Implementation of Activity-Based Costing Systems by the Macedonian Insurance Segment: The Influence of Organizational Factors on the Adoption Rate

Abstract

Numerous studies unveil the benefits of using activity-based costing systems (ABC) in the service industry in order to improve service quality while keeping costs under control. But, is ABC perceived as a strategic tool to improve competitive positioning and how should insurance businesses implement ABC to achieve this costing system benefits. Research on activity-based costing practices in developing countries is of limited scope. Joining knowledge obtained from literature review and previous research, this paper analyses the degree of ABC application in the Macedonian insurance industry and the related obstacles by performing a field study. The results indicate that certain organizational characteristics influence the decisions to adopt ABC methods, such as company size and product diversity. Other organization variables, such as ABC knowledge and cost structure, appear to be insignificantly related to the adoption. Furthermore, the study indicated that ABC adopters experience benefits in product pricing and cost control decisions, whereas non-adopters are discouraged due to system and behavioral issues.

The impact of organizational characteristics on the adoption of contemporary cost management techniques by the textile industry in North Macedonia

“…There are also quite a few studies conducted in the developing world with the purpose of examining the adoption of management accounting methods by entities from various industries (Cuzdriorean, 2017;Collins & Solabomi, 2017;Dmitrovic-Saponja & Suljovic, 2017;Srbinoska, 2017;AlMaryani & Sadik, 2012;Musbah, 2010;Anderson & Lanen, 1999). The field results indicate that there is space for improving the adoption rate of management accounting practices given the perception of benefits like better strategic decision making and higher market share Nonetheless, lack of finances and unsatisfactory management commitment are stated as the main reasons for the gap.…”

“…Aside from the financial, the organizational characteristics of the companies may be factors which influence costing system implementation. New cost management trends are not used in North Macedonian enterprises as much as in countries with developed economies due to the fact that North Macedonian enterprises are not well familiarized with new techniques that may have a positive impact on enterprises (Srbinoska, 2017;Spaseska et al, 2014). Therefore, the results of analysis of selected organizational factors for determining the decision of adoption of such techniques in the companies may offer an answer on the underuse of contemporary cost technics in the range of companies within the same or different sectors.…”