• Drivers of cost system development in hospitals: results of a survey

      Cardinaels, Eddy; Roodhooft, Filip; Van Herck, Gustaaf (2004)
      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. Keywords: Activity Based Costing, Organizational Change, Cost Control, Hospital context
    • Linking supply chain performance to value creation

      Slagmulder, Regine; Van Wassenhove, L. (2006)
    • Market feedback, cost system choice and competitve pricing: the advantage of not being a leader

      Cardinaels, Eddy; Roodhooft, Filip; Warlop, Luk; Van Herck, Gustaaf (2004)
      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.
    • The joint effects of customer profitability reports and sales support diversity in effective customer pricing

      Cardinaels, Eddy; Roodhooft, Filip; Warlop, Luk; Van Herck, Gustaaf (2004)
      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, M49
    • Value-based management control processes to create value through integration: a literature review

      Ameels, Anne; Bruggeman, Werner; Scheipers, Geert (2002)
      In the last decades, management accounting faced increasing challenges to adopt new approaches, designed to fit the changes in the economic environment and to correct perceived inefficiencies in existing controlling structures. This paper focuses on one of those recent developments, viz. value-based management (VBM). Since VBM is claimed to be changing financial management at the highest level in some of the world's largest companies, this literature review compares the value-based management approaches of six consultants, viz. Stern Stewart & Co, Marakon Associates, McKinsey & Co, PriceWaterhouseCoopers, L.E.K. Consulting and HOLT Value Associates and tries to assess the potential of their management frameworks. Value-based management can be defined as an integrated management control system that measures, encourages and supports the creation of net worth. Although VBM is more than metrics, we first focused on a non-exhaustive number of value-based metrics, divided in two segments, the listed perspective-segment and the non-listed perspective. Since metrics are a means and not the goal of a VBM-program, we compared not only the metrics used by the six consultants, but also analysed their value-based management constructs as a whole. This analysis was based on the fundamental components of a holistic VBM-program, as defined by several researches on value-based management. This comparison revealed some clear similarities between the approaches, but also demonstrates distinctions and different accents. There is for instance a clear unanimity about the focus on maximizing shareholder value, about the conviction that the interests of all stakeholder groups are best served when putting the shareholder first and about the impact of value-based management on collaboration. Notwithstanding the similarities, they all six suggest using different types of measures, combine different systems and processes, have other views on strategy development and advocate their own training & education program.