The effect of relational factors on open-book accounting and inter-organizational cost management in buyer–supplier partnerships

Abstract

Open-book accounting (OBA) – the systematic disclosure and discussion of cost data between partner firms – is indispensable for revealing additional cost reduction opportunities that become feasible through the joint efforts of different organizations within supplier–buyer partnerships (inter-organizational cost management). However, evidence from previous case studies indicates that the adoption of OBA and inter-organizational cost management (IOCM) depends on the relational context. This study hypothesizes that the relational factors trust and commitment influence the implementation of OBA and IOCM. The results of a structural equation model used to evaluate data from 147 automotive suppliers partly support this hypothesis. While supplier's commitment promotes cost data disclosure, the buyer's commitment is a key enabler for the inter-organizational cost management.