Activity-Based Costing for Higher Education Institutions in Europe: A Literature Review with a Focus on Albania
Abstract
Objectives: This study aims to systematically review the adoption of Activity-Based Costing (ABC) in higher education institutions (HEIs) across Europe, with a focus on Albania. It seeks to evaluate the extent of ABC implementation, identify its benefits, and highlight challenges faced by HEIs in improving cost transparency and financial sustainability. Prior Work: Activity-Based Costing (ABC) has been recognized as a method to enhance cost allocation accuracy in organizations, including HEIs. Unlike traditional costing methods, ABC assigns costs to specific activities, providing a more granular understanding of resource utilization, particularly in complex environments like higher education. Approach: This study employs a systematic literature review methodology, analyzing peer-reviewed studies from 2010 to 2024. The review focuses on ABC implementation in European HEIs, with a particular emphasis on Albania, to assess adoption patterns, benefits, and barriers in both Western and Eastern European contexts. Results: The review finds that Western European countries, have increasingly adopted ABC to enhance cost transparency and operational efficiency in HEIs. In contrast, Eastern European nations, including Albania, rely heavily on traditional costing methods, constrained by resource limitations, centralized funding models, inadequate data infrastructure, and limited managerial expertise. The findings suggest that ABC could improve financial sustainability in Albanian HEIs but requires overcoming significant barriers. Implications: This study contributes to the literature on ABC in higher education by highlighting regional disparities in adoption and identifying specific challenges in transitioning economies like Albania. It underscores the need for capacity-building and policy support to facilitate ABC implementation and align Albanian HEIs with European higher-education frameworks. Value: The study provides valuable insights for HEI administrators and policymakers by identifying the potential of ABC to enhance cost management and financial sustainability. It also highlights areas for improvement in Albanian HEIs, offering a foundation for future case studies and regional strategies to support ABC adoption in transitioning economies.
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