In Defense of Limited Manufacturing Cost Control: Disciplining Acquisition of Private Information by Suppliers

• 成果类型: Article
• 署名作者: Arya, Anil; Mittendorf, Brian; Ramanan, Ram N., V
• 署名单位: University System of Ohio; Ohio State University; State University of New York (SUNY) System; Binghamton University, SUNY
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0694
• 发表日期: 2022
• 页码: 29-49
• 关键词: corporate social-responsibility; customer-base concentration; asymmetric information; ORGANIZATIONAL SLACK; Labor unions; disclosure; INVESTMENT; incentives; profitability; performance

摘要

When a firm's input supplier can acquire and misreport private information to gain an edge in negotiations, we show that the firm can blunt the supplier's informational advantage by permitting inefficiencies in its own internal production. Specifically, we establish that a modest increase in the cost of the input(s) a firm makes internally credibly commits it to be more aggressive in negotiations with a supplier for the input(s) the firm buys. Recognizing that its potential information rents will be limited, the supplier, in turn, becomes less aggressive in information acquisition. The paper fully characterizes the equilibrium-the firm's investments, the supplier's information acquisition and reporting decisions, and the terms of trade-to demonstrate that often-maligned internal bloat can be an endogenous facilitator of efficient outsourcing.