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Keiretsu centrality — profits and profit stability: A power dependence perspective

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  • Brouthers, Lance Eliot
  • Gao, Yan
  • Napshin, Stuart

Abstract

Prior studies compare keiretsu member firm and independent firm performance. Here, we use historical and power dependence perspectives to theorize that the Japanese keiretsu system primarily benefits the most central firms. We test this by examining the performance of two types of keiretsu firms (central firms and other member firms) within two types of keiretsu (horizontal and vertical). We hypothesize and find that: (1) central vertical keiretsu firms are more profitable than central horizontal keiretsu firms; (2) central horizontal keiretsu firms have greater profit stability than central vertical keiretsu firms; (3) central vertical keiretsu firms are more profitable than non-central vertical keiretsu firms; and (4) central horizontal keiretsu firms have greater profit stability than non-central horizontal keiretsu firms. Implications for managers and future research directions are discussed.

Suggested Citation

  • Brouthers, Lance Eliot & Gao, Yan & Napshin, Stuart, 2014. "Keiretsu centrality — profits and profit stability: A power dependence perspective," Journal of Business Research, Elsevier, vol. 67(12), pages 2603-2610.
    • Handle: RePEc:eee:jbrese:v:67:y:2014:i:12:p:2603-2610
    DOI: 10.1016/j.jbusres.2014.03.019
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