The adoption and implementation of activity‐based costing in Thailand

Abstract

While a number of studies relating to activity‐based costing (ABC) have been conducted, relatively few have been conducted in the South East Asia region. This paper reports the results of a survey of firms in Thailand regarding issues associated with ABC adoption and implementation. The study finds that the rate of ABC adoption in Thailand was relatively high (58% of all respondent firms having ABC knowledge and adopting ABC as an idea; 35% of respondents overall) compared with other Asian countries. In particular, firms with greater variation in product complexity, complexity of production service processes and intensity of capital equipment were more likely to adopt ABC. In line with previous studies, top management support was identified as a key criterion influencing the success of ABC.

ABC success: evidence from ISO 9000 certified companies in Thailand

“…This model is combined with two academic sources: Shields (1995), who was the first to explore contextual, organizational, and behavioral factors associated with ABC success, and Chongruksut and Brooks (2005), who studied ABC adoption and success in Thailand. They ranked five factors affecting ABC implementation success, including TMS and commitment, clear and concise objectives, and non-accounting commitment and ownership.…”

“…ABC not only improves the accuracy of product-and service-costing but also helps managers understand how resources are used through financial performance, such as return on investment and bottom line statements (Cagwin and Bouwman, 2002). Prior research on ABC has focussed on various aspects, including, for example the success of ABC (Anderson and Young, 1999;Foster and Swenson, 1997;Roberts and Silvester, 1996;Shields, 1995), ABC implementation (Gosselin, 1997;Krumwiede, 1998;Majid and Sulaiman, 2008;McGowan and Klammer, 1997;Chongruksut and Brooks, 2005), and the benefits and consequences of ABC (Ittner et al, 2002;Kennedy and Affleck-Graves, 2001;Swenson, 1995;Cagwin and Bouwman, 2002;Maiga and Jacobs, 2008). In this paper, we focus on ABC implementation success and factors influencing this.…”

“…This research is thus useful for companies entering the ISO system and adopting the ABC. Here, the key research question is to confirm the six constructs (topmanagement support, NAO, adequate resources (ADE), LPE, AST, and LIQs), and whether these match the models of Shields (1995) and Chongruksut and Brooks (2005) in the context of companies that are ISO 9000 certified and which apply ABC.…”

“…This paper measures the success of ABC by support for, and the convenience and benefits of, the ABC system (Anderson, 1995;Chongruksut and Brooks, 2005). The research used confirmatory factor analysis (CFA) in order to investigate the six behavioral and organizational constructs on ABC implementation success.…”

“…However, this paper focusses on contextual, behavioral and organizational variables because these are more strongly associated with ABC success than are technical variables (Shields, 1995). We use five significant constructs of the Shields (1995) model, namely top management support (TMS), ABC system training (AST), links to performance evaluation (LPE), links to quality initiatives (LIQ) and the adequacy of resources, along with one suggestion from Chongruksut and Brooks (2005), non-accounting ownership (NAO), to analyze ABC implementation success in the context of ISO 9000 certified companies in Thailand.…”