Cost Stickiness and Core Competency: A Note

21 Pages Posted: 28 Mar 2008

See all articles by Ramji Balakrishnan

Ramji Balakrishnan

University of Iowa - Department of Accounting

Thomas S. Gruca

University of Iowa - Department of Marketing

Date Written: January 16, 2008

Abstract

Using data from Ontario hospitals, we investigate the conjecture that the stickiness of costs would be greater for functions that relate to an organization's core competency. We find operating costs for the hospital as a whole are sticky. Moreover, we find higher stickiness in costs pertaining to patient care relative to costs in other functions. Indeed, there is no evidence of stickiness in the operating costs of support departments that are peripherally related to the hospital's mission.

Keywords: cost structure, sticky cost, hospitals

JEL Classification: D23, M40, M46, M47, M48

Suggested Citation

Balakrishnan, Ramji and Gruca, Thomas S., Cost Stickiness and Core Competency: A Note (January 16, 2008). Contemporary Accounting Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1113775

Ramji Balakrishnan (Contact Author)

University of Iowa - Department of Accounting ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0958 (Phone)
319-335-1956 (Fax)

Thomas S. Gruca

University of Iowa - Department of Marketing ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States

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