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Anderson, S. W., J. W. Hesford and S. M. Young. 2002. Factors influencing the performance of activity based costing teams: A field study of ABC model development time in the automobile industry. Accounting, Organizations and Society 27(3): 195-211.

Summary by Rosalyn Mansour
Ph.D. Program in Accounting
University of South Florida, Spring 2004

ABC Main Page | Teams and Teamwork Main Page

This article explores how competition in the external environment, team inputs, and team dynamics affect team outcomes. This is important because cross-function teams with diverse perspectives often develop ABC models. This study helps explain why ABC implementation teams may sometimes fail as well as how to make the ABC modeling process more efficient.

The authors identified two major U.S. automobile manufacturers that allowed them access to 9 plants each. The two companies and the individual plants were chosen by the authors according to criteria developed by prior research. The authors wanted plants who had developed ABC systems as part of a corporate directive. Onsite, the authors interviewed key plant personnel and conducted surveys where they collected information about the plant characteristics and complexity of the plants’ products and processes. To test their hypothesized model, the authors used path analysis on the interview and survey data collected.

There are a total of 10 variables in the hypothesized model. The following describes the variables modeled. Remember that these variables are defined from the perspective of an automobile manufacturer. The model and hypotheses are also shown below.

Competition – is an external environment attributed. Competition is operationalized according to whether the plant is a core or non-core plant. A core plant is considered to have little competition because much capital investment by the corporation has been made and it sells most of what it produces (for example, it manufactures the engines). A non-core plant might make items incidental to manufacturing the automobile such as components; therefore, competition is high and price-based (often outsourced).

ABC Training – is part of the team inputs. Training in ABC is thought to increase the level of significance people put on the ABC modeling task.Training is operationalized as the number of hours company training was provided.

Team Size – is considered a team input and is based on the number of plant employees assigned to the ABC project.

Team Heterogeneity – is a team input and measures the degree of functional diversity in the ABC team members.

Consultant – is a team input since all of the plants for one of the two companies studied used a consultant to help with the ABC implementation.

Task Significance, Conflict Resolution, and Team Cohesion - are all components of team dynamics. Data was captured via scale asking for respondent’s attitudes about ABC and the ABC team.

Model Complexity – is a measure of the team’s outcome.To determine model complexity, the authors used number of activity centers, number of first stage cost drivers, and number of second stage cost drivers. The quantity of each was standardized and then summed to get a measure of overall model complexity.

Development Time – is also a measure of the team’s outcome and was measured from the time the team began training until the first product costs were generated by the ABC model.

Factors Related to an Activity-Based Costing Model

H1a: As team size increases, the team's ability to resolve conflicts decreases (p. 198). REJECTED

H1b: As team heterogeneity increases, the team's ability to resolve conflicts decreases (p. 198).REJECTED

H1c: The presence of an external consultant increases the team's ability to resolve conflicts (p 198). REJECTED

H2a: ABC teams that face a high level of competition will have a greater level of ABC training than those that face low level of competition (pg. 198). REJECTED

H2b: ABC teams that face a high level of competition will have larger team sizes than those that face a low level of competition (pg. 198). REJECTED

H3a: As the level of ABC training increases, the perceived level of task significance increases (p. 199). SUPPORED

H3b: ABC teams that face a high level of competition will experience a higher-level of task significance than those that face a low level of competition (p. 199). SUPPORTED

H4a: As the level of task significance increases, the level of ABC team cohesion increases (p. 199). SUPPORTED

H4b: As the team's ability to resolve conflicts increases, so does the level of ABC team cohesion (pg. 199). SUPPORTED

H5a: As the team's ability to resolve conflicts increases, ABC model complexity decreases (p. 200). SUPPORTED

H5b: As the perceived level of external competition increases, ABC model complexity increases (p. 200). SUPPORTED

H5c: The presence of a consultant increase ABC complexity (p. 200). SUPPORTED

H6a: As the level of team cohesion increases, the time it takes to develop the ABC model decreases (p. 201). SUPPORTED

H6b: As ABC model complexity increases, the time to develop the ABC model increases (p. 201). REJECTED

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