The Four Dimensions of True Cost Accounting and the Role of Institutional Isomorphism

Abstract

Aim/Purpose: This review presents an overview of relevant literature related to True Cost Accounting. The transition from standard traditional cost accounting via Activity Based Costing towards True Cost Accounting (TCA) also will be described. Results: four dimensions of TCA are described: (1) ethical (transparency, accountability, stakeholder involvement, professional accountability, ethical responsibility, greenwashing); (2) instrumental (leadership support, employee awareness, integrating TCA with Enterprise Resource Planning systems); (3) environmental (resource consumption and usage, emissions and waste management, environmental impact metrics); (4) regulatory (environmental data reporting, market mechanisms for environmental costs, transition of voluntary standards to mandatory status). Policy Relevance: The role of external stakeholders will be emphasized. Also, obstacles for proper implementation like the lack of standardized frameworks, high implementation costs and a lack of expertise are described. Theoretical Background: The role of Institutional Isomorphism - and its three types coercive, mimetic and normative – describes, explains and predicts what happens and will happen with TCA.