Competitive environment and corporate constructs of price and costs in the UAE

Download This Article

Peter Oyelere ORCID logo, Fernando Zanella ORCID logo


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.


Target costing is a cross-disciplinary subject with several unexplored academic dimensions besides having applied business practices and economic policy implications. In this paper, we use a unique combination of mixed methods research approach to investigate the adoption of target costing by manufacturing firms in the United Arab Emirates (UAE). The first employed method is the new Dumitrescu-Hurlin (D-H) Granger non-causality test for heterogeneous panel data, while the second is a survey. The D-H test with annual data indicates the adoption of target costing by the publicly listed manufacturing firms. When using quarterly data, but with a smaller sample of firms, the results show bi causality between costs and sales revenues; thus target costing is possibly corroborated but within a feedback mechanism. Survey results, based on self-reported data and again on a smaller sample, show mixed results. The relationship between target costing and the intensity of competition seems moderately corroborated by the survey results. This paper contributes to the literature by employing a unique mixed methods research approach, to the best of our knowledge not found previously in the literature, and by its findings on the adoption of target costing by manufacturing firms in a relatively open and dynamic economy such as the UAE.

Keywords: Target Costing, UAE, Competitiveness, D-H Causality Test

Authors’ individual contribution: Conceptualization – F.Z. and P.O.; Methodology – F.Z.; Investigation – F.Z.; Writing – Original Draft – F.Z.; Writing – Review & Editing – P.O.; Funding Acquisition – F.Z. and P.O.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: This research was funded by the United Arab Emirates University CPPL Grant No. G00002353 and UPAR Grant No. G00002121. The funding body had no involvement whatsoever in the conduct of the research, and the preparation of this article for publication. The authors are grateful to Henri Dekker and Christian Ax for permission to reproduce questions from their surveys. The authors are also grateful to Mohammad Sourani and Amna R. M. Alkaabi for their research assistance and help with data collection.

JEL Classification: M21, M41, D40, J8

Received: 30.04.2020
Accepted: 15.06.2020
Published online: 16.06.2020

How to cite this paper: Zanella, F, & Oyelere, P. (2020). Competitive environment and corporate constructs of price and costs in the UAE. Corporate Ownership & Control, 17(4), 129-141.