Building successful cost accounting implementation of electronics manufacturing businesses in Thailand: how do its antecedents and consequences play a significant role?

Author:Tontiset, Nattawut
Position:Report - Survey
 
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  1. INTRODUCTION

    In today's competitive environment, every organization encounters various challenges that require them to adapt effectively in order to endure competitiveness. Especially, manufacturing firms must confront more competitive environments (Danneels, 2002) for instance structure of product cost had changed substantially with production overhead cost growing in relative with size (Maelah and Ibrahim, 2007). Thus, manufacturing firm also implements several techniques for sustainable competitive advantage and firm success (Chenhall and Langfield-Smith, 1998). Cost accounting implementation is one of contemporary management accounting techniques that provide cost information usefulness to develop strategic decision making, sustainable competitive advantage crucial to operating more efficiently in violently competitive environment (Tselepis, 1989; Sulaiman et al., 2005). Cost accounting has yielded most significant benefits useful for product decision such as pricing, deleting, value-adding, redesigning, and outsourcing; helpful for product profitability analysis such as making operational improvements, planning budgeting and performing evaluation (Drury and Tayles, 1998; Lawson et al., 2009).

    Cost accounting refers to measure and financial reports and other information related to the organization's acquisition or consumption of resources that provide cost information, namely product costing for both management and financial accounting (Horngren et al., 1997). Product costing comprises the costs incurred in the factory to make a unit of product that is the process of accumulating, classifying, assigning direct materials, direct labor, and factory overhead costs to product (Blocher et al., 2001). Cost accounting success is relatively recent and important development in the general area of cost accounting. In accounting literature, providing a definition, however, was problematic as the literature is vague about what constitutes cost accounting success (Shields, 1995; Foster and Swenson, 1997; Krumwiede, 2008). Recent empirical studies have focused on cost accounting success as measured in various ways, and have paid little attention to the primary objective of cost accounting implementation. Thus, this research is an attempt to provide the definition based on the primary objective of cost accounting.

    For this research, cost accounting success refers to the achievement of primary objective of cost accounting implementation. This research focuses on the main objective of cost accounting in three ways including, accurate calculation product cost, effective inventory valuation, and efficient preparation of financial report (Gordon, 1951; Robert and Stephen, 1987; Anand, 2004; Krumwiede and Suessmair, 2005; Krumwiede, 2008). Moreover, cost accounting literature is a lack of empirical evidence for investigating the relationship between antecedents and consequences of successful cost accounting implementation (Krumwiede et al., 2007; Baird et al., 2007). Thus, the relationship between antecedents and consequences of successful cost accounting implementation is necessary for academic researches to investigate and verify.

    The main objectives of this research are as follows: (1) to examine the roles of successful cost accounting implementation on firm success, (2) to examine the effect of successful cost accounting implementation on decision making effectiveness, appropriate cost budget setting, financial report timeliness, and corporate competency, (3) to scrutinize the relationships between corporate competency and firm success by using competitive learning as a moderator, (4) to investigate the effect of internal resources and capabilities including, congruence of support systems, adequacy of resources, top management support, and accountant competency on successful cost accounting implementation, and (5) to test the moderating effects of organizational enthusiasm on congruence of support systems-successful cost accounting implementation, adequacy of resources-successful cost accounting implementation, top management support-successful cost accounting implementation, and accountant competency-successful cost accounting implementation.

    The key research question of this research is how successfully cost accounting implementation has an impact on firm success. Moreover, the specific research questions are as follows: (1) how do successful cost accounting implementation have an influence on decision making effectiveness, appropriate cost budget setting, financial report timeliness, corporate competency, and firm success?, (2) how do congruence of support systems, adequacy of resources, top management support, and accountant competency have an influence on successful cost accounting implementation?, (3) how does competitive learning moderate the relationship between corporate competency and firm success?, and (4) how does organizational enthusiasm moderate the relationship between congruence of support systems-successful cost accounting implementation, adequacy of resources-successful cost accounting implementation, top management support- successful cost accounting implementation, and accountant competency-successful cost accounting implementation?

    This research generates both theoretical and managerial contributions. In the theoretical contribution, this research provides important extension on previous knowledge and relevant literature of cost accounting success. Moreover, this research focuses on the dimensions of successful cost accounting implementation that can enhance the quality of decision making, appropriate cost budget setting, financial report timeliness, corporate competency, and firm success. In managerial contribution, the findings of this research provide information for managers of manufacturing firms to identify and justify key component of cost accounting success in order to gain sustainability and success in the more competitive environment of manufacturing firms.

    The remainder of the paper is organized as follows. The first provides theoretical foundation. The second provides a brief literature review and links to hypothesis development. The third section provides research methods including, sample and data collection procedure, the variable measurements of each construct, the instrument verification, the statistics, and equations to test the hypotheses are provided. The fourth section provides the results and discussion. The fifth provides both theoretical and managerial implication. The sixth provides limitations and suggestions for future research. The last provides the conclusion.

  2. THEORETICAL FOUNDATION

    This research integrates two theoretical perspectives to support the antecedents and consequences of successful cost accounting implementation including, the resource-based view (RBV) of the firm and contingency theory. For this research, the RBV is applied to explain both the antecedents and consequences of successful cost accounting implementation, internal resources and capabilities that influence on successful cost accounting implementation and through to corporate competency, and firm success. Internal resources and capabilities in this research including congruence of support systems, adequacy of resources, top management support, and accountant competency which are setting as the antecedents of successful cost accounting implementation because it is an important factor affecting to successful cost accounting implementation (Swenson, 1995; Krumwiede and Suessmair, 2005; Krumwiede et al., 2007).The RBV emphasizes on the firm-specific resources that are the sources of competitive advantage. The more valuable resources will create sustainable competitive advantage and bring better performance (Barney, 1991; Russo and Fouts, 1997).

    Moreover, this research also employs contingency theory to explain the phenomenon of implement cost accounting success afterwards; it has an impact on firm performance. Corresponding to contingency theory, the effectiveness of design of cost accounting depends on its ability to adapt to changes in external circumstances and internal factor (Pavlators and Paggios, 2009). Contingency theory hypothesizes that organizational structure is a function of context, a context that is simultaneously determined by both external and internal environment, including organizational factors (Anderson and Lenen, 1999). Researchers have interpreted organizational structure to include management accounting techniques such as planning and controlling, performance measurement and cost management that can enhance organizational performance (Hayes, 1977; Ginzberge, 1980).

    This research has developed the conceptual framework as shown in Figure 1 which builds on resource-based view, contingency theory, and relevant literature. The framework depicts the relationships among successful cost accounting implementation, decision making effectiveness, appropriate cost budget setting, financial report timeliness, corporate competency, and firm success. Also, the framework depicts the relationships between corporate competency and firm success via competitive learning as a moderator. Moreover, the framework depicts the relationships among congruence of support systems, adequacy of resources, top management support, and accountant competency on successful cost accounting implementation via organizational enthusiasm as a moderator. The conceptual model and hypotheses are shown as below.

  3. LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

    3.1 Successful Cost Accounting Implementation and Firm Success

    For this research, cost accounting success refers to achievement of primary objective of cost accounting implementation. This research focuses on the main objective of cost accounting in three ways including, accurate calculation product cost, effective inventory valuation, and efficient preparation of financial report (Gordon, 1951; Robert and Stephen, 1987; Anand, 2004; Krumwiede and...

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