Abstract

Liberalization of the Libyan economy, which recently encouraged private initiatives and commercialization, has provided a motivation for this study on manufacturing organizations in Libya. In particular, the need for a more effective costing system has raised pertinent policy initiatives among the major industry players such as cement, steel and textile industry.

Furthermore, the national economic policy shifted from oil and gas to non-oil gas sectors has also spurred the need for more competitive and efficient organizations. This research investigates organizational factors influencing the level of adoption of a costing system in Libyan manufacturing organizations as well as the influences of these systems on organizational performance. The study also seeks to identify the organizational factors that have had an influence on the adoption of the costing system. The changing environment of global competitiveness and the improvement in information technologies are providing opportunities for the organizations to compete globally.

Behavioural theory, specifically contingency theory, has been adopted to explore factors influencing organizational performance. The organizational factors studied include organizational culture, organizational structure and organizational strategy. This study analysesed the organizational factors relevant to the adoption of the costing system as well as the expected organizational performance arising from the adoption of the costing system. The research focused on the adoption level and influence of the costing system on organizational performance of manufacturing organizations in Libya. The findings of the study underlined the importance of a costing system on performance of Libyan manufacturing business units.

Analysis of data using the Statistical Package for the Social Sciences (SPSS 18) and Structural Equation Modelling (Semeijn, Van Riel, & Ambrosini, 2004),through Analysis of Moments of Structure (AMOS 21) for Quantitative Analysis and NVivo 8 for qualitative analysis offer statistical evidence that the adoption of the costing system has a relationship with organizational performance. The empirical findings of the study showed that the use of a modern costing system was positively associated with organizational performance of manufacturing companies in Libya.

Furthermore, SEM through AMOS offered statistical evidence that the patterns of a modern costing system by users could influence an organization’s performance in manufacturing. The results also indicated that empirical support for the major study premised of the model fit between organizational factors like organizational strategy, organizational structure and organization culture is associated with.

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