Incorporating Contingency Theory in Understanding Factors Influencing Target Costing Adoption

摘要

Globalisation, manufacturing and technological changes are the main factors contribute to the increase in challenges facing the business environment. The competitive environment requires firms to adopt advanced management accounting techniques particularly target costing technique tocope with the changing markets needs. The research postulates that perceived intensity of competition, technological advancement and business strategy would influence adoption of target costing technique. Based on survey administered to the finance managers of Electrical and Electronic firmsmembers of the Electrical and Electronic Association of Malaysia (TEEAM), 57 useable responses were analysed using Pearson Correlation Analysis. The findings indicate that perceived intensity of competition, differentiation strategy and cost leadership strategy are positively associated withthe adoption of target costing. Cost leadership strategy indicates highly significant association to target costing adoption then differentiation strategy. However, there is no evidence of association between technological advancement and the adoption of target costing.