Factors of application of activity-based costing method: Evidence from a transitional country

This study examines the factors in the application of the activity-based costing (ABC) method in firms in a transitional country. The study adopts a quantitative approach by developing a Logit regression model. The study tests the model in a sample of 71 publicly-listed Vietnamese pharmaceutical companies in 2017 when Resolution Number 10, issued by the Central Political Party of Vietnam, took place. The primary data was collected from a company survey. The study finds that indirect cost proportion, competition pressure in price and quality, and product diversification significantly affect a firm's decision of whether to implement the ABC method. In Vietnam, most of the pharmaceutical companies are state-owned. Consequently, the use of a research context whereby the market economy is combined with state regulation to test the hypothesized factors is of value. Our findings have implications for managerial practice and public policy.(c) 2022 The Authors. Published by Elsevier B.V. on behalf of College of Management, National Cheng Kung University. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/ licenses/by-nc-nd/4.0/).