ENABLING USE OF STANDARD COSTING IN LEAN ORGANIZATIONS AS DETERMINANT OF GOAL CONGRUENT BEHAVIOR

Using the enabling formalization framework in two longitudinal case studies combined with a survey in the companies, we find that a standard costing model can be perceived as a form of enabling formalization in Lean organizations. Hence, standard costing cannot be characterized as coercive formalization per se. This contradicts conventional wisdom.
Repair is a feature of enabling formalization through the use of standard costing. Applying a structural equation model, we present evidence that this repair feature has a direct effect on behavior that is congruent with Lean objectives. Internal and global transparency together with flexibility are three other features of enabling formalization through use of standard costing, but these have an indirect effect on Lean-goal-congruent behavior through the repair feature. Thus, these three features are antecedents of the repair feature, and we also confirm this using the structural equation model.