Deagnostic market feedback attenuates the benefits of ABC for competitive price setting in a heterogeneous market.

Activity-Based Costing (ABC) is intended to assist managers to make better pricing decisions than those taken using traditional volume-based cost methods. The added value of ABC should be assessed against that of signals emanating from the competitive environment in which the firm operates. Prior research has often shown market-based information to be overwhelming, thereby calling into question the wisdom of investing in cost systems to better approximate actual costs. We compare experimentally the pricing decisions of decision makers in a price-competitive duopoly market, characterized by considerable heterogeneity in customer-serving costs. Our results show that the incremental value of ABC depends on the quality of market signals. Decision makers receiving uninformative feedback revert to costing data and ABC outperforms volume-based costing. The presence of a well-informed competitor attenuates but does not completely eliminate the value of ABC.Activity based costing; Managers; Pricing; Decisions; Methods; Value;

Drivers of cost system development in hospitals: Results of a survey.

While many hospitals are under pressure to become more cost efficient, new costing systems such as Activity-based costing (ABC) may form a solution. However, the factors that may facilitate (or inhibit) cost system changes towards ABC have not yet been disentangled in a specific hospital context. Via a survey study of hospitals, we discovered that cost system development in hospitals could largely be explained by hospital specific factors. Issues such as the support of the medical parties towards cost system use, the awareness of problems with the existing legal cost system, the way hospitals and physicians arrange reimbursements, should be considered if hospitals refine their cost system. Conversely, ABC-adoption issues that were found to be crucial in other industries are less important. Apparently, installing a cost system requires a different approach in hospital settings. Especially, results suggest that hospital management should not underestimate the interest of the physician in the process of redesigning cost systems.Activity based costing; Cost control; Factors; Hospital context; Hospitals; Industry; Management; Organizational change; Problems; Processes; Studies; Systems;

Competitive Pricing in Markets with different overhead costs: concealment or leakage of information.

Pricing; Markets; Market; Costs; Cost; Information; Accounting; Research;

The benefits of cost system accuracy in a competitive price setting duopoly.

This study reports the results of an experiment to investigate the value of increased cost report accuracy in competitive pricing decisions. Prior work has shown that in more competitive environments, cost system choice matters less since there is opportunity to learn from informative market signals. Our study argues that in a dynamic duopoly, learning from such informative market signals is distorted when decision makers act as market leaders deciding first on prices. Compared to second movers (followers), a leader with a biased cost report continues to prefer his own distorted cost figures over the informative signals emanating from better informed market players. Consequently he realizes lower performance and can be taken advantage of by opponents with access to superior cost data. We conclude that in order to achieve profit leadership, current reputational market leaders have a great interest in improving the accuracy of their own cost report system.Activity based costing; Choice; Competition; Data; Duopoly; Market;

The value of more accurate customer profitability reports: Does cost complexity matter?.

This paper reports experimental evidence on the potential benefits of reporting different levels of customer-related information in a pricing decision context. The paper mainly focuses on the influence of the complexity of the cost environment -measured by the degree of heterogeneity across customers- on the value of more accurate customer profitability systems. Contrary to the findings of Gupta & King (1997) our results indicate that the value of more accurate cost reports increases, as the cost environment becomes more complex. In addition we find that, compared to a situation where decision makers receive only general profit feedback, reports based on traditional costing systems improve the quality of the pricing decision only in a complex cost environment.Activity based costing; Complexity; Cost complexity; Decision; Decision making; Information; Price setting; Pricing; Profitability; Reporting; Systems; Value;

Opinie-onderzoek over verschillen tussen openbare en private Vlaamse ziekenhuizen.

Uit vroegere studies bleek dat algemeen directeurs van Vlaamse openbare en private ziekenhuizen een eenheidsstatuut nastreven. Met een eenheidsstatuut wordt in het algemeen een situatie bedoeld waarbij de regelgeving voor alle ziekenhuizen dusdanig is dat noch de openbare noch de private ziekenhuizen zich bevoordeeld of benadeeld voelen tegenover elkaar bij het aanbieden van de zorg. Dit kan zowel verband houden met het juridisch statuut als met de regelgeving over financiering, personeel enz.. Een mogelijk eenheidsstatuut zal wellicht makkelijker tot stand komen als openbare en private ziekenhuizen een zelfde visie delen over een aantal beleidstopics. Het leek ons daarom interessant om via een opinie-onderzoek na te gaan hoe ziekenhuizen met een openbaar of een privaat karakter dezelfde of verschillende meningen hebben over elkaar wat betreft hun juridisch statuut, personeelsbeleid, mogelijke samenwerking, ziekenhuisfinanciering en toegankelijkheid. Alhoewel de resultaten aanduiden dat beide types ziekenhuizen, anno 2003, sterk te vinden zijn voor een eenheidsstatuut blijken er heel wat meningverschillen te bestaan over een aantal belangrijke beleidstopics.Studies;

The joint effects of customer profitability reports and sales support diversity in effective customer pricing

This paper experimentally investigates the value-enhancing effects of more accurate customer profitability analysis (CuPA) reports on customer pricing decisions and firm profitability when customers place different demands on the firm's support functions. Activity-based driven CuPA reports are contrasted against less accurate reports, either based on traditional volume-based costing or on aggregated feedback. Cost complexity of the environment was further varied by either low or high diversity in resource usage across customers depending on whether or not the most costly type of customer always consumed more resources in each of the various support functions of the firm. Results suggest that the diversity in resource requirements serves as an important 'contextual factor' for CuPA to have incremental value over the less accurate report types. Only when usage of sales support becomes more diverse, CuPA provides strong opportunities for learning resulting in more effective customer pricing and profit improvement. Results further show some profit benefits of volume-based costing reports. Even though cost allocations are more distorted, they still perform better than aggregated reports that do not allocate marketing overhead, but only in a more complex cost settings. Keywords: Customer profitability, pricing, sales support diversity, decision making. JEL-classification: C91, D83, M31, M41, M4

Market feedback, cost system choice and competitve pricing: the advantage of not being a leader

This study experimentally investigates the value of cost report accuracy in an interactive pricing context. Market agents received feedback about their own profits via either a volume-based costing or a more accurate activity-based costing report. They also received a typical market report containing the performance of their rivals. While prior work suggested that market discipline and learning from salient competitors can overcome performance decrements due to inaccurate costing, our results imply that the corrective nature of market feedback depends on the decision maker's role in the competitive play. Compared to other participants, decision makers endowed with the role of a 'reputational' market leader are less effective in screening available market feedback because they predominantly fixate on their own cost data. Even when receiving biased volume-based costing, reputational leaders ignore valuable market signals of opponents having access to more accurate cost data. Consequently other market players can take advantage of them

Earnings benchmarks, information systems, and their impact on the degree of honesty in managerial reporting

This paper provides experimental evidence about how the interaction between a company's earnings and its information system influences the degree of honest reporting by managers in a capital budgeting task. Specifically, the results show that participants overstate cost less when the manager's cost report determines whether the firm earns a gain or loss than when their report does not affect whether the firm earns a profit or loss (i.e., the firm always earns either a profit or loss regardless of the cost report). Further, the results suggest that the impact of the earnings situation on the degree of honesty depends on whether the firm uses an information system that improves its ability to detect misreporting. Specifically, the earnings situation has less effect on the degree of honesty when the firm uses an information system. This is because the information system decreases honesty when the manager's report determines whether the firm earns a profit or loss but increases it otherwise. This study provides important insights into the conditions under which information systems can crowd out prosocial behavior