Citations


Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062
USA

Conference List

Activity Cost Management and its Effect on Enterprise Productivity

John Nkeobuna Nnah Ugoani

John Nkeobuna Nnah Ugoani 1


  1. Department of Management Sciences College of Management and Social Sciences, Rhema University, Nigeria 1

Pages: 232-247

DOI: 10.18488/journal.62.2019.64.232.247

Share :

Article History:

Received: 28 March, 2019
Revised: 06 May, 2019
Accepted: 19 June, 2019
Published: 22 August, 2019


Abstract:

This study investigated the relationship between activity cost management and its effect on enterprise productivity using the exploratory research design. It focused on critical factors that lead to cost-effectiveness. A sample of 113 respondents participated in the study, and data collected from secondary and primary sources were analyzed through descriptive and regression statistical techniques. The result showed that activity cost management has significant positive effect on enterprise productivity. The new result is important because an enterprise is effective when it attains its goals, but productive only when such goals are achieved efficiently. Through the exploration and result, the study clearly highlighted that factors such as activity-based cost management, cost-benefit-analysis, internal control, ratio analysis, zero-base budgeting, internal accountability, and transparency, as well as cost leadership form the basis for enterprise productivity. An effective board of directors is imperative in any enterprise to provide necessary cost leadership for cost-effectiveness and enterprise productivity. The study was limited by insufficient current academic literature, therefore, further study could examine the relationship between activity cost management and enterprise failure. Based on the result, it was recommended that activity cost management practices must be intensified in public enterprises as a measure to reduce the heap of fraud prevalent in such enterprises.
Contribution/ Originality
This study is one of the very few recent studies that have investigated the relationship between activity cost management and enterprise productivity using descriptive and regression statistical techniques to achieve the desired result. The paper’s primary contribution is finding that there is significant association between activity cost management and enterprise productivity.

Keywords:

Activity cost management, Efficiency, Ratio analysis, Internal control, Internal accountability, Profitability, Enterprise resource planning, Management accounting.

Reference:

Aakar, D.A., G.S. Day and V. Kumar, 2004. Marketing research. 8th Edn., Hoboken, N: John Wiley and Sons.

Abdel-Kader, M.G. and B. Wadongo, 2011. Performance management in NGOs. Review of Management Accounting Research: 450-478.

Abolo, E.M., 1998. Human resources accounting: Its role in strategic human resource management. Monthly Business & Economic Report. September, 1998, First Bank of Nigeria Plc, Lagos. pp: 1-7.

Abolo, E.M., 1999. Productivity improvement programme: Logic or lottery. Monthly Business & Economic Report, First Bank of Nigeria Plc, Lagos. pp: 1-8.

Adams, S.J., I.J. Pryor, D.E. Keller and E. Mary, 2010. Management accounting information. 4th Edn., USA: South-Western College Publishing.

Al-Halabi, N., 2013a. The role of management control and accounting systems in increasing the efficiency of activities in manufacturing companies. European Journal of Business and Management, 5(13): 147 – 158.

Al-Halabi, N., 2013b. The effect of applying balanced scorecards in increasing the operational efficiency of activities in manufacturing companies. Journal of Innovative System Design and Engineering, 7(7): 53 – 63.

Al-Halabi, N.B. and O.F. Shaqqour, 2018. The effect of activity-based costing (ABC) on managing the efficiency of performance in Jordanian manufacturing corporations-an analytical study. Accounting and Finance Research, 7(1): 262 - 271.Available at: https://doi.org/10.5430/afr.v7n1p262.

Alagbe, J., 2018. How to build great business in 2019. Westafrica Businessnews, 5(270): 17.

Alleyne, P. and D. Weekes-Marshall, 2011. An exploratory study of management accounting practices in manufacturing companies in Barbados. International Journal of Business and Social Sciences, 9(2): 49-58.

Antos, J., 1992. Activity-based management for service, not-for-profit, and governmental organizations. Journal of Cost Management, 6(2): 13-23.

Armstrong, P., 2002. The cost of activity based management. Accounting, Organizations and Society, 27: 99-120.

