Discussion between and within groups

In Group 1: Fundamental Concepts, six articles are close to each other and located near the center of the map, which represent the central ideas that are commonly co-cited by other groups. These articles were mainly published in professional-oriented journals, particularly in Journal of Cost Management and Harvard Business Review in the late 1980s and early 1990s. Robin Cooper and Robert S. Kaplan, both academics and consultants, are the most influential writers of ABC fundamental concepts. Cooper (1988) argued the obsolescence of traditional volume-based costing and proposed ABC as being able to calculate more accurate product costs by tracing activities based on the demands within the diversity and complexity of the product mix. Cooper and Kaplan (1991a, 1992) presented that the important characteristics of ABC are the clarification of cost hierarchical structure and measurement of the costs of resource usage.

Noreen (1991) noted that ABC systems provide relevant costs for decisions of product drop and product design under three conditions: 1. Total cost can be partitioned into cost pools, each of which depends solely upon one activity. 2. The cost in each cost pool must be strictly proportional to the level of activity in that cost pool. 3. Each activity can be partitioned into elements that depend solely upon each product. Ness and Cucuzza (1995) showed how Chrysler and Safety-Kleen, early ABC successful adopters, rolled out ABC/ABM into their organizations. Foster and Gupta (1990) suggested that ABC systems appropriately identify cost drivers that adequately capture the complexity and efficiency concepts of manufacturing overhead.

In short, these articles of Group 1 advocate the emergence of the ABC technique and explain its meanings, natures, and functions.

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In Group 2: Methodology and Validation, the articles are dispersedly located among each other owing to the dissimilarity of stances or approaches about the validation of ABC methodologies. Cooper and Kaplan (1988b) co-wrote the article titled “Measure Costs Right, Make the Right Decision”, which advocated ABC as providing more accurate cost information than tradition costing systems to decide a competitive strategy. Cooper (1989) and Babad and Balachandran (1993) both suggested the methods of determining cost drivers in an ABC system. Banker and Johnston (1993) empirically demonstrated that strategic operations-based cost drivers significantly affect the costs of U.S. airline companies. Kee (1995) integrated the theories of both ABC and TOC (theory of constraints), which had previously battled seriously in opposition. However, Datar and Gupta (1994) argued that the assumptions of more cost pools and better specifications in ABC systems did not necessarily result in more accurate product costs, due to the trade-off among aggregation error, specification error, and measurement errors of overhead costs and product-specific units of allocation bases. Noreen and Soderstrom (1994) empirically demonstrated that most of the overhead accounts in hospital service departments are not in accordance with the proportionality hypothesis between costs and activities of ABC. After the mid-1990s, few papers about ABC’s technique improvement were published to deal with some of the unsolved problems - particularly, large and complex firms encountered difficulties justifying large time and costs to collect data based on questionnaires and interviews with employees. Until the 2000s, Kaplan and Anderson (2004) proposed time-driven ABC and a more flexible cost model, which solved this long-standing problem to become the latest improvement of the ABC technique.

In Group 3: Implementation and Diffusion, there are eighteen articles that all were

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published in academic journals after 1994. They are located across the x-axis and to the right of the y-axis. The close distances between the points indicate a high degree of similarity among these articles. These authors primarily explored and analyzed a variety of actually occurring phenomena of implementing ABC in organizations.

We further divide this subject into four topics to discuss them. First, the introduction and implementation of ABC in an organization might cause employee resistance. Bhimani and Pigott (1992) illustrated the unanticipated behavioral consequences within an enterprise, because ABC’s implementation shifted the authority and organizational power base of different line managers. Argyris and Kaplan (1994) suggested the strategies for overcoming participants’ resistance of implementing ABC to be education, sponsorship, and incentive alignment in the initial processes and creating internal commitment in the subsequent process. Malmi (1997) revealed that economic rationale, political motives, and organization culture are the fundamental structural reasons for employee resistance to accounting change.

Second, the successfully influential factors of ABC implementation in organizations are identified. Shields (1995) emphasized ABC as both technical and administrative innovation and provided empirical evidence on 143 firms’ degree to which various behavioral organizational and technical factors were associated with the success of ABC implementation, particularly top management support, link to competitive strategies, link to performance evaluation and compensation, training, ownership by non-accountants, and adequate resources. Anderson (1995) developed a framework for evaluating ABC implementation and hypotheses about influential factors by means of studying General Motors Corporation’s experimentation with it from 1986 to 1993. Krumwiede (1998) found that the direction and level of

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importance for contextual and organization factors vary at ten stages of the ABC implementation process. Drake et al. (1999) noted that ABC focuses attention on activities and resources under the control of multiple workers so as to link with group-based incentives that provide high motivation to cooperate. Anderson and Young (1999) tested a structural model of associations between evaluations of ABC systems, contextual factors, and factors related to the ABC implementation process.

Third, the uses and performances of ABC implementation are examined. Swenson (1995) studied the effect of ABC implementation on manufacturing firms through interviewing managers’ satisfaction and evaluating the uses of ABC. McGowan and Klammer (1997) empirically examined employees’ satisfaction levels associated with ABCM implementation and their perceptions of the factors across four sites. Foster and Swenson (1997) argued the methodology of empirical research about how the success of activity-based cost management should be measured. Malmi (1997) claimed that the success of ABC does not depend on whether one takes consequential actions, but rather on the ability to correctly diagnose strategic decision-making.

Maher and Marais (1998) argued that linear ABC may not provide reliable information to aid in decision-making when resources are supplied on a joint and indivisible basis. Ittner et al. (2002) empirically demonstrated that extensive ABC use increases product quality and decreases cycle time so as to indirectly reduce manufacturing costs.

Fourth, the status of ABC diffusion was surveyed in different countries. Gosselin (1997) examined the strategic posture and organizational structure impact from the adoption and implementation of the activity management approach in Canadian manufacturing firms. Malmi (1999) empirically identified how the efficient-choice,

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forced selection, fad, and fashion perspectives discriminatively influenced Finnish firms at various stages of diffusion. Bjørnenak (1997) studied the characteristics of adopters and expansion types of diffusion among Norwegian companies. Innes and Mitchell (1995) and Innes et al. (2000) respectively surveyed the adoption rate and the reasons for adoption and non-adoption of ABC in the UK’s largest companies. In short, the results of studies in Finland, Canada, Norway, and the UK indicate that ABC is disseminated in many industries among many countries, but it has not been widely adopted and implemented despite the theoretical benefits of ABC.

In Group 4: Benefits and Risks, four articles all were published in the 2000s when ABC had already existed for a long time. Jones & Dugdale (2002) studied the formation and reformation process of ABC theories and practices by a network of human and non-human allies as well as the recursive cycles of local reembedding and global disembedding over time and space. Briers and Chua (2001) studied the change processes of implementing ABC in an Australian manufacturing firm by a heterogeneous actor-network of local actors and cosmopolitans as well as the mediation of five boundary objects. Granlund (2001) found that it is difficult to change management accounting systems in spite of the tremendous pressure from the operating environment owing to the intertwining of human, institutional, and economic factors. Armstrong (2002) argued that the accountably routine activities imposed by ABC hinder the non-routine initiatives of the staff department, which target its competitive advantage. In short, the articles discuss the complex relationship between human thought and the social context within which ABC is constructed, developed, transmitted, and maintained. These authors thus criticize that ABC originally was a very popular modern tool, but subsequently it may have turned out to be an untrustworthy system. In other word, they cautioned that as ABC becomes more

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powerful, it also becomes more fragile.