improves firm's performance; level of using of this system is still lower than traditional one. Also the finding may explain this paradox by showing the negative effect of some factors on ABC adoption which are not under the managements control (e.g., environmental uncertainty) or affect of some factors opposite what was previously expected (e.g., information technology quality). The potential for management accounting literature (MAS) to inform ABC implementation research is highlighted by this study. Mireover, this study contributes to the accounting innovation literature concerning the combination effect of certain contextual factors on implementation stages, adoption, and infusion of ABC.
Further, the main contribution is conceptualization of perceived environmental uncertainty (PEU) and its investigated result that indicated influences of PEU on implementation stages, adoption, and infusion of activity-based costing (ABC). This study identified the PEU as a most important determinant for reaching the adoption and infusion of ABC.
In addition, this study contributes to the literature regarding to applied multidimensional performance measures and test difference of financial and non financial performance between adopters / non adopters, infusers / non infusers, and low implementation stages / high stages groups.
Furthermore, the study contributes to the strategic management literature with providing evidences concerning the identification and measurement of Miles and Snow's strategy typology. Moreover the finding can explain that firms use particular accounting system, is depending on which strategy they adopt.
6.6.2. Practical implications
From the finding of this study, there are implications in four practical areas. First regarding the ABC system designs, different contextual factors (i.e., technological, environmental, and organizational factors) are tested to find whether they affect adoption, and infusion ABC. The finding is shown technological factors (e.g., Information system quality, products diversity, and overhead), environmental factors (e.g., Uncertainty, competition, and strategy) and organizational factors (e.g., size) effect the adoption ABC. Moreover, the results indicate the positive role for these entire variables except information technology and uncertainty that affect ABC adoption negatively. Furthermore, the result shows size, management support, and uncertainty-financial positively affect infusion ABC.
Focus on factors that influence ABC adoption and infusion will provide useful gaudiness for firms who are interested for applying ABC. Based on the finding of this study, organizations in high rate of positive ABC adopters characteristics are the good candidates for adopting ABC. It seems these results may be important for non-ABC adopters firms considering adoption or ABC adopters firms considering infusion ABC. Organizations may want to compare themselves on these factors to determine how closely they make straight with adopting and infusing firms.
Second, with regard to the respect of business strategy usage, the finding provides evidences that business strategy is a key element in the implementing and adopting ABC system. The finding indicated adopters firms are following particular strategy. From Miles and Snow (1978 ) strategy typology, analyzer are more likely to be in higher ABC implementation stage and also ABC adoption. Based on the finding of this study, firms that choose analyzer strategy analyzer are good candidates for adopting ABC. Thus these companies may be concerning for using ABC to develop their cost accounting system. Organizations may want to compare themselves on strategy to determine how closely they make straight with adopting firms.
Third, the most important finding of this study is adopting and infusing ABC system improve both financial and non financial organizational performance. These results should be important for non-ABC adopters firms considering adoption or ABC adopters firms considering infusion ABC. Firms may motivate to adopting ABC to improve their organizational performance. Moreover, firms who are adopted ABC may improve their cost accounting methods by infusion ABC and achieving final goal.
As with any research, this study has many limitations that must be cited. The following limitations are the most relevant. First, the choice of sampling frame is previous limitations. This study covers only manufacturing sectors selected from Tehran Stock Exchange (TSE) and results of the study also need to be generalized with caution. There are any generalizations of the results to other sector (e.g., distribution, retail, services, transportation, and others) should be with caution. In this case future research should consider other sectors such as service and non-profit sectors, government organization in order to get better understanding of the ABC system and its application. Further, the actual population of manufacturing firms in whole Iran was not considered. In this case, future research should investigate across geographical regions in Iran to overcome the limitation of small sample size.
Second, the response rate was fairly high at a level of 44% and t-test was performed to attempt preventing this problem. Gosselin(1995) believed that there is no way to know for sure whether the non-respondents are different than the respondents. However, it cannot conclude that respondents are adequate alternative for the whole population of manufacturing listed on TSE. For future research suggested that uses both questionnaire survey and case study methods to avoid this limitation.
Third, questionnaire were use to obtain data and focused for measuring the respondents' perceptions. Thus, the variable measures are more subjective than other possible types of information. For example in this study the overhead cost assumes as an independent variable and its measurement was more subjective, future research should place a greater concern for measurement variables and should use secondary data for measuring some variable such as firm size, diversity, overhead and financial performance to order gathering objective data.
Next, the decision-making processes are quite complex and probably related to additional factors which are not tested in this study. Surveys are limited by a lack of other contextual factor. In this case, future research should clarify the relationship between international PEU perception, entry mode strategy and ABC adoption.
Finally, a survey approach enhances the external validity of the findings, but for further improved it should be better to conduct follow-up interviews if it been possible.
Activity-based costing is the most important accounting innovation. It was developed for overcoming the product cost distortion that caused by using traditional costing system (TCA), and researchers have agreed that ABC allocates overhead costs more accurately than TCA. In fact, the potential offered by the study may well exceed the other accounting innovations.
ABC has gained increasing performance and awareness throughout the manufacturing firms. Regarding the benefits of ABC, empirical evidences show that ABC user increased profits and enhance organizational performance. In the current study Logit analysis was used to test the effects of several contextual factors on implementation, adoption and infusion of ABC. These contextual factors were classified as technological, environmental, and organizational factors. Overall findings show the effect of the technological factors (e.g., Information system quality, products diversity, and overhead), on implementation, adoption and infusion is marginally supported. The overall effect of environmental factors (e.g., Uncertainty, competition, and strategy) on these three distinct perspectives of ABC is partially supported. Meanwhile, the overall effect of organizational factors (e.g., size, management support, and training) is ABC is partially supported. Furthermore, three interesting result of this study were: The negative effect of IT on adoption ABC, The negative effect of overhead on infusion ABC, and the positive effect of uncertainty-financial on infusion ABC
Moreover, this study found the improvement of firm's performance in the adoption and infusion stage of ABC. The primary focus of this work is not to develop new theatrical procedures to adopt ABC system and brow a 7 stages model from other researcher, but to explore how this model would work when the environment and the factors combination are changed.
Three models were developed to capture the effect of certain factors on different stages of ABC. Adoption model investigate the influences of contextual factors when ABC is used occasionally, while in infusion model, ABC is used extensively. Moreover, ABC implementation stages model attempt to find the different effect of this contextual factors on different stages.
This study follows the theory that used by most of ABC adoption research, which is called information systems (IS) innovation theory. ABC is defined as a management accounting innovation, and it is considered as an administrative innovation (versus technological innovation).This study is an innovation research, tried to explain implementation process by using a factor-based approach (versus a contingency approach).
This study found evidence that perceived environment uncertainty (PEU) plays an important role in implementation, adoption, and infusion stage of ABC. It is also important to note Iran face with in unpredictable environment. The findings suggest that under uncertain conditions, manager does not provide resources for implementing new innovation system such as ABC. The results also provide evidence on the role ABC as an innovation accounting systems to improve financial and non financial performance.