Arnaboldi, M. and I. Lapsley, 2003. Activity based costing, modernity and the transformation of local government: A field study. Public Management Review, 5(3): 345-375.Available at: https://doi.org/10.1080/1471903032000146946.

Arslan, A. and S. Staub, 2013. Theory X and theory Y type leadership behavior and its impact on organizational performance: Small business owners in the Şishane lighting and Chandelier District. Procedia-Social and Behavioral Sciences, 75: 102-111.Available at: https://doi.org/10.1016/j.sbspro.2013.04.012.

Asika, N., 2004. Research methodology: A practical approach. Lagos: Mukugamu & Brothers Enterprises.

Avino, Z.B., 2013. Top management team diversity, quality decisions and organizational performance in the service industry. Journal of Management Strategy, 4(1): 113 – 123.Available at: https://doi.org/10.5430/jms.v4n1p113.

Baird, K.M., 2007. Adoption of activity management practices in public sector organizations. Accounting and Finance, 47(4): 551- 569.Available at: https://doi.org/10.1111/j.1467-629x.2007.00225.x.

Baird, K.M., G.L. Harrison and R.C. Reeve, 2004. Adoption of activity management practices: A note on the extent of adoption and the influence of organizational and cultural factors. Management Accounting Research, 15(4): 383-399.Available at: https://doi.org/10.1016/j.mar.2004.07.002.

Boyd, D.P., 2011. Lessons from turnaround leaders. Strategy & Leadership, 39(3): 36-43.Available at: https://doi.org/10.1108/10878571111128801.

Cheng, B., I. Ioannou and G. Serafeim, 2014. Corporate social responsibility and access to finance. Strategic Management Journal, 35(1): 1-23.Available at: https://doi.org/10.1002/smj.2131.

Chi, W., L.L. Lisic and M. Pevzner, 2011. Is enhanced audit quality associated with greater real earnings management? Accounting Horizons, 25(2): 315-335.Available at: https://doi.org/10.2308/acch-10025.

Cleary, R., 1992. Models as affective research tools in D. M. Cavanagh, and G. M. Rodwell (Eds), Dialogues in Educational Research Darwin, N. T. USA: McGrew-Hill Irwin, William Michael Press. pp: 261.

Covin, J.G., D.P. Slevin and R.L. Schultz, 1997. Top management decision sharing and adherence to plans. Journal of Business Research, 40(1): 21-36.Available at: https://doi.org/10.1016/s0148-2963(96)00207-x.

Creswell, J., 2009. Research design: Qualitative, quantitative, and mixed methods approaches. London: Sage Publications Inc.

Dorgham, T., N. Al-Halabi and M. Shanikat, 2014. The effect of management control systems limiting frandulent practices in manufacturing companies. European Journal of Finance and Accounting, 5(6): 1 – 14.

Dorotinsky, W. and S. Pradhan, 2007. Exploring corruption in public financial management. In J. E Campos and S. Pradhan (Eds), The Many Faces of Corruption. Tracking Vulnerabilities at the Sector Level. Washington, D. C: The World Bank. pp: 257-294.

Drucker, P.F., 2009. The effective executive. New York: Harper Colins.

Drury, C., 2000. Management and cost accounting. 5th Edn., London: Thomson Learning. .

Drury, C., 2006. Management accounting for business. 6th Edn., London, UK: Patrick Bond.

DuBrin, A.J., 2012. Leadership: Research findings, practice and skills. Mason, OH: Cengage, South-Western.

Edmondson, A.C. and S.E. McManus, 2007. Methodological fit in management field research. Academy of Management Review, 32(4): 1246-1264.Available at: https://doi.org/10.5465/amr.2007.26586086.

Ezejelue, A., E.O. Ogwo and A. Nkamnebe, 2008. Basic principles in managing research projects. 2nd Edn., Port-Harcourt: Educational Books Ltd.

Gill, A. and J.D. Obradovich, 2012. The effect of corporate management control, and accounting systems and financial leverage on the value of American firms. International Research Journal of Finance and Economics, Issue 91: 1 - 14.

