Inter-Organisational Cost Management and Governance Mechanisms: A Conceptual Review
Journal Title: International Journal of Social Science Humanity & Management Research - Year 2022, Vol 1, Issue 02
Abstract
Interorganisational cost management focuses on cost minimisation through strategic alliance with the aim of creating competitive advantages and ensuring sustainability of the bottom line. This study’s main purpose is the synthesis of governance mechanism as a necessary tool for minimising the inhibitors of interorganisational cost management practice among companies in developing economies like Nigeria. Literature or a qualitative research method was utilised to situate the existing research in interorganisational cost management (IOCM) and governance mechanisms usually used in practice. This study found from extant literature that hybrid governance mechanism or model, market-based mechanism, hierarchical governance and network administrative organisation governance are the most common governance mechanism that can limit inhibiting factors to the practice of interorganisational cost management such as opportunistic behaviour, weak open book accounting practice, weak employee and top management support, and poor choice governance mechanism. This study demonstrates that proper choice of governance mechanism as a coordinating mechanism in IOCM can lead to a greater value creation for the participating organisations. Therefore, this study recommends that companies in developing economies should embark on IOCM practices to combat lack of coordinated resources and huge capital demand on raising the required factors of production by single entity.
Authors and Affiliations
shaku Thomas, Ph. D, Musa Jerry, Ph. D
Keywords
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