The extent of ABB and its impact on decision-making process: evidence from Middle Eastern universities

Abstract

This research focuses on the application of activity-based budgeting (ABB) through the use of the institutional theory perspective. It explores the views of academic deans, academic heads of departments and administrative heads of departments, on activity-based models in some Middle Eastern (ME) public universities. This research employed a semi-structured interviews approach with 29 respondents in four public universities across a variety of ME countries. The results show that the extent of ABB ranges from being non-existent to having minimal application in these public universities. The respondents believe that ABB would enhance the universities' performances, but there is a concern that the cost of ABB systems is greater than the resultant expected benefits would warrant. They believe that applying ABB in their operation is possible, and would enhance the quality of information. As a practical implication of the current study, universities are recommended to search for the best cost driver for each activity in order to properly allocate the indirect costs to the operational department. This examination of ME public universities offer great insights into the business administration techniques that are employed in academic institutions.