Abstract
We examine the effect of more precise cost information on contract renegotiations between supply-chain parties. Specifically, we experimentally investigate the benefits of activity-based costing (ABC) information to address common supply-chain inefficiencies that are caused by the buyer or the seller, but have the same underlying costs. Results suggest that the impact of more precise cost information depends crucially on the cause of the inefficiency that parties need to address during the negotiation. ABC information increases the total joint profit in the supply chain. However, ABC information increases the seller’s perceptions of the fairness of the buyer’s arguments for contract changes only when the buyer causes the inefficiency but not when the seller causes the inefficiency. The combined effect of ABC information on joint profit and fairness perceptions thus increases the buyer’s profit only when buyer causes the inefficiency but not when the seller causes the inefficiency.Data Availability: Data are available from the first author upon request.
Stijn Masschelein
Senior Lecturer in Accounting and Finance - Fellow in Center of Data Business Analytics
I am a lecturer in accounting at the University of Western Australia. I am interested in the role of (management accounting) information in decision making and risk taking. My research investigate how verifiable and subjective information supports formal and informal contracts. My interest is easily piqued and as a result I am involved in a wide variety of projects such as field applications in target setting and cost of quality, lab experiments on negotiations, markets, and risk taking, survey research on integrity and quantitative field studies in the banking sector. I developed experience in a range of statistical methods such as meta-analysis, (Bayesian) multilevel models, and simulations.