Impact of Characteristics and Environment of the Company on the Adoption of ABC System in the Large Manufacturing Companies in Karnataka
Al-Saidi, Shafeq H. M., and Gowda, H. Nanje (2015). ‘Impact of Characteristics and Environment of the Company on the Adoption of ABC System in the Large Manufacturing Companies in Karnataka’. In Parasuraman, N.R. and Rao, Ullas (edt). ‘ 4th International conference on Emerging Trends in Finance and
Posted: 17 Apr 2017 Last revised: 26 Nov 2018
Date Written: August 1, 2015
The present research examines one set of potential reasons for the paradox of why ABC system has not been widely adopted despite its superiority over the traditional costing systems and therefore the favourable context for its adoption and implementation. A questionnaire survey of large and mega manufacturing companies in Karnataka, India, is used to examine the impact of certain factors, particularly in relation to the characteristics and business environment of the company, on the adoption of ABC system. Four variables are selected for this study: degree of production complexity, degree of product diversity, degree of competition faced by the company, and the level of overheads. Using binary logistic regression, the study indicated a positive and significant influence of the level of overheads on the adoption of ABC system. Degree of Production complexity, degree of product diversity, and degree of competition have no significant influence on the adoption of the ABC system by the companies.
Keywords: Costing Systems; Activity-based costing system; ABC; Adoption
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