Target Costing: First And Second Comings

Contrary to the conventional wisdom that target costing (TC) was a 1960s' Japanese innovation, it is argued that the same concept, albeit then labelled 'product tailoring', first appeared in the 1950s' Anglophone managerialeconomics literature in works linked to economist-consultant Joel Dean. These sources describe a range of North American applications of TC which clearly predate Japanese implementations. It is further argued that in the specifically accounting literature, Gordon Shillinglaw (1967) - a one-time employee of Dean - provided the first description of the TC concept. To support these propositions, the post-1990 TC literature is analysed to determine the key characteristics of TC. These phenomena are then shown to be present in the earlier works of Dean and his followers in an oeuvre which can be regarded as the 'first coming' of the TC concept. The diffusion of TC concepts is then analysed from two perspectives: as between the USA and Japan at the enterprise level and within and between the economics and accounting literatures. Explanations are then offered for the diffusion patterns identified and for the neglect of the first-coming TC works.