The effect of Open Book Accounting on Reducing Production Cost and Enhancing Competitive Advantage (Field study in industrial companies in Khartoum, Sudan)

Abstract

The policy of open book accounting has become of clear importance and effective role in reducing production costs and raising companies to the competitive level. This study aimed to investigate the impact of disclosure of cost data in reducing the cost of production and increasing the competitive advantage. The primary data was collected through a five-point Likert scale questionnaire that was distributed to a study sample of 200 employees from several companies in Sudan to explore the respondents’ views. 170 questionnaires were retrieved, with a response rate of 85%. To analyze the data, the descriptive statistics -mean and standard deviation- were used to measure the respondents’ degree of agreement. The simple linear regression analysis was adopted to
test the hypothesis of the study. the study concluded that the open book accounting assists in reducing the cost by disclosing cost structure and driver for each product and developing product manufacturing process,also, motivating supplier to disclose cost data through joint policies between buyer and supplier leads to support the competitive advantage. The study recommended building up joint team which includes members from buyer and supplier to manage costs and develop products according to the information that provided by open book accounting technique.