Supply chain decision making supported by an Open books policy

Based on a study of a buyer–seller relationship in the automotive industry, this article identifies 17 different decision-making processes where openly sharing cost data—a so-called open books policy—plays an important supporting role. These processes relate to supplier selection, various activities that occur prior to production, and the full-speed production stage of the exchange process. Overall, open books plays the greatest role in the pre-production stage, although it is found to support decision-making relating to supplier selection and decision-making during full-speed production to a greater extent than the literature recognizes

Generation of human and structural capital: lessons from knowledge management

Interorganizational and social relationships can be seen as part of the intellectual capital of a firm. Existing frameworks of intellectual capital, however, fail to address how relationships should be managed to generate more intellectual capital. Drawing on the interaction approach and the fields of intellectual capital and knowledge management, this paper develops a framework for managing relationships. The framework is illustrated with a case study. It is also noted that firms can improve relationship management and thus generate more intellectual capital

Social cross-functional vendor selection in technologically uncertain sourcing situations

Based on an in-depth case study of an automotive manufacturer sourcing parts for high technology projects, this study investigates the intentions and structure of socialization within and between firms during the supplier selection process in technologically uncertain sourcing situations. Here, we aim to answer the question of how socialization can hedge against the high levels of uncertainty for manufacturers selecting suppliers of high technology resources. The case represents a major automotive manufacturer in Northern Europe, and is based on 38 semi-structured interviews with representatives of the different functions involved in the sourcing for the new development projects. Our data suggest that internal and external socialization during the supplier selection process can improve internal alignment and problem solving, and external familiarity towards the sourcing task. In this context, socialization took place on functional, cross-functional, and (inter)corporate levels, with higher functional autonomy during the assessment, and higher cross-functional integration during negotiations and decision making, adding to the debate on whether functions should be integrated or separated

Managing appropriation concerns and coordination costs in complex vendor relationships: Integration and isolation as governance strategies

Many studies have shown that the inter-organizational governance mechanisms required to manage appropriation concerns come into conflict with the mechanisms needed to manage coordination costs. Research has, however, largely left unanswered the question of how client organizations govern complex vendor relationships that involve multiple categories, transactions, and activities where appropriation concerns and coordination costs must be managed simultaneously. We propose that this may be achieved by utilizing two strategies; while integrating some activities, transactions and categories, others can be isolated. Drawing on 23 interviews as well asprocedural documents associated with vendor management, this study examines how a leading automotive manufacturer governs relationships with three vendors. The analysis reveals how corporate and operational-level staff combine formal and informal governance mechanisms as they pursue integration and isolation strategies, enabling the client organization to maintain and develop longterm complex relationships. Our findings lead us to question a tendency in the literature to regard isolation as negative and integration as an ideal strategy for managing long-term relationships. Only when utilized in tandem will isolation and integration strategies enable organizations to align the conflicting governance mechanisms required to manage appropriation concerns and coordination costs

Internationalisation as a process of strategy and change : A study of 16 Swedish industrial SMEs

This thesis reports a study of the internationalisation processes of 16 industrial SMEs located in the county of Jönköping (Sweden). More specifically, it identifies changes in international strategies, identifies reasons why changes are undertaken and discusses how these changes can be understood when placed in the context of the internationalisation process. The findings show that industrial SME managers tend to stress the importance of foreign sales but are often much more reluctant to buy products abroad. This means that while changes in foreign sales market strategy occur frequently in many firms, the process of foreign sourcing market expansion unfolds more slowly, involving fewer markets. The findings also indicate preferences for a low degree of complexity in foreign sales and purchasing. Therefore, industrial SMEs typically become involved in more complex ventures like foreign subsidiaries only when this is perceived as necessary, for example when there is risk of losing a foreign market. Mostly, changes in industrial SMEs’ international strategies are undertaken as responses to external opportunities, such as unsolicited orders. Changes much less frequently find their origin in internal initiatives. This pattern appears to pervade throughout the internationalisation process, even if a more critical attitude towards potential changes arises with increasing experience

