Success Of Activity Management Practices : The Influence Of Organizational And Cultural Factors

Accounting and Finance 47 (2007) 47–67

©

The Authors

Journal compilation

©

2006 AFAANZ

045BAO©68lCcx aT1cfFc0ohokI-reu5wd nA,3e tU9iulnl1t KghP ouarbnsld iJs oFhuiinnrnagna, lcL ectodm. pilation © 2006 AFAANZ

ORIGINAL ARTICLE

K. Baird

et al.

Success of activity management practices: the influence

of organizational and cultural factors

Kevin Baird, Graeme Harrison, Robert Reeve

Division of Economic and Financial Studies, Macquarie University, Sydney, 2109, Australia

Abstract

This study examines the success of activity management practices and the

organizational and cultural factors affecting success at each of Gosselin’s (1997)

three levels of activity analysis (AA), activity cost analysis (ACA) and activitybased

costing (ABC). Data were collected by survey questionnaire from a random

sample of managers of Australian business units. The results indicate that activity

management is moderately successful in Australian organizations, with greater

use associated with higher levels of success. Two organizational factors (top

management support and link to quality) were associated with success at each

of Gosselin’s three levels, whereas training was associated at the AA and ACA

levels. The cultural factor of outcome orientation was associated with success

at each level, with attention to detail important at the ABC level. Organizational

factors were more strongly associated with activity management success than

cultural factors.

Key words

: Activity management; Activity analysis; Activity cost analysis;

Activity-based costing; Organizational culture

JEL classification

: M40

doi

: 10.1111/j.1467-629x.2006.00195.x

1. Introduction

This paper has three main aims. The first is to examine the success, as perceived

by Australian managers, of activity management practices at each of

Gosselin’s (1997) three levels of activity analysis (AA), activity cost analysis

(ACA) and activity-based costing (ABC). The motivation is a contradiction in

The authors acknowledge the helpful comments of the Editor and reviewer of this paper.

Received 9 June 2005;

accepted 10 March 2006 by Robert Faff (Editor).

48 K. Baird

et al.

/Accounting and Finance 47 (2007) 47– 67

©

The Authors

Journal compilation

©

2006 AFAANZ

published works between the claimed benefits of activity management practices,

particularly ABC, and success rates observed in practice. On the one hand, many

authors advocate the benefits of ABC (see Innes and Mitchell, 1990; Johnson,

1990), and many studies provide evidence to support its success (Anderson, 1995:

Swenson, 1995; Foster and Swenson, 1997; McGowan and Klammer, 1997). On

the other hand, studies of organizations that have adopted ABC report considerable

variation in the level of success achieved, and success rates are found to be

generally lower than might be expected, given the claimed benefits (Cobb

et al.

,

1992; Anderson, 1995; Malmi, 1997).

We argue that part of the explanation for this contradiction might lie in differences

in the ways previous studies have defined and operationalized activity

management, and in the approaches they have taken to measure success. These

differences are detailed in Section 2. In particular, studies have typically failed

to consider that organizations might choose to operationalize activity management

practices at different levels and for different purposes. Hence, the findings

of previous studies might be the result of respondents being asked to evaluate

success against unclear or inappropriate descriptions of activity management

practices and/or success criteria.

The contribution of our study is that we use a multilevel conception of activity

management

...