The Influence of External Contingency Factors and Activity-Based Costing Implementation on Organizational Performance

Abstract

The Activity-Based Costing (ABC) system continues to gain attention due to the increasing challenges in the current business environment. This situation motivated the researchers to examine external contingency factors (environmental uncertainty (EU) and market orientation (MO)) that influence ABC implementation and the possible effects of ABC implementation on organizational performance. This study also examines the mediating effect of ABC implementation on the relationship between external contingency factors and organizational performance in a developing economy. A cross-sectional survey was conducted among 114 manufacturing companies in Iraq. The data was analyzed using PLS3-SEM, and the results revealed that EU and MO have a positive and significant effect on ABC implementation, and that ABC implementation has a positive and significant effect on organizational performance. Furthermore, this study establishes the mediating role of ABC implementation on the relationship between external contingency factors and organizational performance. Keywords: ABC implementation; contingency factors; organizational performance; Iraq ABSTRAK Sistem Pengkosan Berasaskan Aktiviti (ABC) terus mendapat perhatian disebabkan oleh peningkatan cabaran dalam persekitaran perniagaan semasa. Keadaan ini telah mendorong para penyelidik untuk mengkaji faktor-faktor kontingensi luaran (ketidakpastian persekitaran (EU) dan orientasi pasaran (MO)) yang mempengaruhi pelaksanaan ABC dan kesan mungkin pelaksanaan ABC terhadap prestasi organisasi. Kajian ini juga memeriksa kesan mediasi pelaksanaan ABC ke atas hubungan antara faktor kontingensi luaran dan prestasi organisasi dalam ekonomi yang sedang membangun. Satu kajian selidik telah dijalankan di kalangan 114 syarikat pembuatan di Iraq. Data tersebut dianalisis dengan menggunakan PLS3-SEM dan hasilnya menunjukkan bahawa EU dan MO mempunyai kesan yang positif dan signifikan terhadap pelaksanaan ABC, dan pelaksanaan ABC tersebut mempunyai kesan yang positif dan signifikan terhadap prestasi organisasi. Tambahan pula, kajian ini membuktikan peranan mediasi pelaksanaan ABC terhadap hubungan antara faktor-faktor kontingensi luaran dan prestasi organisasi. Kata kunci: Pelaksanaan ABC; faktor-faktor kontingensi; prestasi organisasi; Iraq.

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