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The vertical keiretsu advantage in the era of Westernization in the Japanese automobile industry: investigation from transaction cost economics and a resource-based view

Author

Listed:
  • Genjiro Kosaka

    (Sophia University)

  • Koichi Nakagawa

    (Osaka University)

  • Seiji Manabe

    (Yokohama National University)

  • Mizuki Kobayashi

    (Ritsumeikan University)

Abstract

Vertical keiretsu are specific buyer–supplier relationships that define the structure of firms in the Japanese automotive industry. However, during Japan’s economic recession, firms started restructuring their relationships, which raised the question of whether automakers maintained transactions with their keiretsu suppliers or pursued new transactions outside of keiretsu. Applying two fundamental theories, transaction cost economics and the resource-based view, we investigate parts transactions in the Japanese automobile industry, and show that keiretsu suppliers maintained business with their keiretsu automakers. Our results suggest long-term vertical corporate linkage endows suppliers with a competitive advantage, even when arm’s length transactions prevail in the industry.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:abaman:v:19:y:2020:i:1:d:10.1057_s41291-019-00074-2
    DOI: 10.1057/s41291-019-00074-2
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