Less is sometimes more: The role of information quantity and specific assets in the propensity to engage in cost data exchange processes

The mutual disclosure of cost information among companies can lead to significant cost reductions. This experimental study examines how the quantity of cost information disclosed (high vs. low) and the offering of a joint specific investment (yes vs. no) influence the willingness of a buyer and supplier to engage in open book cost data exchange. The results show that when a large quantity of cost information is offered initially, participants reciprocate and reveal more cost information themselves, consistent with a tit-for-tat strategy. We also show that information quantity and the offering of a joint specific investment exhibit substitutive effects rather than additive effects on the willingness to engage in open book cost data exchange. For example, when a small amount of cost information is disclosed, the offering of a joint specific investment increases the willingness of the partner to engage in cost data exchange. However, consistent with the theory of reactance, a large quantity of cost information coupled with the offer of a joint specific investment does not result in a greater willingness than when a large quantity of information is offered alone.