The effects of commitment, costing systems and feedback on people's judgement and resistance to change: the case of activity-based costing

People tend to resist change, even changes that are designed to improve organizations' performance. People often fail to take seriously warnings they receive about the risk of continuing with their chosen course of action. This thesis investigates the effects of commitment, costing systems and feedback on people's judgment about the usefulness of costing Systems and, in turn, on people's resistance to change. Building on the theory of cognitive dissonance, the study predicts that commitment to a particular course of action will cause people to become insensitive to the potential benefits of the rejected alternative. Consequently, committed people will not be sensitive to feedback.

Commitment will result in high inertia (resistance to change) even when facing negative feedback. Eighty nine students registered in an introductory business course participated in a laboratory experiment in which they were randomly assigned to either control or experimental group. Participants in the experimental group were induced to commit to either a traditional or an activity-based costing system. Following this inducement, participants were given a description of the two costing systems and were asked to evaluate the usefulness of both systems. Participants were also asked to indicate their willingness to change from their chosen system (the experimental group) or the assigned system (the control group). Results from this experiment indicated that people's judgment about the usefulness of the costing Systems was influenced by their prior commitment to their favoured system. Their commitment led them to exaggerate the attractive features of their favoured system and to downgrade the attractive features of the unfavoured system. Consequently, committed people refused to change their favoured system even when facing negative feedback. In addition, the results confirmed that people normatively know that their judgment should be objective yet they unconsciously make prejudiced judgments biased toward their desired conclusion.

The evidence provided by this study helps us understand why new initiatives, such as ABC, intended to improve organizations' performance, often encounter resistance from people in the organizations. Allowing people to participate in the change process and better communication about the proposed change can alleviate people's resistance to change.