Factors influencing the implementation of activity-based costing in Thai companies
Creators: name: KONGCHAN, PAWEENA
Publisher: name: RMIT University
Year: 2024

description: This research aims to extend the understanding of contingency theory and the factors influencing Activity-Based Costing (ABC) and Activity-Based Budgeting (ABB) system implementation in developing economies. Using qualitative case-based methods, the unique features of ABC/ABB implementation in three large Thai companies from telecommunications, banking and oil industries were investigated. Interviews were conducted with key personnel involved with the implementation process. The Telecommunications Company and Bank implemented ABC and the Oil Company implemented ABB. This research contributes to the literature in four areas. Firstly, the key literature investigating ABC implementation draws on contingency theory. However, the empirical research is dominated by quantitative methods. This research contributes to contingency theory with in-depth case analysis. Secondly, this research contributes to the theory with a detailed investigation of six contingency factors: competition, government policy, technology, organizational strategy, structure and culture, throughout the process of implementation. It was found that competition in the market was the most important factor in adopting ABC/ABB systems. In Thailand recent changes in the economic, political, government policy and technology have caused changed in competition. This also linked to changes in organizational strategy. This research found that ABC was able to contribute to differentiation strategy, focused by Telecommunications Company and Bank. ABB was adopted to meet cost leadership strategy, found in the case of the Oil Company. Other factors, including organizational culture and structure were shown as important contributors to the design, implementation of ABC/ABB and the use of that information. In addition, this research enabled a more detailed exploration of the interrelationship between the contingency factors and how they played out through the varying stages of implementation. Thirdly, this research contributes to the contingency theory literature by providing in-depth study of ABC/ABC implementation success through the factors identified by Shields (1995). This research found that the ABC team which was responsible only for the ABC implementation and external consultants who helped to design and implement the ABC model will make the implementation effectively. Top management support is a crucial factor, as it drives other factors. Organisational culture of three cases, reflected in Thai culture, combined with an effective human resource development strategy enabled the companies to successfully implement ABC/ABB with minimal resistance. Fourthly, this research contributes to the management accounting literature by providing a detailed investigation of ABC adaptations to suit local needs. It was found that the design of ABC by the Bank was a hybrid combination of the ABC system and the TDABC concepts. The Telecommunications Company designed the ABC system by combining traditional cost system and ABC system. The ABB information flow of the Oil Company started with the setting up of expected profitability which was the last step of the traditional ABB information flow. This study provides empirical evidence that enables a better understanding of the influence of contingency factors on the implementation of ABC/ABB in a developing country setting. This study would be beneficial for other companies in developing economies to assist with successful ABC/ABB implementation in a shorter time period with fewer problems.<br>