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"Dissolve the Keiretsu , or Die": A longitudinal study of disintermediation in the Japanese automobile manufacturing supply networks

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  • Petr MATOUS
  • TODO Yasuyuki

Abstract

Under unstable global economic conditions and an increasing competition for customers in the emerging markets of lower income countries, Japanese automotive parts manufacturers and assemblers are striving to minimize their procurement costs to remain competitive. Applying stochastic actor-oriented network models to the procurement data of the 100 largest Japanese automobile firms in 2006 and 2011, this study explores (1) the predominant supply chain management strategies in the automobile industry; (2) the dynamics of the manufacturers' revenue; and (3) the interactions between the supply chain structures and revenue. In contrast to supply networks among major companies in other sectors of the Japanese economy, the present results do not reveal a clear tendency to preserve cliquish trading groups. On the contrary, during this challenging economic period, Japanese carmakers sought to bypass traditional intermediary partners in their supply chains and directly access upstream parts manufacturers with lower margins. The firms that pursued this strategy were rewarded with higher revenue. The novel network analytic method specifically discerns that the disintermediation and the diversification of supply chains precede firms' success in sales (rather than vice versa). The results suggest a potential challenge for the traditional keiretsu structure among Japanese automotive manufacturers in the new global economic environment.

Suggested Citation

  • Petr MATOUS & TODO Yasuyuki, 2015. ""Dissolve the Keiretsu , or Die": A longitudinal study of disintermediation in the Japanese automobile manufacturing supply networks," Discussion papers 15039, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:15039
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    File URL: https://www.rieti.go.jp/jp/publications/dp/15e039.pdf
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    References listed on IDEAS

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    1. Petr MATOUS & TODO Yasuyuki, 2014. "The Effects of Endogenous Interdependencies on Trade Network Formation across Space among Major Japanese Firms," Discussion papers 14020, Research Institute of Economy, Trade and Industry (RIETI).
    2. Bengt Holmstrom & John Roberts, 1998. "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 73-94, Fall.
    3. Cooper, Robin & Yoshikawa, Takeo, 1994. "Inter-organizational cost management systems: The case of the Tokyo-Yokohama-Kamakura supplier chain," International Journal of Production Economics, Elsevier, vol. 37(1), pages 51-62, November.
    4. Aoki,Masahiko, 1990. "Information, Incentives and Bargaining in the Japanese Economy," Cambridge Books, Cambridge University Press, number 9780521386814, October.
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    Cited by:

    1. K. Skylar Powell & Eunah Lim & Naoki Ando, 2021. "Seeing the tree and the forest: Japanese auto firm multinational dispersion, cultural distance, and foreign manufacturing subsidiary ownership levels," Asian Business & Management, Palgrave Macmillan, vol. 20(2), pages 163-187, April.
    2. Tomeczek, Artur F., 2022. "The evolution of Japanese keiretsu networks: A review and text network analysis of their perceptions in economics," Japan and the World Economy, Elsevier, vol. 62(C).
    3. David C. Earnest & Ian F. Wilkinson, 2018. "An agent based model of the evolution of supplier networks," Computational and Mathematical Organization Theory, Springer, vol. 24(1), pages 112-144, March.
    4. Genjiro Kosaka & Koichi Nakagawa & Seiji Manabe & Mizuki Kobayashi, 2020. "The vertical keiretsu advantage in the era of Westernization in the Japanese automobile industry: investigation from transaction cost economics and a resource-based view," Asian Business & Management, Palgrave Macmillan, vol. 19(1), pages 36-61, February.

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