Managers divided: implementing ABC in a Portuguese telecommunications company

This paper reports a case study of implementing activity-based costing (ABC) in a Portuguese telecommunications firm. It proved problematic. Production engineers were reluctant to use ABC, being skeptical about its accuracy and usefulness. Workers resisted ABC by inputting inaccurate data late. Production managers tolerated this. Production personnel had difficulty understanding ABC, relating it to their jobs, and feared it would add to work intensification and redundancies. In contrast, commercial managers, responsible for pricing and investment, and senior managers were satisfied with ABC. They believed it was more accurate than previous systems, met the requirements of regulators and financial markets, and eased consolidation of accounts. They used ABC data for decisions despite its problems. The results were consistent with factor and process-based research on ABC implementation. For example, top management support and generous resources help explain why the project was evaluated favourably outside of production. User involvement and ownership of the project was high but the prioritisation of commercial over production needs, and education and training delays fuelled conflicts between commercial and production managers. Given inter-professional rivalries and production managers' token commitment to implementing ABC it is questionable whether ABC could ever have been effective within production. The case confirms that evaluations of ABC implementations can vary at operating and corporate levels, and industrial relations and worker resistance are major issues. It is argued studies of ABC implementation should incorporate issues in labour process research to explain consent and resistance.