Costing to support strategies for product development : an empirical study of large international companies

The purpose of this study is mainly to investigate the use of Target Costing (TC) and Life Cycle Costing (LCC) to support New Product Development (NPD) strategies in large international companies. Another purpose is to determine how companies apply the TC concept and why this strategic costing technique is adopted to support NPD strategies. The study involves interviews in 7 organizations based in Europe and the United States and operating in Italy. It appears that TC, together with value engineering (VE) activities, is used in all 7 organizations in supporting NPD strategies, while only 2 organizations tend to use LCC. The contributions of this study to the accounting literature pertain to its research content and design. In particular, the paper offers new evidence for the debate concerning the relevance of strategic costing techniques, such as TC and LLC, in supporting NPD as a central dimension of the corporate strategies of the companies. [Publisher's text].