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Impacts of the Information-technology Revolution on Japanese Manufacturer-supplier Relationships

Author

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  • Hodaka Morita

    (University of New South Wales and Cornell University)

  • Hirohiko Nakahara

    (Ministry of Economy, Trade and Industry)

Abstract

'Vertical keiretsu', characterized by suppliers' willingness to make customized investments and their long-term relationships with manufacturers, had been recognized as an important source of strength in Japanese industries. Our model predicts that, in contrast to the recent popular argument, the information-technology revolution can strengthen '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.

Suggested Citation

  • Hodaka Morita & Hirohiko Nakahara, 2002. "Impacts of the Information-technology Revolution on Japanese Manufacturer-supplier Relationships," Industrial Organization 0207009, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpio:0207009
    Note: Type of Document - pdf; pages: 28; figures: included
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    References listed on IDEAS

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    1. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
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    4. Michael A. Cusumano & Akira Takeishi, 1991. "Supplier relations and management: A survey of Japanese, Japanese‐transplant, and U.S. auto plants," Strategic Management Journal, Wiley Blackwell, vol. 12(8), pages 563-588, November.
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    8. Hodaka Morita, 2001. "Partial Ownership Induces Customised Investments Under Repeated Interaction: An Explanation of Japanese Manufacturer‐Suppliers Relationships," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(3), pages 345-359, August.
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    12. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-86, July.
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    Cited by:

    1. Shuhei Nishitateno, 2012. "Global Production Sharing in the Japanese Automobile Industry: A Comparative Analysis," Departmental Working Papers 2012-02, The Australian National University, Arndt-Corden Department of Economics.
    2. 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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    More about this item

    Keywords

    Customized investment; Information technology; Japanese firm; Vertical Keiretsu; Subcontracting;
    All these keywords.

    JEL classification:

    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

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