Case Study Application of VSM to Transfer Pricing

Transfer pricing is a challenging problem for MNEs. This research reports quantitative results from a survey of Taiwanese MNEs operating in China, indicating differences between method frequency domestically and internationally, and mainly authoriarian top down transfer pricing decision-making. A transfer pricing system, based on the viable system model (VSM), is proposed to introduce an open systems holistic approach. The proposed VSM transfer pricing system is applied in seven MNEs, and the outcome of the applications is reported from interviews with CEOs. The proposed VSM transfer pricing system was reported to lead to improved transfer pricing decision-making, because of more complete information, integrated information flow, people know their responsibilities, more accountability, fewer conflicts, more participation, and more proactivity.

[1]  J. R. Gould.  Internal Pricing in Firms When There are Costs of Using an Outside Market , 1964 .

[2]  Edward J. Lusk,et al.  Transfer pricing - A synthesis , 1974 .

[3]  M. Snowdon.  The Heart of Enterprise , 1979 .

[4]  J. Hirshleifer.  On the Economics of Transfer Pricing , 1956 .

[5]  Severin V. Grabski,et al.  Transfer pricing in complex organizations: a review and integration of recent empirical and analytical research , 1985 .

[6]  Paul W. Cook,et al.  Decentralization and the Transfer-Price Problem , 1955 .

[7]  B. Spicer,et al.  TOWARDS AN ORGANIZATIONAL THEORY OF THE TRANSFER PRICING PROCESS. , 1988 .

[8]  R. Kaplan.  Measuring manufacturing performance: a new challenge for managerial accounting research , 1983 .

[9]  Michael Jackson,et al.  Systems approaches to management , 2002 .

[10]  Roger Y. W. Tang.  Transfer pricing in the 1990s : tax and management perspectives , 1993 .

[11]  Peter Secord.  Management Accounting (2Nd Ed.) , 1997 .

[12]  Maryanne M. Mowen,et al.  Cost Management: Accounting and Control , 1994 .

[13]  S. Beer.  The Brain of the Firm , 1972 .

[14]  R. Anthony,et al.  Management Control Systems , 2020, Management Control Systems and Tools for Internationalization Success.

[15]  Jack Hirshleifer,et al.  Economics of the Divisionalized Firm , 1957 .

[16]  W. Abdallah.  International Transfer Pricing Policies: Decision-Making Guidelines for Multinational Companies , 1989 .

[17]  R. Bernhard.  Some Problems In Applying Mathematical Programming To Opportunity Costing , 1968 .

[18]  F. Bradley.  International Marketing Strategy , 1991 .

[19]  J. M. Samuels,et al.  Opportunity Costing: An Application of Mathematical Programming , 1965 .

[20]  Robert S. Kaplan,et al.  Advanced Management Accounting , 1989 .