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

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Author Info

  • 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.

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File URL: http://128.118.178.162/eps/io/papers/0207/0207009.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0207009.

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Length: 28 pages
Date of creation: 10 Aug 2002
Date of revision:
Handle: RePEc:wpa:wuwpio:0207009

Note: Type of Document - pdf; pages: 28; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: Customized investment; Information technology; Japanese firm; Vertical Keiretsu; Subcontracting;

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References

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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," Microeconomics 9903002, EconWPA.
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  4. Flath, David, 1996. "The Keiretsu Puzzle," Journal of the Japanese and International Economies, Elsevier, vol. 10(2), pages 101-121, June.
  5. David Lucking-Reiley & Daniel F. Spulber, 2001. "Business-to-Business Electronic Commerce," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 55-68, Winter.
  6. Banri Asanuma, 1985. "The Organization of Parts Purchases in the Japanese Automotive Industry," Japanese Economy, M.E. Sharpe, Inc., vol. 13(4), pages 32-53, July.
  7. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
  8. Baba, Yasunori & Nobeoka, Kentaro, 1998. "Towards knowledge-based product development: the 3-D CAD model of knowledge creation," Research Policy, Elsevier, vol. 26(6), pages 643-659, February.
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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.

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