Value Chain Analysis in Interfirm Relationships Dekker 2003

Management Accounting Research 14 (2003) 1–23

Value chain analysis in interfirm relationships: a field study

Henri C. Dekker∗

Amsterdam Research Center in Accounting (ARCA), Vrije Universiteit Amsterdam, De Boelelaan 1105, 1081 HV Amsterdam, The Netherlands Received 20 October 2001; accepted 4 December 2002

Abstract Interfirm relationships introduce new challenges for management accounting. One such challenge is the provision of information for the coordination and optimization of activities across firms in a value chain. According to the literature, a value chain analysis (VCA) is a useful tool to meet this challenge. However, little empirical evidence has been published on the use of this analysis in practice. This paper presents a case study on the use of an activity-based costing (ABC) model by a large UK retail firm and a group of suppliers for supporting their supply chain management (SCM) practices. This cost model was based on the principles of value chain analysis and integrated cost information across the supply chain. It was used to improve supply chain operations by performing benchmark analyses, strategic what-if analyses and cost monitoring. An interpretation of the case findings is provided using organizational theory and transaction cost economics. © 2003 Elsevier Science Ltd. All rights reserved.

Keywords: Interfirm relationships; Control; Value chain analysis; Case study

1. Introduction Interfirm relationships and networks are an indispensable part of business relationships, yet in the past they have gained little attention on the agenda of management accounting researchers. Only recently more attention towards this issue has been called for in the accounting literature (Hopwood, 1996; Munday, 1992; Otley, 1994; Scapens and Bromwich, 2001). Due to the recognition of the implications for organizational design and management control within and between organizations, the topic currently is drawing increasing research interest. Specific issues...