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Open-book accounting: Reason for failure of inter-firm cooperation?

Authors
Journal
Management Accounting Research
1044-5005
Publisher
Elsevier
Publication Date
Volume
23
Issue
1
Identifiers
DOI: 10.1016/j.mar.2011.07.001
Keywords
  • Management Accounting
  • Open-Book Accounting
  • Inter-Organizational Cost Management
  • Supply Chain Management

Abstract

Abstract Inter-firm accounting techniques such as open-book accounting (OBA) have been described as an important means for effectively managing costs in buyer–supplier relationships and for improving relationship quality. However, disclosing cost data also implies for the supplier the risk that the buyer uses the data during price negotiations to pressure the supplier's profit margin. To date, there is sparse empirical evidence addressing the extent to which cost-data disclosure does affect the supplier's perception of the exchange relationship. This study addresses this gap by investigating the impact of OBA on supplier relationship satisfaction. The findings indicate that OBA may negatively affect supplier relationship satisfaction and thus represents a potential risk to cooperation. The results further suggest that effective safeguards against opportunistic behavior, such as relational social norms, significantly attenuate the negative effect of OBA on supplier relationship satisfaction.

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