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'Intermediate Organization' Revisited: A Framework for the Vertical Division of Labor in Manufacturing and the Case of the Japanese Assembly Industries

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  • Hemmert, Martin

Abstract

This paper develops a framework that distinguishes five types of organization for the vertical division of labor between manufacturing firms: market transactions, recurrent transactions, interdependent transactions, quasi-integration and formal integration. The application of this framework to the Japanese assembly industries shows that (i) components suppliers are quasi-integrated in Japan, in contrast to formal integration in the West, and (ii) transactions with parts makers are mostly interdependent in Japan, compared with recurrent transactions in Western countries. These findings are explained by differences in the institutional setting and have resulted in a competitive advantage for the Japanese assembly industries throughout several decades. Recently, however, the structural difference relative to Western countries seems to be diminishing gradually due to the globalization of manufacturing firms in these industries. Copyright 1999 by Oxford University Press.

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  • Hemmert, Martin, 1999. "'Intermediate Organization' Revisited: A Framework for the Vertical Division of Labor in Manufacturing and the Case of the Japanese Assembly Industries," Industrial and Corporate Change, Oxford University Press, vol. 8(3), pages 487-517, September.
  • Handle: RePEc:oup:indcch:v:8:y:1999:i:3:p:487-517
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    Cited by:

    1. Jar-Der Luo & Ke Rong & Kunhao Yang & Rong Guo & YaQi Zou, 2019. "Syndication through social embeddedness: A comparison of foreign, private and state-owned venture capital (VC) firms," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 499-527, June.
    2. Chan, Jin Hooi & Reiner, David, 2019. "Evolution in inter-firm governance along the transport biofuel value chain in Maritime Silk Road countries," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 268-282.
    3. Matsushima, Noriaki & Mizuno, Tomomichi, 2013. "Vertical separation as a defense against strong suppliers," European Journal of Operational Research, Elsevier, vol. 228(1), pages 208-216.
    4. Noriaki Matsushima & Tomomichi Mizuno, 2010. "How do market structures affect decisions on vertical integration/separation?," ISER Discussion Paper 0770, Institute of Social and Economic Research, Osaka University.
    5. Wang, Yue & Tanaka, Akira, 2011. "From hierarchy to hybrid: The evolving nature of inter-firm governance in China's automobile groups," Journal of Business Research, Elsevier, vol. 64(1), pages 74-80, January.
    6. Noriaki Matsushima & Tomomichi Mizuno, 2007. "Why do large firms tend to integrate vertically? - asymmetric vertical integration reconsidered -," Discussion Papers 2007-34, Kobe University, Graduate School of Business Administration.

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