Gomez-Mejia, B.B. D. and R.L. Cardy, 2005. Porter’s business unit strategies. In L. R., Gomez-Mejia B. D. Balkin, and R. L. Cardy (Eds), Managing Human Resource, 4th Edn., New Delhi: Prentice-Hill of India private Ltd. pp: 29-30.

Gorzeń-Mitka, I. and M. Okręglicka, 2014. Improving decision making in complexity environment. Procedia Economics and Finance, 16: 402-409.Available at: https://doi.org/10.1016/s2212-5671(14)00819-3.

Greenwood, T.G. and J.M. Reeve, 2002. Activity-based cost management for continuous improvement: A process design framework. Journal of Cost Management, Winter: 22 – 40.

Greiner, A., M. Kohlbeck and T. Smith, 2013. Do auditors perceive real earnings management as a business risk? Working paper. USA: Florida Atlantic University.

Guest, D.E., N. Conway, R. Briner and M. Dickman, 1996. The state of the psychological contract in employment: Issue in people management. London: IPD.

Harrison, F.E., 1995. The managerial decision-making process. 4th Edn., Boston: Houghton Mifflin Company.

Hermanson, R.H., J.D. Edwards and M.W. Maher, 1992. Accounting principles. 5th Edn., Boston, MA: Richard D. RWIN, INC.

Hill, C.W.L. and G.R. Jones, 1995. Strategic management: An integrated approach. 3rd Edn., Boston: Houghton Mifflin Company.

Hill, T., 2000. Manufacturing strategy: Text and cases. 3rd Edn., New York: McGraw-Hill.

Hilton, R.W., 1999. Managerial accounting. 4th Edn., USA: Irwin McGraw-Hill.

Hossan, F. and M.A. Habib, 2010. Performance evaluation and ratio analysis of pharmaceutical company in Bangladesh. Master’s Thesis in International Business 15 ECTS Department of Economics and Informatics, University West. Spring term 2010.

Judeh, A.A.M.K. and K.U.M. Nimer, 2011. The extent of using management accounting approaches in Jordanian manufacturing, listed companies - a survey study. Economic and Management Journal, 1(37): 13 – 37.

Khan, I.A., 2011. Target cost: The Japanese strategy for continuous improvement. VSRD – IJBMR, 1(3): 177-184.

Koerber, A. and L. McMichael, 2008. Qualitative sampling methods: A primer for technical communicators. Journal of Business and Technical Communication, 22(4): 454-473.Available at: https://doi.org/10.1177/1050651908320362.

Koutsoyainnis, A., 1977. Theory of econometrics. Humpshire: Macmillan Education Ltd.

Lasher, W.R., 1997. Advanced financial accounting. 5th Edn., London: Pitman Publishing Company.

Lata, R.S., 2014. Non-performing loan and its impact on profitability of state owned commerical banks in Bangladesh: An empirical study. Proceedings of 11th Asian Business Research Conference, 26-27 December, 2014, BIAM Foundation Dhaka, Bangladesh.

Lere, J.C., 1991. Managerial accounting: A planning-operating-control framework. New York: John Wiley and Sons.

Lucey, T., 2001. Management accounting. 4th Edn., New York: ELST.

McGregor, L., 2010. Improving the quality and space of decision-making. Journal of Change Management, 2: 344 – 356.

McNaughton, D., 1997. Operating and financial control. In D. McNaughton (Ed), Banking Institutions in Developing Markets? Building Strong management and Responding to Change.  Washington, D. C.: The World Bank, 1:150 – 154.

Melese, F., J. Blandin and S. OKeefe, 2004. A new management model for government: Integrating activity based costing, the balanced scorecard, and total quality management with the planning, programming and budgeting system. International Public Management Review, 5(2): 103-131.

Meredith, J., 1993. Theory building through conceptual methods. International Journal of Operations & Production Management, 13(5): 3-11.Available at: https://doi.org/10.1108/01443579310028120.

