ABSTRACT

Agbejule, Adebayo (2000). An Administrative and Institutional perspective of activity-based costing implementation. Acta Wasaensia No. 74, 177 p.

This thesis studies the implementation of activity-based costing from an administrative and an institutional perspective. These two perspectives derived from the literature were used to develop a theoretical framework for implementing activity-based costing. The theoretical framework developed suggests that an administrative perspective reveals the practice (action) involved in the implementation; whereas the institutional perspective reveals the broader (macro) factors which shape the internal (micro) processes of implementation. Using mostly the contextual factors found in the ABC implementation in prior studies, this thesis shows how administrative and institutional factors affect different stages of the ABC implementation process.

The empirical work consists of three longitudinal case studies and two field survey interviews with Finnish firms. Based on the case studies, different perspectives become important at the different stages of implementation. Evidence is found that the level of importance of administrative and institutional perspectives varies by stages. For instance, the institutional perspective provides an explanation for the introduction of ABC, whereas the administrative perspective highlights the adoption stage, which supports the belief that a standard project organisation set-up will aid ABC implementation. Three types of ABC implementation models were established, and evidence is also found that the implementation stages will follow different paths depending on the implementation type. For example, an implementation path for an ABC proposed by rule would be different from that implemented out of curiosity. Finally, of particular interest is the symbolic aspect of ABC implementation in the creation of new categories and words. In this study, two new words (activity analysis and processes) have entered the formal system. Also noticeable is the separation of the ABC information system from the current information system of the firms.

This study contributes to improving practice by identifying factors that can be used as a behavioural implementation model to improve the understanding and success of ABC implementation.

This study also contributes to the institutionalist literature. While most of the studies of the institutional perspective have focused on non-profit organisations, this study examines the implementation of management accounting change in profit making organisations. In addition, this study provides insights in to the emergence and persistence of a management accounting system in this case ABC implementation, which is lacking in the literature.

Key words: activity-based costing, adrainistrative, implementation, and institutional theory.