Open book accounting in practice – exploring the faces of openness

Abstract

Purpose -In spite of the increased research activity on inter-organizational cost management (IOCM) and open-book accounting (OBA), detailed evidence on the application of these tools in real-life settings is still relatively sparse. Increased outsourcing and supplier responsibilities call for more thorough understanding on the possibilities and variations of supply chain cost management. As a research avenue, in-depth case studies have been invited to elaborate the cost management interaction between companies. This paper aims to address these issues. Design/methodology/approach -This paper is based on an interventionist research within two supply networks. By making research interventions on the development of cost management practices among the suppliers, the researchers have set the ground for implementation of OBA, which, then, has provided a box seat to observe the process of OBA and its associations with the different forms of control. Within these two networks, this paper focuses on two OBA episodes portraying different facets of openness in IOCM. Findings -This paper presents OBA as an accounting template with a seemingly flexible character. By relying on the empirical study, the paper shows how OBA might be used for mitigating the component's price increasing pressures and, thus, controlling the costs of the end product in hybrids resembling very much market conditions. However, the very similar OBA procedures can be applied for achieving the long-term goals of partnering in hybrids resembling to a great extent hierarchical structures. As the paper shows, the best corresponding control archetype for a given OBA application largely depends on the purpose defined for the IOCM activity by participating stakeholders. Originality/value -Thus, far, there are no interventionist studies on OBA and, hence, the research setting provides an interesting new element to the extant literature on OBA and IOCM. However, the research method does not have intrinsic value. Thus, the contribution, and therefore also the originality, of this paper is based on new aspects provided to the theory on OBA.

Dynamic and static pricing in open-book accounting

“…Our definition conforms in general to other definitions of OBA (e.g. Agndal and Nilsson, 2010, Alenius et al, 2015, Kumra et al, 2012, Suomala et al, 2010, Windolph and Möller, 2012. In addition, our definition stresses the fact that the kind of information shared can vary within different OBA agreements.…”

“…• The customer gaining knowledge of the production process (Piontkowski andHoffjan, 2009, Alenius et al, 2015), the market (Agndal and Nilsson, 2010), and how to formulate needs (Seal et al, 1999, Suomala et al, 2010 • Price pressuring (Munday, 1992, Axelsson et al, 2002 • Customer control over supplier information (Alenius et al, 2015, Agndal and Nilsson, 2010, Mouritsen et al, 2001 • Shifting transaction costs (Möller et al, 2011) and profit margin variance (Kumra et al, 2012) from the customer to the supplier • Shifting focus from price to process (Alenius et al, 2015) • Error checking Nilsson, 2008, Agndal andNilsson, 2010) • Stimulating transparency (Mouritsen et al, 2001, Cooper andSlagmulder, 2004), nonopportunistic behaviour (Caglio and Ditillo, 2012), commitment (Piontkowski and Hoffjan, 2009), and trust (Tomkins, 2001, Seal et al, 1999, Dekker, 2003. Agndal and Nilsson (2008) provide a list of seventeen decision-making processes informed by OBA.…”

“…The role of trust in OBA agreements also varies depending on the selected pricing mechanism. For example, Suomala et al (2010) describe how, in a dynamic price OBA agreement, the customer may fear that the supplier will act opportunistically and disclose incorrect costs. If static prices were used instead, disclosing incorrect costs would not benefit the supplier in the same obvious way.…”

Time-driven activity-based costing

“…That is, researchers must also assume an etic viewpoint to link the findings with the relevant literature and thus make a theoretical contribution (Jönsson and Lukka, 2007;Suomala et al, 2014). Essentially, it is expected that researchers take an interactive approach, alternating between a balanced use of the etic and emic viewpoints (Jönsson and Lukka, 2007;Dumay, 2010;Suomala et al, 2010;Suomala et al, 2014).…”

Inter-organisational asset management: linking an operational and a strategic view

“…They include for instance target costing, cost tables/disclosed cost data and activity-based costing (Axelsson et al, 2002), and they are typically employed in some way or another to improve dyadic inter-organisational coordination of purchasing and value chain operations in the present cost accounting and management literature. There are numerous empirical case studies where a company and its supplier(s) have implemented at least one IOCM technique in the above-mentioned context (e.g., Mouritsen et al, 2001;Kulmala et al, 2002;Agndal and Nilsson, 2008;Free, 2008;Suomala et al, 2010;Romano and Formentini, 2012;Kumra et al, 2012). The nature of such customer-supplier relationship, and the purchasing strategy of the customer in particular, can be either transactional or relational (Axelsson et al, 2002;Agndal and Nilsson, 2010).…”