Open-book accounting in networks: Potential achievements and reasons for failures

Abstract

Open-book accounting has been mentioned both as a means of improving the cost efficiency of supply chains and as a tool for building trust into customer–supplier relationships. However, there is little empirical evidence of how to make open-book accounting work and avoid potential pitfalls. This study, which is based on a contingency framework, contributes to reducing this deficiency in two steps: First, a single case study of a German car manufacturing network describes open-book accounting practice in detail. Second, the results of a cross-case analysis in three Finnish manufacturing networks reveal six major reasons why open-book accounting fails. On the basis of these empirical findings, the contingency framework is specified and theoretical and managerial implications are discussed. The paper concludes with suggestions for further research.