Cost-System Functionality, Perceived Usefulness of Cost Information and Performance of Oil Palm Enterprises in Malaysia

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Changes in the competitive landscape have made reporting of timely and accurate cost information very critical for organizations to sustain and improve their performance. This is particularly relevant for companies competing based on their cost efficiency and the oil palm industry is one of such industries. Since the price of palm oil is determined by external market forces, oil palm enterprises have to continuously lower their production costs to sustain and increase profitability. This study investigates the effects of cost-system functionality on performance of oil palm enterprises in Malaysia. As the effectiveness of cost information is also dependent on the perceived usefulness of cost data, the moderating effect of manager's perception of the usefulness of costing information is also investigated.

A structured questionnaire was designed to gather data from oil palm business enterprises located in Sarawak. The preliminary analysis of thirty returned questionnaires indicates that managers of oil palm enterprises generally valued cost information provided by high functional cost system, and each of the three dimensions of cost system functionality has a positive significant relationship with performance of the oil palm enterprises. The rigid compliance of routine estate operating procedures might have contributed to the insignificant moderating effect of manager's perceived usefulness on the cost-functionality-performance relationship.

Keywords: cost system functionality; organizational performance; perceived usefulness

Document Type: Research Article


Publication date: January 1, 2009

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  • Sustaining Competitiveness in a Liberalized Economy: The Role of Accounting
    The International Management Accounting Conference 4 was held in August 2007 in Kuala Lumpur to discuss issues pertaining to the role of accounting in liberalized economy. From the conference, it was clear that liberalized economy does impact the direction, nature and practices of accounting. In response to these challenges, accounting must play a proactive and relevant role to sustain the competitiveness of companies in the business environment. The book is organized in the following themes: Cost and Information Management; Performance Measurement; Strategic Alliance. The articles were written based on research findings of studies conducted in several countries including Malaysia, New Zealand, Indonesia, UK, India, Saudi Arabia and Botswana.
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