Molina-Azorin, J. and R. Cameron, 2010. The application of mixed methods in organizational research: A literature review. The Electronic Journal of Business Research Methods, 8(2): 95-105.

Monwuba, A.O., 1995a. Auditing and investigations: 76 questions and answers. Onitsha: Fortune Printing Ind. Ltd.

Monwuba, A.O., 1995b. Management accounting. Enugu: IBS Press Nigeria.

Moorthy, K. and P. Yacob, 2013. Green accounting: Cost measures. Open Journal of Accounting, 2(01): 4-7.Available at: https://doi.org/10.4236/ojacct.2013.21002.

Muo, I.K., 1999. The nature scope & challenges of management. Lagos. Impressed Publishers.

Navaratne, K. and J. Kothalawala, 2012. Management practices survey: Private health sector, Sri Lanka, Neilson Company, Sri Lanka.

Nelson, D.L. and J.C. Quick, 2003. Purposes of scientific research: Applied and basic research. In D. L. Nelson and J. C. Quick (Eds), Organizational Behaviour: Foundations, Realities, and Challenges. 4th Edn., USA: South-Western. pp: 656-670.

Nwankwo, O.C., 2011. A practical guide to research writing for students of research enterprise. 4th Edn., Port Harcourt: Pam Unique Publishers.

Nwizu, G.C., 2002. Studies in modern public administration. Okigwe: Marco Press.

Obodoeze, F.O., 1996. Modern textbook of research methodology. Enugu: Academic Publishing Company.

Ogbo, A., 2010. A management challenge on cost-benefit analysis and effectiveness. Management in Nigeria, 46(3): 26-29.

Pettigrew, A.M., 1987. Context and action in the transformation of the firm. Journal of Management Studies, 24(6): 649-670.Available at: https://doi.org/10.1111/j.1467-6486.1987.tb00467.x.

Ranft, R., 1978. Productivity. R & D productivity. California: Hieghes Aircraft, Company.

Reynolds, A. and V.D.H. Poll, 2015. ABC implementation in the Nelson Mandela Bay Metropole: How far should manufacturing organisations go? Southern African Business Review, 19(2): 118-136.Available at: https://doi.org/10.25159/1998-8125/5810.

Roach, S.S., 1998. In search of productivity. Harvard Business Review, 76(5): 153-159.

Schinckus, C., 2010. The importance of communicative rationality on financial market. Journal of Economic and Social Research, 12(2): 119 – 144.

Shiozawa, Y., 2006. Economics and accounting: A comparison between philosophical background of two disciplines in view complexity theory. Accounting, Auditing & Accountability Journal, 12(1): 19-51.

Shtub, A., 1999. Enterprise resource planning: The dynamics of operations management. Boston: Klewer Academic Publishing.

Smith, E.A., 1990. The productivity manual. Tokyo: Gulf Public Company.

Steiner, T., 2000. Activity-based accounting for total quality management. Accounting, Englewood Cliffs, New Jersey: Prentice Hall. pp: 40.

Stevenson, W.J., 2002. Operations management. 7th Edn., Boston: McGraw-Hill, RWIN.

Swenson, D. and A. Ansari, 2010. Best practices in target costing. Management accounting research, 2(1): 12-15.

Tuttle, T., 1983. Organizational productivity: A challenge for psychologists. American Psychologist, 38(4): 479-486.Available at: https://doi.org/10.1037/0003-066x.38.4.479.

Ugoani, J.N.N., 2018a. Effective management decision-making and operational effectiveness in Nigeria. Amity Business Journal, 7(2): 1-8.

Ugoani, J.N.N., 2018b. Performance ratio analysis and management effectiveness. Business Management and Economics Research, 4(12): 171-177.

Ugoani, J.N.N., 2019a. Budget management and organizational effectiveness in Nigeria. Business Management and Economics Research, 5(2): 33-39.

Ugoani, J.N.N., 2019b. Performance management and bank profitability in Nigeria. Business Management and Economics Research, 5(3): 49-56.

