Strategic cost management practices and organizational performance: A study of manufacturing firms in Nigeria

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Institute for Global Business Research, Nashville, USA


There has been a lot of transformation in the manufacturing industry. The manufacturing processes are highly automated, multiple product mix strategies are employed, and the nature of production cost drivers are complex, production costs have increased and market competition has risen due to market globalization. Therefore, the use of the traditional cost management system, such as standard costing and predetermined overhead allocation system in the Nigerian manufacturing industry has proven to be ineffective in product costing, cost management, and decision making. As a result of these developments, it has become necessary to employ more refined product costing techniques of Strategic Cost Management. Some of the Strategic Cost Management methods are Activity-Based Costing, Target Costing, Life Cycle Costing, Balance Scorecard, and Total Quality Management. The implementation of the Strategic Cost Management system has led to improved product costing analysis and decision-making, production efficiency, and improved firm performance and market competitiveness. This study examines the effect of Strategic Cost Management practices on organizational performance of Nigerian manufacturing industry. A survey research design is employed to collect primary data, which are analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) method. The study reveals that Strategic Cost Management practices positively impact organizations’ performance. Therefore, it is recommended that manufacturing firms still using the traditional costing methods should consider employing the Strategic Cost Management methods to enhance their performance and competitiveness.



Activity-based costing, Life cycle costing, Target costing, Organizational Performance, Strategic Cost Management, Production Costing


Adigbole, E .A., Adebayo, Arinola O., Osemene, Olubunmi F. (2020). Strategic cost management practices and organizational performance: A study of manufacturing firms in Nigeria. Global Journal of Accounting and Finance, 4 (1), 142 -157.