Diffusion and accounting: the case of ABC in Norway

Abstract

Most social and economic changes are direct consequences of the diffusion of some ideas or phenomena into new areas, new social groups etc. The characteristics of a diffusion process are thus of general interest. This paper focuses on the diffusion of Activity-Based Costing (ABC) in Norway. A conceptual framework from general diffusion theory is adopted to structure a tentative model to describe the diffusion process. The study is based on a questionnaire survey, incorporating data from 75 of the largest manufacturing companies in Norway (a response rate of 57%). The findings show that a large number of companies have adopted ABC as an idea, i.e. they have implemented ABC or plan to do so (40%). Different variables related to cost structure, competition, existing costing system and product diversity were tested for their relation with ABC (planned or actual) adoption, but only cost structure was found to be statistically significant. Companies which had knowledge of ABC were significantly larger than the others. However, size did not significantly discriminate between adopters and non-adopters within the group with ABC knowledge. The source of information on ABC is also examined and the empirical data indicate a diffusion process that takes a contagious form and points out the importance of institutional influence.