Because Toyota symbolizes the miraculous success of the Japanese automobile industry as a whole, scholars have thoroughly documented the nature of Toyota’s business strategy and its keiretsu.1 In contrast, literature exploring the nature of Nissan’s keiretsu and its business strategy was almost non-existent in the 1990s. The assumption was that the two keiretsu were identical, with similar characteristics, differences being a matter of degree.2 In this paper, I argue that the Provisional Act for the Promotion of the Machinery Industry (the Provisional Act or Kishinho), 1956-1970, enacted by the Ministry of International Trade and Industry (MITI), provided Nissan with incentives to vertically integrate some of its most important keiretsu firms; during these fifteen years, Nissan adopted hierarchy. I document how the Nissan keiretsu evolved in the period coinciding with the Provisional Act and how it differed from the Toyota keiretsu. Toyota’s inter-firm relationship with its core keiretsu members was built on trust and organizational capability, whereas Nissan’s initial postwar strategy was similar to Toyota’s only in name. Contrary to common belief, Nissan’s governance in this period was driven by transaction cost considerations in the absence of trust.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
8195.
Find related papers by JEL classification: D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights N15 - Economic History - - Macroeconomics and Monetary Economics; Growth and Fluctuations - - - Asia including Middle East L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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