The Effects of Organizational Culture and Structure on the Success of Activity-Based Costing Implementation

Purpose We examine the interactive effects of organizational culture and structure on the success of implementing activity-based costing (ABC) in Chinese manufacturing firms. Methodology/approach We applied contingency theory of management accounting and used a questionnaire survey of 106 respondents. Findings The results indicate that a formalized organizational structure significantly affects the success of implementing ABC. The organizational culture factors, outcome orientation and attention to detail , were significantly associated with the success of implementing ABC. Further, interactions between centralization and outcome orientation and formalization and innovation were associated with success in implementing ABC. Research implications/limitations While this study is constrained to Chinese manufacturing firms, its findings have ramifications for organizations in both developed and less-developed economies as the study demonstrated that organizational structure and culture interact with each other to affect the implementation success of a management accounting system. Originality/value This paper presents the first attempt to demonstrate the interactive effect of organizational culture and structure on the success of implementing ABC in organizations.