Trust, distrust, and open-book accounting in three client-vendor relationships

Extant management accounting research has conceptualized the interplay between trust, distrust, and open-book accounting (OBA) as a relationship-level phenomenon, largely ignoring that inter-organizational relationships are often complex entities that comprise multiple arenas of exchange where (dis)trust and OBA can interact in different—and potentially contradictory—ways. To address this theoretical oversight, we draw on relational exchange theory to propose that (dis)trust largely forms within OBA domains where different forms of data are exchanged for different purposes. Trust and distrust may thereby coexist within a relationship. We also propose that (dis)trust spills over to influence the conditions for OBA in other domains. Consequently, trust and distrust not only take shape in cumulative processes within OBA domains but also diffuse between domains in a relationship. Empirical observations from a longitudinal case study of a retail buyer's attempts to introduce OBA in three vendor relationships lead us to suggest that competence-trust spillover is determined largely by domain similarity, while goodwill-trust spillover relies to a greater extent on staff mobility between OBA domains. Overall, the negative effects of distrust spillover on the implementation of OBA appear greater than the positive effects of trust spillover. Our study shows that, by analyzing the domain-specific nature of trust and distrust, future research can increase our understanding of the relationship between data characteristics and (dis)trust, as well as explain how trust and distrust interact to determine conditions for data exchange between organizations

Different open book accounting practices for different purchasing strategies

Extant studies of open book accounting focus primarily on data disclosure in long-term, committed purchasing arrangements We extend research beyond that context by exploring the association between open book practices (in terms of nature and uses of disclosed data as well as conditions of data disclosure) and two different purchasing strategies. Three case studies are performed Results indicate that within market procurement characterized by a transactional purchasing strategy, cost data primarily serve to reduce purchase price. Therefore, data disclosure is limited in scope and scale, occurs primarily during supplier evaluation and selection, and is characterized by an adversarial atmosphere. Incentives for suppliers to open their books focus on short-term tangible gains Within a hybrid exchange arrangement characterized by a relational purchasing strategy, data disclosure supports cost reduction, e.g., through joint product development, and is more comprehensive The atmosphere is less adversarial and suppliers reap long-term benefits

Controlling inter-organizational relationship transformation

Drawing on theories of social exchange and strategic change, this paper presents a longitudinal study of a retail buyer’s attempts to accelerate the transformation of three arm’s length supplier relationships into relationships characterized by a collaborative atmosphere and integrated activity structure. We find that these largely thwarted attempts are characterized by three paradoxes. (1) Attempts to force the pace of change leads to clashes as change subjects do not have sufficient time to develop capabilities needed to collaborate and acquaint themselves with their counterparts. Processing at a slower pace may, however, lead to loss of momentum and enthusiasm among staff. (2) Attempts to change structures and systems may rely on developments in relationship atmosphere. Relationship atmosphere, on the other hand, may not develop without a clear path towards new activity structures. I.e., the sequencing of change activities is a challenge to change agents. (3) Also timing of change initiatives is characterized by a paradox. We see a desire early on to focus on quick gains and postpone mode demanding activities; at the same time, more substantial rewards later on may rely on challenging the relationship at an early stage. These paradoxes lead us to conclude that accelerated, planned relationship transformation is subject to diseconomies of time compression as well as diseconomies of time expansion. The association between speed of transformation and the likelihood of its success therefore represents an inverted u-shape

Activity-based costing: effects of long-term buyer-supplier relationships

he literature on activity-based costing (ABC) that deals with the allocation of indirect purchasing costs primarily draws on a transactional approach to purchasing. This presents a problem, since a large share of purchasing takes place within relationships. The purpose of this paper is to point out complexities in applying ABC to indirect purchasing costs, when purchasing takes place within long-term relationships. The interaction model is used as a framework