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The Organization Of Innovation In The United States And Japan: Neoclassical And Relational Contracting

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  • Michele Kremen Bolton
  • Roger Malmrose
  • William G. Ouchi

Abstract

This article discusses the role of intermediate governance structures between vertically related industries in the specific context of technological innovation. In the United States, relations between firms in vertically related industries correspond closely to the neoclassical contracting model, characterized by arms‐length, spot contracting on the open market. In Japan, inter‐firm relations are more likely to involve relational contracting, characterized by stable bonding mechanisms and a dense historical network of economic ties between the parties to the exchange. We focus upon the kinyu keiretsu type of relational contracting between firms of unequal size and power in vertically related industries, which is a special case of the more generally studied kigyo shudan, or inter‐market financial group. For illustrative purposes, we compare the contractual arrangements used to manage the development of new technology by 46 US and 27 Japanese semiconductor equipment firms. We conclude by speculating that the organization of innovation in the Japanese semiconductor equipment industry has accelerated their development of new technology and led to their extraordinarily rapid worldwide market penetration.

Suggested Citation

  • Michele Kremen Bolton & Roger Malmrose & William G. Ouchi, 1994. "The Organization Of Innovation In The United States And Japan: Neoclassical And Relational Contracting," Journal of Management Studies, Wiley Blackwell, vol. 31(5), pages 653-679, September.
    • Handle: RePEc:bla:jomstd:v:31:y:1994:i:5:p:653-679
    DOI: 10.1111/j.1467-6486.1994.tb00633.x
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    Cited by:

    1. D J Jin & R R Stough, 1998. "Learning and Learning Capability in the Fordist and Post-Fordist Age: An Integrative Framework," Environment and Planning A, , vol. 30(7), pages 1255-1278, July.
    2. You-Na Lee & John P. Walsh, 2012. "Intra-organizational integration and innovation: organizational structure, environmental contingency and R&D performance," ICER Working Papers 20-2011, ICER - International Centre for Economic Research.
    3. repec:dau:papers:123456789/6629 is not listed on IDEAS
    4. Kalm, Matias, 2012. "The Impact of Networking on Firm Performance - Evidence from Small and Medium-Sized Firms in Emerging Technology Areas," Discussion Papers 1278, The Research Institute of the Finnish Economy.
    5. Bossink, B.A.G., 2002. "The development of co-innovation strategies: stages and interaction patterns in interfirm innovation," Serie Research Memoranda 0020, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    6. Mierzejewska Wioletta & Dziurski Patryk, 2021. "How Firms Cooperate in Business Groups? Evidence from Poland," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 29(2), pages 63-88, June.

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