What Drives Cost System Sophistication? Empirical Evidence from the Greek Hotel Industry

Ioannis E. Diavastis ()
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Ioannis E. Diavastis: Department of Tourism Economics and Management, School of Business, University of Aegean, 82100 Chios, Greece

JRFM, 2025, vol. 18, issue 7, 1-27

Abstract: The increasing complexity of the hotel industry necessitates the implementation of sophisticated cost systems capable of delivering accurate and relevant cost information to support managerial decision-making. Investigating the determinants of cost system design is crucial, given that no single accounting system is universally applicable across all business contexts. This study addresses a critical gap by examining the key drivers of cost system sophistication through the theoretical frameworks of contingency and upper echelons theories, focusing specifically on the Greek hotel sector. Employing multiple regression analysis, the findings reveal that firm size, cost structure, the importance of cost information in decision-making, and the integration of information technology significantly influence the complexity of cost systems. Conversely, factors such as competition, service diversity, business strategy, organizational life cycle, and executive characteristics showed no statistically significant impact. These findings contribute to management accounting and hospitality literature by integrating theoretical perspectives and identifying key determinants of cost system sophistication. Moreover, the study offers practical insights for designing cost systems that meet the specific needs of the hotel industry.

Keywords: cost system design; cost system sophistication; management accounting; contingency theory; upper echelons theory; hotel industry (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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