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Risk sharing in the supplier relationship: new evidence from the Japanese automotive industry

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  • Okamuro, Hiroyuki

Abstract

The Japanese corporate system is assumed to contain an implicit insurance mechanism in various aspects. This paper proves the existence of risk sharing mechanism in supplier relations in a different way from the previous studies, using a unique data set of Japanese automotive parts suppliers. The results suggest that the auto makers absorb a part of the business risk of the suppliers, in spite of recent structural changes in the supplier system: The relative stability of their profit rate is significantly influenced by the intensity of business relations.

Suggested Citation

  • Okamuro, Hiroyuki, 1997. "Risk sharing in the supplier relationship: new evidence from the Japanese automotive industry," Discussion Papers, Research Unit: Market Dynamics FS IV 97-18, WZB Berlin Social Science Center.
  • Handle: RePEc:zbw:wzbmdy:fsiv9718
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    References listed on IDEAS

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    1. Sheard, Paul, 1989. "The Japanese general trading company as an aspect of interfirm risk-sharing," Journal of the Japanese and International Economies, Elsevier, vol. 3(3), pages 308-322, September.
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    6. Okamuro, Hiroyuki, 1995. "Changing Subcontracting Relations and Risk-sharing in Japan: An Econometric Analysis of the Automobile Industry," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 36(2), pages 207-218, December.
    7. Asanuma, Banri & Kikutani, Tatsuya, 1992. "Risk absorption in Japanese subcontracting: A microeconometric study of the automobile industry," Journal of the Japanese and International Economies, Elsevier, vol. 6(1), pages 1-29, March.
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    Cited by:

    1. Takehiko Yasuda, 2005. "Firm Growth, Size, Age and Behavior in Japanese Manufacturing," Small Business Economics, Springer, vol. 24(1), pages 1-15, December.
    2. Sebastian Heise, 2016. "Firm-to-Firm Relationships and Price Rigidity - Theory and Evidence," CESifo Working Paper Series 6226, CESifo.
    3. Matsushima, Noriaki & Shinohara, Ryusuke, 2014. "What factors determine the number of trading partners?," Journal of Economic Behavior & Organization, Elsevier, vol. 106(C), pages 428-441.
    4. Lincoln, James R., 2009. "Strategic Alliances in the Japanese Economy: Types, Critiques, Embeddedness, and Change," Institute for Research on Labor and Employment, Working Paper Series qt87j3h103, Institute of Industrial Relations, UC Berkeley.
    5. Chifeng Dai, 2021. "Optimal sequential contract with a risk‐averse supplier," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 92-125, February.

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