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The Impact of Competition and Uncertainty on the Adoption of Target Costing

Abstract
In recent years factors which may influence firms´ decisions to adopt target costing have been presented in the literature. These studies generally argue that target costing adoption rates positively correlate with the intensity of competition and perceived environmental un-certainty. However, empirical support for this view is limited. This study argues that the adoption of target costing positively correlates with the intensity of competition, but nega-tively correlates with perceived environmental uncertainty. In addition, perceived environ-mental uncertainty moderates the adoption of target costing when the intensity of competition intensifies. Hypotheses are generated and tested using data provided by a web-based survey of Swedish manufacturing firms. The findings indicate that the adoption of target costing and the intensity of competition positively relate, although the effect reduces with an increase in perceived environmental uncertainty. There is no evidence of a direct relationship between perceived environmental uncertainty and the adoption of target costing. As a result, the find-ings partly conflict with the outcomes of earlier work. The article also discusses the implica-tions for research and firm managers considering the adoption of target costing.
University
Göteborg University. School of Business, Economics and Law
Institution
Departement of Business Administration
Publisher
Elsevier
Electronic version
http://dx.doi.org/10.1016/j.ijpe.2008.04.010
Journal title
International Journal of Production Economics
Volume
115
Issue
1
Start page
92
End page
103
URI
http://hdl.handle.net/2077/19230
Collections
  • Articles / Department of Business Administration
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gupea_2077_19230_1.pdf (233.1Kb)
Date
2008
Author
Ax, Christian
Greve, Jan
Nilsson, Ulf
Keywords
target costing
adoption
perceived environmental uncertainty
intensity of competition
Publication type
article, peer reviewed scientific
Language
eng
Metadata
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