Time-Driven Activity-Based Costing : Potential for Application at the SMEs in Poland and Bulgaria

Despite the growing popularity of the Activity-Based Costing (ABC) approach over the last 30 years, its recent development – the Time-Driven Activity-Based Costing (TDABC) concept (Kaplan and Anderson, 2004) – remains largely unknown for the economic science and business practice in Central and Eastern Europe, Poland and Bulgaria included. This paper argues that this omission is a grave shortcoming, because, the extant research has suggested that TDABC has the potential to eliminate the main barriers to implementing, maintaining and modifying an ABC model at most organizations, especially at the small and medium-sized enterprises (SMEs). Specifically, two are the main arguments of the paper. First, implementing advanced costing systems such as TDABC in the SMEs in Poland and Bulgaria would have a greater impact on the general socioeconomic development than any improvements in managing costs of the large enterprises, because the SME sector plays a relatively more important role in these countries than large enterprises do. Second, TDABC is an appropriate costing approach for the SME sector in Poland and Bulgaria for the following reasons: (1) SMEs in the two countries seem to be relatively more labor-intensive; (2) TDABC models have the potential power to contribute to solving some of the most pressing problems of the Polish and Bulgarian SMEs; and (3) the TDABC approach – that engages relatively few resources, needs data about a relatively small pool of activities, and does not require continuous employee interviews and resurveys – seems to have greater potential for implementation at the SMEs than the traditional ABC approach has. The broad goal of the paper is to spark a renewed interest about the issues of strategic cost management at large. A more specific goal is to make this new concept popular in Central and Eastern Europe, which to enable its further theoretical development, as well as its practical implementation