ABC Cost Driver Framing and Altering the Balance of Power in Customer-Supplier Negotiations

Abstract

This study examines how activity-based costing (ABC) cost driver framing affects suppliers’ ability to increase their bargaining power when facing powerful customers. Results of an experiment show that suppliers with high potential to contribute to increasing joint profits are able to increase their power and earn a higher share of joint profits than suppliers with low contribution potential. However, providing suppliers with externally framed cost drivers (cost drivers represented as customers’ activities) instead of internally framed cost drivers (cost drivers represented as suppliers’ own activities) reduces their ability to utilize contribution potential as a source of power. Analyses of negotiators’ behavior show that suppliers with high contribution potential and internally framed cost drivers use more integrative tactics to increase joint profits, allowing them to earn higher shares of joint profits. This study shows that the how firms frame cost drivers affects negotiators’ ability to improve joint profits and negotiation power.

Are State-Owned Enterprises Equally Reliable Information Suppliers? An Examination of the Impacts of State Ownership on Earnings Management Strategies of Chinese Enterprises

“…Selecting stable and reliable partners to work with has become an in-creasingly crucial question for organizations to answer. Previous research on supply chains has shown that accounting information is often used by firms to evaluate the profitability and operational efficiency of suppliers [3]. However, if such financial information has been manipulated by the providers, it can lead to a misjudgment of the credibility and reliability of suppliers by the users.…”

“…Prior studies have found that companies prioritize suppliers' technical capabilities, cost, quality, delivery, and service when choosing suppliers [2]. Additionally, accounting information can help firms evaluate suppliers' operational efficiency, cost management, and profitability [3]. However, the question remains: can people trust the earnings information provided by suppliers?…”

A data mining algorithm-based approach to accounting for enterprise operating costs

“…Accounting cost accounting is an important part of enterprise financial management, which has an important position in the process of enterprise operation and management, the relationship between the size of the profit margin of enterprise operation and management, and the survival of the enterprise [11]. Zhang, R. et al introduced the operation cost method (ABC) to provide accurate cost budgeting for factory operations, optimize the process of management and operations, provide full support and help for enterprise cost management, and look at the validation of this method through actual cases [12].…”