Academic journal article International Journal of Business

Value Chain Costing, Competitive Advantage and Firm Success: Evidence from Thai Auto Parts Manufacturing Businesses

Academic journal article International Journal of Business

Value Chain Costing, Competitive Advantage and Firm Success: Evidence from Thai Auto Parts Manufacturing Businesses

Article excerpt


This study investigates the influences of value chain costing on competitive advantage and firm success of auto parts manufacturing businesses in Thailand. Customer response, customer acceptance and customer satisfaction are also hypothesized to be mediators of the relationships between value chain costing and competitive advantage. In this study, 138 auto parts manufacturing businesses in Thailand are the samples of the study. The results reveal that value chain costing (value creating activity, interdependent network, supplier-customer relationship, and continuous improvement) plays a significant role in determining business outcomes. Customer response, customer acceptance, customer satisfaction, and competitive advantage are important for driving their consequences. In addition, customer response, customer acceptance and customer satisfaction are the mediators of the research relationships. This study verifies the importance of value chain costing as consistent with dynamic capability theory. Supplier-customer relationship, interdependent network, value creating activity, and continuous improvement have a critical determinant of business outcomes respectively.

JEL Classification: M41

Keywords: value chain costing; customer response; customer acceptance; customer satisfaction; competitive advantage; firm success


In increased highly and rigorously competitive environments, firms need to utilize valuable resources and capabilities through implementing critical operational techniques and reasonable organizational strategies so as to enable them to cope with these challenges efficiently. To provide an effective means of optimizing the use of limited resources, value chain analysis is important for understanding a sequence of strategically relevant activities that add values, benefits and contributions to the products or services provided by an organization to its customers (Chang and Hwang, 2002). It explicitly promotes firms to manage these activities effectively by deleting and minimizing unnecessary activities and maintaining and pooling necessary activities. It integrates value chain activities together by improving cost structure and profitability and creating customer satisfaction with firms' products or services. The necessary activities affect firms' competitive advantage and performance, but the unnecessary activities do not. Thus, value chain analysis is an increasingly significant business tool in helping firms respond customer needs and market requirements and achieve superior performance and sustainable success (Christopher and Gattorna, 2005). It becomes a key source of competitive advantage, performance and success within rapidly business situations and circumstances. Firms with effective value chain analysis tend to develop and exploit their inter- and intra-organizational capabilities to successfully compete in uncertain and unpredictable business markets and environments. Accordingly, successful value chain analysis leads to increased customer satisfaction, added competitive advantage and improved organizational success.

As mentioned earlier, value chain analysis is a main determinant of customer satisfaction, competitive advantage and organizational performance. It is an important topic for practitioners and researchers in several disciplines, such as marketing, management, production, and accounting. In existing accounting literature, value chain analysis and related issues have been empirically studied through the lens of what is so called "value chain costing." Value chain costing is one characteristic of strategic management accounting. It attempts to integrate concepts of accounting, management and marketing aspects in recognizing, managing and utilizing relevant business activities through cost structure, profitability and customer satisfaction in an organization. Moreover, value chain costing is a management accounting operationalization of value chain analysis. …

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