INTER-FIRM COORDINATION

Inter-Firm Accounting and Information Sharing Systems

Inter-Firm Accounting and Information Sharing Systems

Introduction

Today, the accounting information system of any business has been computerized in order to achieve high levels of automation of administrative and accounting tasks. This involves development of integrated programs that manage accounting and payroll treasury; this also facilitates the rapid processing of the data. It often happens that two companies managing a strong customer-supplier business relationship follow two separate advanced accounting information systems to conduct their financial transactions.

The major function of inter-firm accounting and information sharing systems is to ensure that business rules are met, taking a deep control of processes and documents. It results in development of coherent set of data structured according to rules agreed for transmission by electronic means (Aydogan, 2008). Inter-firm accounting and information sharing systems are prepared in a format capable of being read by the computer and to be processed automatically and unambiguously that result in enhancing the communication effectiveness (Collier, 2006).

Inter-Firm Accounting and Information Sharing Systems

In inter-firm accounting and information sharing systems, the interactions between the parties take place through computer applications that act as an interface with local data and can exchange structured business information (Tomak, 2005). The inter-firm coordination practices sets out how information for coordination of investment decisions will be structured for onward transmission (George, 2011). Information communication from the documents and electronic trading defines the meaning of each data element. 

There is broad agreement that the functioning of institutions determines the evolution of economies and the specific growth path information sharing for investment decision. This involves addressing the rules and regulations which can be formal (such as contracts and agreements between firms and coordinating companies), or also informal (such as codes of conduct and conventions) that exist in inter-firm accounting sharing practices (Aydogan, 2008). This plays a strategic role in the development process and enhancing the efficiency of organization with respect to timely information sharing for investment decisions. Companies and organizations make their investment decisions in an institutional setting and carried out through a system of relations and interactions with other companies and organizations that make up the institutional system (George, 2011). This affects the results of the investment; and therefore, the value of investment decision, and economic development process of the partnering companies.

Information technology and communication (ICT) greatly influenced the inter-firm accounting system development for the inter-firm coordination of investment decisions. Senior management expects that the investment in information technology has a positive impact on competition in the market and the real impact on financial results in short-term.

Inter-firm coordination of investment decisions is important to institutional economics which has taken special attention over the past decades. It involves identifying the mechanisms that establish the relationships between institutions and growth (Grout, 2006). Thus, inter-firm accounting and information sharing systems establish connection between institutions or firms coordinating to each other. Economic growth is realized through cost reduction of non-commercial activities, which incur by the exchanges and transactions between economic agents (Collier, 2006). 

Typical applications of inter-firm accounting and information sharing systems can be observed in the industrial, commercial, financial, medical, administrative, manufacturing or any other similar ...