Organizational Factors Influencing Costing System in Libya

Imhmed Abdulgader Salim, Syed Musa Bin Syed Jaafar Alhabshi


This is a conceptual paper to study the effect of organizational factors that have influence of costing system in the manufacturing companies of Libya. The study reviews literature on the organizational factors (organizational culture, organizational strategy and organizational structure and their influence on costing system. This research goes on to analyse three organizational factors that play role on influencing costing system. These factors are organizational culture, organizational strategy and organizational structure. Organizations have no choice but rebuilding and recovering the failure system due too many disadvantages. Such a process needs much more investment and using more resources. But this present study instead of focusing on the failure of the system, it will be more focused on the organizational factors. The factors outlined in this research will be analysed using the theoretical framework of contingency theory. This theory claims that to lead a company the course of action is contingent upon internal and external situations. The model is appropriate for this inquiry because it allows understanding the importance of organizational factors towards costing system in the manufacturing companies of Libya. It also describes the role of top management providing an effective system that leads to increase profitability of the company. (Ogbonna & Harris, 2000) suggested that organizational culture is associated with organizational performance. (Frey & Gordon, 1999) provided additional explanation by examining the contextual factors like competitive strategy and organizational culture that influence the adoption of costing system. Thus from the previous authors investigation on the organizational factors this study is employed to provide a theoretical construct that influence the costing system. By using appropriate organizational strategy the costing system can be much improved. The main contribution of this research is the investigation of the effect of uncertain organizational influence on costing system. The finding of the study would provide the importance of costing system associated with the performance of the Libya’s manufacturing business unit. Both qualitative and quantitative research method will be applied to get an appropriate view of the managers towards the choice of costing system in their company. Qualitative method will investigate in deep on the main aspects of their costing system being used and the behavior of the top management towards decision making. Finally, the study suggests avenues for further research.


Keywords: Costing System, Organizational Factors, Business Performance

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