RESULTS BASED COSTING (RBC) SYSTEM: QUESTIONING THE UNIT OF ANALYSIS IN ABC

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Nizar M. Alsharari

DOI:10.22495/cocv13i2c3p8

Abstract

This paper aims to introduce Results Based Costing (RBC) System as an alternative accounting tool by questioning the unit of analysis in ABC. By focusing on ‘Results’ instead of ‘Activities’, it investigates its manifest and underlying agendas as a newly innovative idea, with a view to determining its degree of cost management focus and Results Based Management (RBM). Adoption of ABC in different countries especially developed countries has not fulfilled early expectations. Its influence on organizational performance, depending upon how successful performance is defined, has not been evident (see Langfield-Smith 2008). The study thus uses historical and website analysis methodologies for investigating innovative diffusion philosophies related to ABC practices and discourse. These are examined through the theoretical lenses of institutional logics theories. It thus distinguishes between institutional logics and situated logics, and their variances. ABC implementation can be characterized as an encounter between the ABC’s inscribed institutional logic and the situated institutional logic that is embedded in the existing practices in a given organization. The paper moves on to consider the surrounding emergence of RBM approach and then introduces RBC as new accounting tool along with its developments, its processes, intentions and claimed advantages. RBC’s dominant agenda are overhead cost reduction, cost management, performance management and results orientation. Accounting research into the management accounting system and its processes is much needed. This has been largely neglected in favor of management accounting change and innovative diffusion literature. In a world dominated by IT industries, RBC system as a center of organizational and accounting management merits greater attention by researchers. Practitioners in this way can better design and implement systems that build on past knowledge and learning. This study thus presents itself as a first study about RBC currently available in the accounting and management research literatures. It also represents one of the very few referred studies of the Results Based Accounting in the accounting research literature globally.

Keywords: Results Based Costing, ABC, Unit of Analysis, Institutional Logics, Innovative Diffusion

How to cite this paper: Alsharari, N.M. (2016). Results based costing (RBC) system: questioning the unit of analysis in ABC. Corporate Ownership & Control, 13(2-3), 589-605. http://dx.doi.org/10.22495/cocv13i2c3p8