Management Accounting and Business Relationships from a Supplier Perspective
Abstract: Management accounting practices are implicated in inter-organizational configurations because they are part of firms’ ability to compete through cooperative efforts. Prior research emphasizes that customers use management accounting to improve efficiency by controlling and exploiting cost benefits through learning in single customer-supplier relationships.This thesis complements this view by adopting a supplier perspective in five papers based on a case study approach. Two management accounting functions – decision-making and accountability – and their inter-organizational implications at three levels – relationship, firm and network - are studied. The objective is to extend the limited knowledge that exists on how the use of management accounting is associated with business relationships in networks.A core argument is that in business networks the key implications of management accounting are located at the firm level and at the network level. Since relationships are different, they produce different opportunities for learning and economic benefits. Hence, it is suggested that the firm uses management accounting to manage its portfolio of relationships. Because relationships in networks are connected, however, this usage of management accounting affects, and is affected by, relationship connectedness. Accordingly, management accounting in business networks is implicated in complex forms of learning that, in addition to cost benefits, are associated with revenue benefits.The results show that the supplier uses management accounting for decision-making and accountability within the firm to manage specific connectedness between close relationships, and specific and general connectedness between close and arms-length relationships. Further, that the usage of management accounting for decision-making and accountability within the network changes the connectedness between relationships, and that change in the connectedness between relationships changes management accounting practices.This suggests that management accounting co-evolves with the network configuration in which it operates. The reason is that economic action in business networks is characterized by interdependence, which means that activities and resources cannot be controlled unilaterally by one part. In effect, the decision-making and accountability functions of management accounting within the firm and within the network are two sides of the same coin. Actors in the firm are accountable within it for decisions made by close customers, and they are accountable to close customers for decisions within it and in arms-length relationships.
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