Shannon W. Anderson

The impact of contextual and process factors on the evaluation of activity-based costing systems

Abstract This paper investigates associations between evaluations of activity based costing (ABC) systems, contextual factors, and factors related to the ABC implementation process using interview and survey data from 21 field research sites of two firms. Structural equation modeling is used to investigate the fit of a model of organizational change with the data. The results support the proposed model; however, the significance of specific factors is sensitive to the evaluation criterion. The model is stable across firms and respondents, but is sensitive to the maturity of the ABC system.

Economic Transition, Strategy and the Evolution of Management Accounting Practices: The Case of India

Liberalization of the Indian economy in 1991 increased the intensity of international competition and changed the internal information needs of Indian managers. This paper explores the evolution of a broad range of management accounting practices in 14 firms using a contingency theory framework. Differences in management accounting practices in 1996 are examined in relation to firms experience in and exposure to world markets prior to liberalization and as a function of contemporaneous differences in competitive strategy. We find evidence of changes associated with shifts in the external environment.

Sourcing parts of complex products: evidence on transactions costs, high-powered incentives and ex-post opportunism

Abstract This paper revisits evidence on the correlates of sourcing decisions in the US auto industry to see whether adoption of new contracting terms and early involvement of suppliers in design activities (e.g. “relational contracting”) yields different results as compared to previous findings. Previous studies find that US auto firms insource complex parts that require investments in specific assets. Absent large differences in production costs, the results suggest that transactions costs associated with external suppliers exceed transactions costs associated with internal suppliers (e.g. loss of high powered incentives). Using data on 156 sourcing decisions for process tooling (dies) of a new car program we find that under the new relational contracting regime, transaction cost theory continues to have explanatory power for sourcing decisions; however, attributes that favored insourcing in previous studies favor outsourcing in this setting. Moreover, more complex subassemblies are associated with fewer distinct suppliers than expectedxa0— evidence of a tendency to co-locate decision rights to reduce transactions costs related to system interactions. After controlling for transaction characteristics that are associated with the sourcing decision, we find no evidence that outsourcing is associated with increased ex post opportunism by the firm (e.g. agreement about contract completion); however, outsourced parts are submitted by suppliers for evaluation significantly later than insourced parts (e.g. delivery holdup).

Direct and Indirect Effects of Product Mix Characteristics on Capacity Management Decisions and Operating Performance

Studies of the performance effects of product mix complexity typically treat plant capacity utilization and machine scheduling (for example, setup frequency) as exogenous factors associated with technology choices, economies of scale, and the level of market demand. However, capacity utilization and machine scheduling also reflect tactical operating decisions taken by local managers to maximize short-run performance. If managers rationally anticipate a negative relation between performance and product mix complexity, we expect tactical operating decisions to be used to mitigate performance degradation. Previous empirical studies that ignore this simultaneity provide an incomplete assessment of the performance effects of product mix complexity. This paper uses path analysis to examine the combined impact of product mix on capacity management decisions and operating performance in three textile manufacturing plants. The results support the hypothesis that product mix acts through capacity management decisions to reduce performance from the level implied by direct effects alone. The evidence also supports the behavioral proposition that managers use capacity management decisions strategically—creating production slack when product mix is anticipated to most affect performance. However, although managers use discretionary capacity management intensively when the product mix is composed of complex, heterogeneous products, they are unable or unwilling to use these decisions to fully offset the performance impact of product mix.