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Purpose Drawing from dynamic capability theory, this paper aims to examine the implementation of target cost management (TCM) in a non-Japanese environment. Design/methodology/approach Based on a case study at Company ABC, an automotive manufacturer in Malaysia, this paper investigates the differences in the TCM implementation process between Company ABC and companies operating in the Japanese business environment. The data were collected through in-depth interviews, direct observation and document reviews. Findings Using a single-case study approach, the findings show that although the case company follows similar fundamental steps of TCM as highlighted in the literature, it has modified the detail of the TCM steps to some extent to match with the company’s resources, business processes and strategic routines. Research limitations/implications As the study used a single-case study approach on an automotive company, the results cannot be generalized in other settings. The findings give an insight into the TCM implementation in a developing country such as Malaysia. Better understanding of TCM as a business competitive tool may help to promote TCM application in other developing countries. The findings help new potential TCM companies in the same industry to mitigate and leverage the risk of failure in implementing TCM by modifying the TCM implementation process to suit their contextual environments. Originality/value This paper attempts to explain in depth the TCM implementation process in the case company and highlights how the dynamic capabilities can cause differences in TCM practices compared to those practiced in the Japanese context.

This paper examines the enablers that influence the implementation success of target cost management (TCM) in the Malaysian context. A single case study was carried out at an automotive company in Malaysia. Using the innovation diffusion theory, this paper explains the key enablers that may influence the successful implementation of TCM in the Malaysian context by conducting a survey and interviews within the case company. The findings show that only teamwork, top management support and commitment, and training are the significant enablers for the successful implementation of TCM in the case company.  This study provides an initial understanding of the critical factors that influence the successful implementation of TCM in the Malaysian context. The findings suggest that priority should be given to human-related factors, such as teamwork, top management support, and training to support TCM practices. As the findings are based on a single case study, the findings are of more relevance when the intention is one of particularization. Teamwork has contributed to the successful implementation of TCM in the case company because it is under a joint-venture agreement with a Japanese company. Employees tend to be more disposed to some aspects of Japanese culture, such as high in collectivism.