<jats:sec> <jats:title>Purpose</jats:title> <jats:p>The adoption of activity-based costing (ABC) and its performance implications within the small- and medium-sized enterprise (SME) context has received limited attention. Since its development in the1980s, the literature on the ABC-performance nexus has been inconclusive, diverging and has produced conflicting results. Whether specific attributes of innovation influence ABC’s adoption to enhance SME performance is largely unknown in emerging economies. The purpose of this study is twofold: first, to examine the impact of innovative attributes on ABC’s adoption in emerging countries, and second, to ascertain the performance implications of ABC’s adoption.</jats:p> </jats:sec> <jats:sec> <jats:title>Design/methodology/approach</jats:title> <jats:p>A survey of 443 SME managers was conducted using SmartPLS structural equations modeling.</jats:p> </jats:sec> <jats:sec> <jats:title>Findings</jats:title> <jats:p>The results show that although ABC’s adoption is relatively low, both observability and trialability are positively related to ABC’s adoption, which in turn impacts operational and financial performance; hence, they are determinants of ABC’s adoption in the Ghanaian context. Operational performance has a positive relationship with financial performance, which suggests that operational performance partially mediates the relationship between ABC’s adoption and financial performance.</jats:p> </jats:sec> <jats:sec> <jats:title>Practical implications</jats:title> <jats:p>The results suggest that Ghanaian SMEs have a higher tendency to adopt the ABC concept if they experiment with ABC themselves. In addition, SMEs that adopt the ABC methodology are likely to improve their financial performance by enhancing the accuracy of their cost performance indicators. In this regard, SMEs with no ABC systems can consider ABC adoption as a managerial intervention aimed at improving operational performance.</jats:p> </jats:sec> <jats:sec> <jats:title>Originality/value</jats:title> <jats:p>This study provides preliminary empirical evidence on innovation attributes that influence ABC’s adoption among SMEs to enhance their operational and financial performance in the Ghanaian context. Research examining ABC’s adoption among SMEs in developing countries and the factors affecting their adoption are largely underdeveloped.</jats:p> </jats:sec>