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Target Costing Performance Based on Alternative Participation and Evaluation Methods: A Laboratory Experiment
Author(s) -
Monden Yasuhiro,
Akter Mahmuda,
Kubo Naoto
Publication year - 1997
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/(sici)1099-1468(199703)18:2<113::aid-mde814>3.0.co;2-y
Subject(s) - product (mathematics) , activity based costing , process (computing) , reduction (mathematics) , computer science , measure (data warehouse) , cost reduction , variable (mathematics) , new product development , operations research , operations management , risk analysis (engineering) , mathematics , economics , data mining , business , marketing , mathematical analysis , geometry , operating system
This paper deals with the motivational impacts of alternative participation and performance‐evaluation methods on the cost‐ reduction performance of product designers in the product development process. Alternative participation methods for establishing the target cost consist of the participative and the nonparticipative approaches. Also, the alternative performance‐evaluation methods include evaluations based on only the controllable item measure and on both controllable and uncontrollable items measures. To test the hypothesis which are proposed with respect to the above impacts, a laboratory experiment was conducted on 120 subjects. When participation and performance evaluation factors are considered separately, the cost‐reduction performance of product designers is improved if they can participate in the target‐setting process and are evaluated by their controllable item information. In investigating their joint influence, it is found that the combination of the participative method and controllable item and nonparticipative and uncontrollable item information have improved cost‐reduction performance. Among all the independent variables, controllable item information is the most dominant variable as it has the strongest influence on cost reduction. © 1997 John Wiley & Sons, Ltd.