Enabling use of Standard Variable Costing in Lean Production

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Abstract

This study presents empirical evidence that the increased enabling use of standard variable costing (SVC) increases performance, and decreases the level of goal-incongruent behaviour in a lean production context. This enabling use is examined by the application of the framework of enabling formalization, characterized by; repair, internal transparency, global transparency, and flexibility. This study finds they have a joint, complementarity, effect on performance and lean-congruent behaviour using a second-order structural equation model applied to a survey from inside two case companies. These results are combined with qualitative evidence. This paper helps practitioners to understand the consequences (goal incongruent behaviour and performance) of less enabling use of SVC. Practitioners can also be guided by the enabling framework questions, we developed, to gauge how well their costing models is fitting lean production in their companies. Lastly, it is concluded that SVC can be used in an enabling way in lean production. This feeds into the ongoing discussion on which costing models that fit with lean production.
Original languageEnglish
JournalProduction Planning & Control
Volume32
Issue number3
Pages (from-to)169-184
Number of pages16
ISSN0953-7287
DOIs
Publication statusPublished - 2021

Keywords

  • Standard variable costing
  • complementarity
  • enabling formalization
  • lean
  • lean accounting
  • lean production
  • lean-congruent behaviour
  • performance
  • second-order structural equation model
  • survey evidence

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