Misinterpretation of the Strategic Significance of Cost Driver Analysis: Evidence from Management Accounting Theory and Practice
This paper traces the development of cost driver theory in the Strategy literature and reflects on misinterpretations of the strategie significance of the theory in related acadcmic disciplines, notably Management Accounting. Management Accounting has largely been rcsponsible for informing costing practice in a wide rangę of organizational settings. The paper considers one such application- i.e. the case of the Higher Education Funding CounciTs (HEFC) costing and pricing initiative for UK universities. 189 The project was completed just under 5 years ago, although dctails of implementation are still ongoing, to a degree. The systems in place incorporate most of the theoretical flaws outlined in this paper. Rather than providing cost driver analysis to aid the strategie management process in universi- ties, the system appears to represent little more than a compliance and reporting framework between university central administrations and the funding provider, HEFC. (original abstract)
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