LTA 2/02 • P . 157–177 HARRI I. KULMALA Open-Book Accounting in Networks ABSTRACT There is extensive on-going discussion in networks on the benefits and disadvantages of revealing a firm’s cost information to other firms. Open-book accounting is mentioned as one of the most impor- tant means in striving for success in business. This is especially the case in manufacturing networks. However, most of the literature seems to cover only customer-supplier relationships and not multilat- eral networks. Furthermore, the utilization of open-book accounting seems to be limited to certain accounting situations. In this study a framework for analyzing open-book accounting is presented and empirical open-book practices are viewed in relation to research questions linked with the character- istics of successful partnerships. Keywords: Cost accounting, Customer-supplier relationship, Network, Open-book management 1 INTRODUCTION 1.1 Cost behind price The cost of a product depends on the direct material and labor used, as well as on the opera- tions inside a firm, allocated as overheads, necessary to produce and sell the product (Burch, Acknowledgements: The author is grateful to Professor Erkki Uusi-Rauva for sketching the draft of the illustrative example of open-book accounting in networks, to Senior Researcher Jari Paranko for ideas to refine the research setting, and to the anonymous reviewer of The Finnish Journal of Business Economics for comments that im- proved the paper very much. 157 HARRI I. KULMALA, Researcher (M.Sc.) Institute of Industrial Management, Tampere University of Technology • e-mail:
[email protected] LTA 2/02 • H.