Effect of Organizational Capital on Cost Stickiness at Indonesian Manufacturing Companies

DOI

10.2991/assehr.k.210531.046How to use a DOI?

Keywords

cost stickiness, cost behavior, organizational capital, intangible investment

Abstract

This study analyzes the phenomenon of cost stickiness (CS) by considering the impact of the level of organizational capital (OC) on sales, general, and administration (SG&A) expenses. OC reflects technologies and business processes that allow companies to optimize resources better than other companies. Costs associated with organizational development are mostly SG&A. CS is an asymmetric cost behavior related to sales activity, caused by the resource-adjustment decisions made by management. The uncertainty of market demand influences the level of sales, such that it affects resource management and earnings performance. This research performs empirical tests on financial data of manufacturing companies listed in the Indonesian Stock Exchange (IDX) from 2010–2016. For extended CS analysis, we also use quarterly financial statement data. We find from global samples that manufacturing companies in Indonesia show anti CS behavior. In the High-OC category, using the annual data sample, the quintile (median) group showed anti-CS (CS) behavior. Meanwhile, in the Low-OC category, the annual data showed anti-CS for the quintile (median) group. In the High- (Low-) OC category, the quarterly data sample showed CS (anti-CS). This study provides insights for evaluating management behavior when managing costs and financial impacts of OC in a manufacturing company’s financial performance.

Copyright

© 2021, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Download article (PDF)

TY  - CONF
AU  - Meriza Saguliannita
AU  - Christina Juliana
PY  - 2021
DA  - 2021/05/31
TI  - Effect of Organizational Capital on Cost Stickiness at Indonesian Manufacturing Companies
BT  - Proceedings of the Asia-Pacific Research in Social Sciences and Humanities Universitas Indonesia Conference (APRISH 2019)
PB  - Atlantis Press
SP  - 366
EP  - 373
SN  - 2352-5398
UR  - https://doi.org/10.2991/assehr.k.210531.046
DO  - 10.2991/assehr.k.210531.046
ID  - Saguliannita2021
ER  -