Open book practices in buyer-supplier relationships in India

Abstract Purpose: The study is explores factors influencing open book policy practices in buyer supplier relationship in three Indian industries, namely Industrial Manufacturing, Construction and Information Technology. Design/Methodology/Approach: Indian firms’ applications of open book practices were operationalized as, nature of open book practices, extent and stage of data disclosed, form of data disclosed, direction of data disclosed, attitude towards cost data disclosed, purpose and conditions of data disclosed. Further, the influence of determinants of open book policy (e.g., characteristics of exchange, characteristic of product, characteristic of buyer and supplier) on these factors were studied. Qualitative data was collected of those buyer and supplier company price panel members who were involved in open book policy. Findings: The results suggest that open book policy is used by buyers for diverse purposes ranging from strategic to operational such as, country entry decisions, value engineering at product development stage, ensure supplier margins, for self improvements and cost reductions. Similarly, data shared ranges from narrow to wide in scope and scale and even attitude differs from neutral to negative towards open book across industries in India. Practical Implications: Indian companies utilize an OB policy to support price negotiations. Nevertheless, experiences gained through the OB policy employed by the industrial manufacturing firm leads to specific suggestions on how Indian companies can leverage the open book policy potential for joint problem solving, equitable profit sharing and supplier selection issues. Originality/value: This paper unlike extant research highlights that open book policy has broader applicability and it can be used for purpose of even strategic decisions and also as an integrated part of buyers risk reduction strategy. Further, it provides specific recommendations for Indian companies with regard to open book policy. Key Words : Open book policy, India