Uwazie, I.U., 2007. Profit maximization versus wealth maximization. In U. I. Uwazie (Ed), Project Evaluation & Analysis II. Owerri: Chukwuemeka Publishers. pp: 143 – 145.

Whittington, R. and P. Delany, 2013. Wiley CPA examination review: Outlines & study guide. 39th Edn., John Wiley & Sons Inc. pp: 77.

Ytanyi, O., U.J.F. Ewurum and W.I. Upere, 2012. Evaluation of decision-making criteria with special references to quantitative and qualitative paradigms. African Journal of Business Management, 6(44): 1110 - 1117 Available at: https://doi.org/10.5897/ajbm12.1299.

Yu, B.T.W. and P.K.C. Lee, 2012. Quality management framework for public management decision-making. Management Decision, 50(3): 420 – 438.

Zangemeister, C., 2005. Extended economic analysis (EWA), Research Series (Eb 879) Bundessanstaltfur Arbeitsschutz und Arbeitschieizin, Dortmund.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:


Related Article

( 1 ) Activity Cost Management and its Effect on Enterprise Productivity
( 2 ) Benefit-Cost Analysis of Alternative Insect Pests Management in Cashew and Mango Orchards in Tanzania
( 3 ) Implications of Crude Oil Price Volatility and Parallel Exchange Rate Fluctuation on the Cost of Living in Nigeria
( 4 ) Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size
( 6 ) The Development of Participated Environmental Education Model for Sustainable Mangrove Forest Management on Eastern Part of Thailand
( 7 ) Earnings Management and Stock Market Returns
( 8 ) Quality Management Practices towards Customer Satisfaction in Local Authority Public Services Website
( 9 ) The Influence of Information Technology and Communication Supply Chain Management Performance for Greater SME Manufacturing in Aguascalientes
( 11 ) Moderating Effects of Project Management Experience, Project Team Size, Project Duration and Project Value Size on the Relationship between Project Manager’s Leadership Roles and Project Team Effectiveness in Malaysia
( 12 ) The Role of Strategic Planning on the Management of Organizational Change
( 13 ) Determinants of Share Price Movement in Nigeria -The Management Perspective
( 14 ) Various International Experiences in Waste Management - Useful Lessons for Algeria
( 15 ) A Negative Rational Pigs Game and its Applications to Website Management
( 16 ) Decision-Making on Working Capital Management, Based on Industry Differences
( 17 ) Africa's Human Capital Development: Is Public Finance Management an Effective Strategy?
( 19 ) Reminiscing Stock Splits Announcement: A Malaysian Case
( 20 ) Micro-Credits and Poverty Reduction in Dar-Es-Salaam, Tanzania: A Case Study of Dar-Es-Salaam Commercial Bank
( 21 ) The Life-Time of Tomorrow Party of Japan and Its Negative Impacts on the Anti-Nuclear Movements in Japan’s Politics
( 22 ) Republic of Zimbabwe National Water Policy: A Desk Review of the Gaps between the Policy and Its Implementation
( 23 ) Measuring the Quality of Islamic Banks Services and Its Impact on Customers Satisfaction A Survey Study on the Islamic Banks Customers in Lattakia-Syria
( 25 ) Land Use/Land Cover Change and its Effects on Bamboo Forest in Benishangul Gumuz Region, Ethiopia
( 26 ) The Role of Social Entrepreneurship in Pakistan and its Impact on Economy
( 27 ) The Effect of Internal and External Factors of Companies on Profitability and its Implications on Stock Price Index of State-Owned Banks
( 29 ) Relationships Between Leadership Roles and Project Team Effectiveness as Perceived by Project Managers in Malaysia
( 30 ) Relationships among Team Trust, Team Cohesion, Team Satisfaction and Project Team Effectiveness as Perceived by Project Managers in Malaysia
( 31 ) The Effects of Exchange Rate Liberalization in Kenya on French Beans Exports
( 32 ) Does the Mena Countries May Converge in GDP to Southern European One? The Effects of International Trade
