Do Costing System Design Choices Mediate the Link Between Strategic Orientation and Cost Information Usage for Decision Making and Control?

Posted: 24 May 2023 Last revised: 27 Nov 2023

See all articles by Piyada Daowadueng

Piyada Daowadueng

Khon Kaen University, Faculty of Business Administration and Accountancy

Sophie Hoozée

Ghent University - Department of Accountancy and Corporate Finance

Ann Jorissen

University of Antwerp - Department of Accounting & Finance

Sophie Maussen

Ghent University - Department of Accounting, Corporate Finance and Taxation

Date Written: May 11, 2023

Abstract

This study investigates the mechanisms that link strategic orientation to choices regarding the purposes of cost information use. We do so by examining whether costing system design choices regarding complexity and diversity mediate the relationships between an exploitation or exploration orientation and cost information usage for decision making and control. Our hypotheses are mainly based on information-processing theory and organizational learning. Using survey data collected from 191 business units of medium- and large-sized Thai manufacturing and service firms, structural equation modelling demonstrates different patterns of results between an exploitation and an exploration context. As predicted, we find that costing system design choices are mediating mechanisms only in the context of exploration. More specifically, an exploration orientation is related to more complex costing systems, which, in turn, results in greater usage of the subsequent cost information for decision making. Similarly, costing system diversity also operates as a channel enacting a link between exploration and cost information usage for both decision making and control. For exploitation, we find a significant direct positive effect on cost information usage for decision making as well as for control. By providing insight into antecedents and consequences of costing system design choices, our study complements prior costing research as well as studies on management control practices across different innovation modes.

Keywords: Cost accounting, costing system design, decision facilitation, decision influencing, exploitation, exploration

JEL Classification: M41

Suggested Citation

Daowadueng, Piyada and Hoozée, Sophie and Jorissen, Ann and Maussen, Sophie, Do Costing System Design Choices Mediate the Link Between Strategic Orientation and Cost Information Usage for Decision Making and Control? (May 11, 2023). Management Accounting Research, Vol. 61, 100854, Available at SSRN: https://ssrn.com/abstract=4455026

Piyada Daowadueng

Khon Kaen University, Faculty of Business Administration and Accountancy ( email )

123 Mittraphap Rd., Muang KhonKaen, Khon Kaen
Khon Kaen 40000
Thailand

Sophie Hoozée (Contact Author)

Ghent University - Department of Accountancy and Corporate Finance ( email )

Sint-Pietersplein 7
Ghent, 9000
Belgium

Ann Jorissen

University of Antwerp - Department of Accounting & Finance ( email )

Prinsstraat 13
Antwerpen, B-2020
Belgium
00 32 3 220 40 92 (Phone)
00 32 3 220 40 64 (Fax)

Sophie Maussen

Ghent University - Department of Accounting, Corporate Finance and Taxation ( email )

Campus Tweekerken
Sint-Pietersplein 7
Ghent, 9000
Belgium

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