Changing firm boundaries in Japanese auto parts supply networks (original) (raw)
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The invisible handshake: the development of the Japanese automotive parts industry
Business and Economic History, 2nd series, 1990
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This paper,examines,how,the arrival and expansion,of Japanese,automotive assemblers in North America during the 1980s and 1990s, has been character- ized by a complex,process of mutual adaptation by both the transplant assem- blers and North American suppliers. It argues that despite the arguments,that globalization is necessarily associated with a convergence,in supply-manage- ment practices, Japanese assemblers generally remain more committed to long-term supplier development ,and ,technical assistance and ,are less price focused than their North American counterparts. Nonetheless, I argue that a hybrid system,is emerging in which the Japanese have modified some,of their strategies to the more,adversarial and price oriented systems,which character- ize North America. The second ,half of the ,paper ,examines ,Canadian-based supplier relations with the transplants and ,concludes ,that despite the emer- gence of a core of large R&D intensive Canadian suppliers, most remain smaller an...
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This paper documents the adoption of the Japanese model of manufacturing in the U.K. motor industry. Internal developments by the vehicle assemblers and their suppliers are examined. It is argued that the Japanese model involves very high intra-and interorganizational dependencies. Although thk does not cause problems in Japan due to the structure of the Japanese motor i n h t t y , the structure of the UK vehicle industry presents severe obstacles to the successful use of Japanese methods. Pursuit of the pure Japanese model within the existing industry structure appears to be fraught with problems. Moreover, such an exercke risks sweeping away potential strengths of the exikting structure. are the U.K. arms of multinational operations. Ford and General Motors (Vauxhall) are well established in the U.K., while Peugeot acquired the old Chrysler/Rootes operations in 1978.
4. Comparison of the Supplier System in China and Japan: Status in the Second Half of the 1990s
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This chapter demonstrates, based on the findings of the on-site survey, that the supplier system of the motorcycle industry in China in the second half of the 1990s was an isolated type, in contrast to the united-type system that existed in Japan. There are clear differences between the Japanese and Chinese firms. In Japan, makers, sharing risks with suppliers, attempt to cooperate with them to learn ways to upgrade their capabilities. By contrast, in China, amid severe selective pressure, makers seek to upgrade their capability in an isolated manner, predominantly passing the risks on to suppliers. Section I looks at China and Japan, comparing the division of roles between makers and suppliers. Section II discusses how makers make suppliers compete among themselves, and Section III discusses the qualitative characteristics of the transaction relationship between makers and suppliers in the two countries. The analytical framework established in Chapter 1 is mainly dealt with in Section III, but why the framework has to be this way is closely related with the characteristics discussed in Sections I and II. 1 This chapter is primarily based on the findings of the first survey conducted at the end of the 1990s, but also integrates the findings of the second survey from 2001 to 2003 and supplementary survey in 2004.
Make or Buy, and/or Cooperate? The Property Rights Approach to Auto Parts Procurement in Japan
We conducted an empirical analysis on the hypothesis on auto parts procurement in Japan, raised by Asanuma (1989; 1992). The Asanuma hypothesis of Japanese subcontractors claims that there is a new classification of auto parts and their producers according to the degree of initiative for product and process designs. The initiative results in "relation-specific skills" acquired by the suppliers in relation to the auto manufacturers in the first tier. Among the responses to the hypothesis, Milgrom and Roberts (1992) and Holmstrom and Roberts (1998) focused upon a role of the supplier association in the Japanese hierarchy system, where communication among the suppliers alleviates opportunistic misbehavior of the automakers. This paper, instead of the reputational role of the association, takes an alternative stand on the technology cooperation association, from the property rights theory, especially a general setup of Whinston (2003). Participation in the associations should be considered as non-contractible investments for the relation-specific skill. The empirical implications of some specified models concern the effects on a vertical integration likelihood of both the importance of buyers' or sellers' non-contractible investments and specificity in the acquired relation-specific skills. We estimate an equation of vertical integration wherein the determinants are dummy variables of the parent firm and the subsidiary's participation in the cooperation associations and variables representing the degree of their relation specificity. The significance and the signs of these variables suggest that, other than a model of exogenous acquisition of relation-specific skills, a model can be also applicable to the Japanese auto parts suppliers-manufacturers, where it is not the manufacturers' but instead are the suppliers' investments which create their own relation-specific skills through the association activities. The Asanuma hypothesis turns out to be alive.
Impacts of the information-technology revolution on Japanese manufacturer–supplier relationships
Journal of the Japanese and International Economies, 2004
Vertical keiretsu", characterized by suppliers' willingness to make customized investments, their long-term relationships with manufacturers and financial as well as personal ties between them, had been recognized as an important source of strength in Japanese industries. Our model predicts that, in contrast to the recent popular argument, the informationtechnology revolution can strengthen several aspects of "vertical keiretsu". This is because the efficiency of designing customized parts is significantly enhanced if suppliers undertake a substantial level of IT investments such as the introduction of 3D CAD systems, and the customized nature of such investments could reduce the number of potential suppliers. Our interviews with Japanese manufacturers provide a support to this prediction.
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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.
Developing buyer-supplier relationships in the automobile industry A study of Jaguar and Nippondenso
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The adoption of Japanese-style practices is considered to be the most effective weapon for automobile manufacturers to sustain and enhance future revenue in the face of increasingly fierce competition. This paper illustrates how these practices influence the development of a relationship, through studying the current partnership between Jaguar and Nippondenso.
Keiretsu, Governance, and Learning: Case Studies in Change from the Japanese Automotive Industry
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The keiretsu structuring of assembler-supplier relations historically enabled Japanese auto assemblers to remain lean and flexible while enjoying a level of control over supply akin to that of vertical integration. Yet currently there is much talk of breakdowns in keiretsu networks. This paper examines some recent developments in Japanese parts-supply keiretsu. We argue that keiretsu relationships are drifting from “hybrid” or “network” (i.e., keiretsu) governance modes toward the extremes of arms-length contracting and top-down administration. These changes are best understood through a combination of transaction cost and learning perspectives on alliance. Consistent with transaction-cost economics, the shift in purchase-supply relationships can be traced to changes in the nature of parts transactions and keiretsu-governance structures. A learning perspective on alliance complements and extends transaction-cost theory, providing additional explanation of the sources of change and t...