Critical success factors of strategic cost reduction. Results from an empirical survey of german cost reduction projects
Himme, Alexander
Himme, Alexander
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Publication Type
Journal article
Editor
Supervisor
Publication Year
2012
Journal
Journal of Management Control
Book
Publication Volume
23
Publication Issue
3
Publication Begin page
183
Publication End page
210
Publication NUmber of pages
Collections
Abstract
Cost reduction is usually confronted with conflicts and resistance. Besides planning and controlling measures the management accounting literature discusses behavioral and organizational factors (e.g., top management commitment, participation, cost culture) in order to overcome this resistance. Thus, from a theoretical perspective different concepts exist for implementing an effective long-term cost reduction. However, only little empirical research can be found that investigates the relative importance of “soft” behavioral and implementation factors compared to general planning and control measures. This study examines the role of behavioral and organizational (“soft”) factors in comparison to planning and control (“hard”) factors in cost reduction projects. Target costing or activity-based costing projects represent examples for strategic cost reduction projects which are considered in this study. The sample comprises 131 chief management accountants of medium-size and large German companies which were involved in such strategic cost reduction projects. Structural equation modeling is used for deriving the results. The results show that cost culture, top management commitment, and participation are of particular importance for the success of cost reductions. Their influence drives significantly planning and controlling measures which in turn determine the effectiveness of cost reduction measures.
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Keywords
Marketing & Sales