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This article presents a study that examines the implementation and success of cost management projects.
In general, effective cost management is considered to be the central accountability of business performance.1 This increased importance of cost management is also reflected in the augmented number of conceptual and empirical studies in this field. Empirically, one can find several case studies and surveys concerned with singular, specific cost management instruments such as target costing and activity-based costing.2 Unfortunately, investigations with regard to the general application of cost management based on broad empirical data that are not restricted to one specific instrument remain unavailable. In addition, existing studies are always based on data from the U.S. industry such that insights into current cost management practices from companies outside the U.S. are not available. Moreover, existing studies mainly deal with the planning, implementation, and monitoring process of specific cost management instruments. Apart from those "hard factors," behavioral factors, especially resistance to new cost management initiative, have been insufficiently analyzed.
Against this background, the present survey provides important insight into the implementation of cost management initiatives. The survey not only analyzes project objectives, applied instruments, and affected departments in the context of cost management projects, but also deals with the amount of realized cost savings. The survey also elaborates on the effectiveness of measures to overcome employee resistance to new cost management projects. Since the survey took place in Germany, this study also provides an insight into German cost management practices.
Definition of cost management
As a prelude to a cogent discussion of the study results, certain differences between German and Anglo-American understandings of cost management must be carefully established. As repeatedly articulated in the practitioner and scholarly Anglo-American literature, cost management provides strategic management through cost information.3 In contrast, German cost management only fulfills managerial tasks where accounting is assigned to provide cost information. Importantly, cost management in the German literature is typically defined as a target-oriented means to influence business decisions regarding products, programs, resources, and processes. Taking this approach, the information derived from cost accounting is the starting point to fulfill this task. Moreover, because of this focus of cost management, German cost management is considered to be more detailed and comprehensive than Anglo-American systems.4
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