The Impact of Non-Accounting Ownership and Top Management Support on (ABC) Adoption

among Industrial Companies in Jordan: Proposed Conceptual Framework

Global Research & Development Conference

Mohammad Farouq Hussein JebreelUniversiti Sains Islam Malaysia (USIM)

jebreelmohammad@yahoo.com

Dr. Nathasa Mazna Ramli, Universiti Sains Islam Malaysia (USIM)

nathasa@usim.edu.my

Dr. Nur Hidayah Laili, Universiti Sains Islam Malaysia (USIM)

hidayah@usim.edu.my

Introduction

• Many changes in organizations are directconsequences of the diffusion of innovations.Although management accounting history isnot rich in such innovations (Johnson &Kaplan, 1987; Malmi, 1999.

• The spread and usability of ABC systems hasproved it to be the ultimate managementaccounting method for all businesses seekingto find an accurate measure of their overheadallocations (Valanciene & Gimzauskiene,2007).

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ABC is an accounting technique that allows anorganization to assign costs to products based onthe resources they consume. It recognizes thecausal relationship between cost drivers and costactivities by measuring the cost and performanceof process-related activities and cost objects(MacArthur 1996).

ABC Concept

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Majority of the research work has been done in thefield of ABC adoption especially with reference to theU.S.A. and the U.K while very little studies wereconducted in developing countries.

Review of the literature has revealed that very littleefforts have been made to determine the ABCadoption especially with reference to Jordan context.

There is no sufficient studies have been conducted onJordan industrial sectors organizations .

Significant of Research

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Level OF ABC

Adoption

Country Year Percentages Industry\services

Poor Jordan 2011 36.5% Jordanian manufacturing companies

Poor Malaysia 2010 36% manufacturing organizations in Malaysia,

Good Greece 2010 60% Manufacturing and services

organizations in Greece

Good USA 2008 49% Members of IMA

Good UK 2000 48% Large companies

Average Australia 2004 42% All Business units in Australia

Average Swedish 2004 40% Manufacturing firms

Average Norway 1997 40% Manufacturing industry

Poor Finland 1996 18% Manufacturing industry

Literature Review

• Activity based costing system play an important role in offering timely and exact important information to managers. (BABAD, 1993).

• Hence, they can make better decisions on business, which helps their firms achieve superior advantages over competitors. (Fie, Z and Isa 2010).

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Cont….

• ABC is an attitude providing accurate and helpful information that has direct effects in planned decisions about a company’s fees, fertility analysis, customer-relationships, supply channels, employee management and production rules.(Al-Khadash, H. and Feridun, M. 2006)

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Theoretical Framework and Hypothesis Development

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H1

H2

• When ABC is owned only by accountants, there isa danger that it might be used only to satisfy theirneeds. An important reason why some companieshave not had good implementation experiences isthat the accountants have retained ownership andhave not succeeded in sharing ownership withnon-accountants

Non accounting ownership

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Top management support

• Defines as “the senior executives’ favorable attitude toward and explicit support for information systems”(Yap, 1989). Managerial commitment is defined as "engaging in and maintaining behaviors that help others achieve a goal”(Cooper, 2006).

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Hypothesis Development

• H1:The Non-accounting ownership is positively related to ABC adoption among Jordanian listed Industrial and services companies.

• H2: The top management support is positively related to ABC adoption among Jordanian listed Industrial and services companies

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Conclusions

• Prior research test the relationship between ABC success and many factors such as behavioral and organizational variables.

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• This paper intends to investigate the roles of the ABC successes factors on ABC adoption among industrial companies listed on the Amman Stock Exchange (ASE).

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Cont..

• The study serves as a wake-up call for reforming the management in Jordan. To achieve this characteristics are proposed, namely, Non-accounting ownership, top management support .

• on the other hand the two hypotheses are developed to validate the hypothesis survey research will be undertaken.

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Thank you 6/2

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