Determinants of the Implementation of Activity-Based Costing Method and Business Performance: Evidence from Foreign Direct Investment Companies in Vietnam

Abstract

The purpose of this research is to investigate the effect of the factors such as company size, product/service diversity, ABC system training, and top management support on the implementation of Activity-Based Costing (ABC) method within Foreign Direct Investment (FDI) companies in Vietnam. This study also examines the associations between the implementation of activity-based costing system and the outcome of business performance in both financial and non-financial aspects. The survey data was collected from foreign direct investment (FDI) firms in Vietnam. Logistic regression was utilized to test the relationship between various factors and the implementation of Activity-Based Costing (ABC). Furthermore, multiple regression analysis was conducted to identify the impact of these factors on the extent of ABC implementation. Multivariate analysis of variance (MANOVA) was used to investigate the link between ABC implementation and business performance. The research findings indicated that factors such as company size, and product/service diversity, have a statistically significant effect on the implementation of ABC method. In addition, the study found that the product/service diversity, ABC system training and top management support significantly improved the level of ABC implementation. The results of this study supported implementing ABC method has a significant impact on both financial performance and non-financial performance. The implementation of ABC contributed to improving cost efficiency and net profit margins and enhanced operational quality and decision-making capabilities.