OPEN BOOK ACCOUNTING IN PRACTICE - CONTRADICTORY EMPIRICAL EVIDENCE

Inter-organizational cost management (IOCM) and open-book accounting (OBA) have been seen as a response of management accounting to the evolution taking place in many supply chains. However, there is surprisingly little evidence on the success and failure of these tools in real-life settings and how companies utilize these tools in their network relationships. Accordingly, literature suggests that even purely descriptive cases would be able to increase our understanding on IOCM practices. This paper reports a case study, which focused on cost management development in a Finnish machine construction network. The researchers had an active and interventionist role in the process, which provided an excellent opportunity to observe and learn from a real-life application of IOCM and OBA. The evidence from this case provides us with somewhat contradictory ideas. Taking a more positive stance, one might say that the case illustrates quite well what is meant by IOCM. Two suppliers opened their books on the basis of which the OEM and the suppliers were able to discuss the costs on a detailed level resulting in lower purchasing prices for the OEM. On the other hand, a more pessimistic stance is equally justified. The OEM employed a number of harsh and non-collaborative methods for squeezing the suppliers on the basis of detailed cost information. Thus, elements of competition were also present in an open-book setting, which is not typically discussed in the OBA literature.