The implementation of activity-based costing at Norwich Union Life Insurance (NZ) Limited and Nelson Marlborough Health Services Limited : a comparative analysis. (1994)
AuthorsDance, Karyn Mariashow all
Since the introduction of activity-based costing (ABC), researchers have identified situations where its implementation is deemed appropriate. Furthermore, a framework for implementation has been recommended. Additionally, it is suggested that the likelihood of installation failure increases when accounting staff sponsor the implementation of ABC, but Cotton (1994) did not find evidence to support this prediction. This indicates that the body of knowledge concerning the successful implementation process of ABC is incomplete. Consequently, two case studies on organisations that implemented ABC, Norwich Union Health Insurance (NZ) Limited (Norwich) and Nelson Marlborough Health Services Limited (NMH), were conducted to expand the existing body of knowledge of the implementation of ABC. The behavioural issues relating to individuals' reactions to the implementation ofABC were also examined. A number of anomalies between the existing body of knowledge and these practical examples of the implementation of ABC were found. In both cases, the decisions made prior to implementation and the installation processes used at these firms deviated from those recommended. Additionally, a number of previously unspecified symptoms indicating that a firm's costing system required alteration were identified. Similarly, additional reasons for implementing ABC were detected. Furthermore, the recommended methods for minimising individuals' reactions to change did not appear to be effective at NMH. Despite the lack of generalisability and other limitations of this research, the body of knowledge concerning the implementation of ABC has been expanded and areas for further research have been recommended.