( 33 ) Can the Interdependence Effect and the Contagion Phenomena be Related with One Another?
( 34 ) Corruption’s and Democracy’s Effects on Economic Growth
( 35 ) Effective Tax Administration and Institutionalization of Accounting Systems in Small and Medium Scale Enterprises: Evidence from Nigeria
( 36 ) Moderating Effect of Demographics on Monetary Motivation and Employees Job Performance Relationship: Evidence from Malaysia
( 37 ) Consideration the Effects of Water Sector Investment on Economic Growth in Iran
( 38 ) Influence Internship Learning Effect in Business Service Sector: Using Internship Self-Efficacy as the Mediator Variable
( 39 ) The Effect of Selected Financial Ratios on Profitability: An Empirical Analysis of Listed Firms of Cement Sector in Saudi Arabia
( 40 ) An Empirical Test on Effect of Intra-Product Trade on Regional Income Distribution: The Case of Liaoning, China
( 41 ) Effects of Advertising on Consumer Behavior in Low Density Houses: The Case of Marlborough, Zimbabwe
( 43 ) The Effects of Changes in Accounting Standards on Value Relevance of Financial Statement Information of Malaysia and Nigeria Banks
( 44 ) The Effect of Outsourcing on Anglogold Ashanti Obuasi Mines Performance
( 45 ) Organisational Politics – Causes and Effects on Organisation and Employees
( 46 ) The Mediating Effect of Market Orientation on the Relationship between Entrepreneurial Orientation Dimensions and Organizational Performance: A Study on Banks in Libya
( 47 ) Confirming the Mediation Effect of A Structural Model By Using Bootstrap Approach: A Case Study of Malaysian 8th Grade Students’ Mathematics Achievement
( 49 ) Emotional Workgroup Performance and Group Effectiveness Egyptian Context
( 50 ) The Effect of Public Debt on Domestic Product and Unemployment (An Empirical Study on the Palestinian Economy)
( 51 ) The Effect of Exchange Rate Changes on Consumer Prices in Nigeria: Evidence from VECM Model
( 52 ) The Effect of Access and Quality of Education on Economic Development in Botswana
( 53 ) Effect of Media Transportation and Advertising Transportation on Customers Responsiveness
( 54 ) The Effect of Personal Factors on the Customer Rating of the Quality of Services of the Islamic Banks Operating in the Syrian Coast
( 55 ) Does the Holiday Effect Differ from Religious to Non-Religious Holidays? Empirical Evidence from Egypt
( 56 ) Effects of Environmental Satisfaction on Family Displacement Case Study: Gohar Dasht Region, Karaj City
( 57 ) Effect of Budget Defict on Private Investment in East African Community for the Period 1981-2015: A Panel Data Analysis
( 58 ) Comparative Analysis of the Effectiveness of Coub-Douglas, Real Business Cycle, and Keynsian Growth Models in Determining Economic Growth in Nigeria
( 59 ) Effects of Corporate Social Responsibility on Banks Financial Performance in Nigeria: A Study of United Bank of Africa
( 60 ) The Effects of Exchange Rate Variability on Trade Flows in Nigeria: A Cointegration Analysis
( 61 ) The Effect of Work-Life Balance on Accounting Ethics
( 62 ) The Moderating Effect of Governance Mechanisms on the Relationship Between Innovation Strategy and the Performance
( 63 ) Effect of Institutional Factors on Foreign Direct Investment in Nigeria
( 64 ) An Evaluation of Effectiveness of Oversight Committees: A Case of City of Johannesburg, Section 79 Committees
( 67 ) Analysis of the Effects of Pull and Push Factors on Brain Drain: An Example of Turkey
( 68 ) The Effect of Selected Factors on Tax Revenue Mobilization in Ethiopia: The Case of Amhara Region
( 69 ) The Mediating Effect of Financial Self-Efficacy on the Financial Literacy-Behavior Relationship: A Case of Generation Y Professionals
( 70 ) Study on the Effect of Foreign Investment on Anhuis Industrial Structure Optimization
( 72 ) Effects of Socio-Cultural Diversity on the Performance of Private Health Care Organizations in Kogi State