Honesty, Diligence, and Skill: Risk Sharing and Specialization in the Kiryu Silk Weaving Cluster, Japan
AbstractIndustrial clusters and factory industries co-develop during industrialization and the relational contracts between manufacturers and subcontractors are the organizational basis of clusters. We predict that relational transactions between manufacturers and subcontractors and cooperative action between manufacturers within a cluster help motivate riskaverse premium subcontractors by reducing risk, not only potentially punish cheaters. We study Kiryu, a kimono weaving cluster that expanded from the late 19th century along with new synthetic dyeing techniques. We show that premium subcontracting weavers were allowed long-term relational contracts and specialization, which induced already honest weavers to be diligent and to acquire skills.
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Bibliographic InfoPaper provided by Institute of Social Science, The University of Tokyo in its series ISS Discussion Paper Series (series F) with number f166.
Length: 26 pages
Date of creation: 23 Dec 2013
Date of revision: 03 Jun 2014
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More information through EDIRC
industrial clusters; relational contracts; putting-out system; risk sharing; textile industry; Japan;
Find related papers by JEL classification:
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-10 (All new papers)
- NEP-CSE-2014-01-10 (Economics of Strategic Management)
- NEP-HIS-2014-01-10 (Business, Economic & Financial History)
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