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Developing Supplier Capabilities: Market and Non-market Approaches


  • Susan Helper
  • Janet Kiehl


We explore the ways that component suppliers in a traditional US manufacturing region (Cleveland) have responded to their customers' demands for improved quality, cost, and delivery. We find that a surprising number (almost a third) have not responded by attempting systematic improvements in their production capabilities. However, two-thirds of suppliers have worked to improve their capabilities in these areas, adopting such policies as just-in-time and total quality management. Although many of the policies are inspired by Japanese management practices, the method of transfer makes far more use of market mechanisms (such as purchase of consulting services and hiring of employees who have experience implementing such practices), than in Japan. We examine the advantages and disadvantages of such market-based diffusion mechanisms.

Suggested Citation

  • Susan Helper & Janet Kiehl, 2004. "Developing Supplier Capabilities: Market and Non-market Approaches," Industry and Innovation, Taylor & Francis Journals, vol. 11(1-2), pages 89-107.
  • Handle: RePEc:taf:indinn:v:11:y:2004:i:1-2:p:89-107 DOI: 10.1080/1366271042000200466

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    References listed on IDEAS

    1. Foss, Nicolai Juul, 1993. "Theories of the Firm: Contractual and Competence Perspectives," Journal of Evolutionary Economics, Springer, vol. 3(2), pages 127-144, May.
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    3. Demsetz, Harold, 1988. "The Theory of the Firm Revisited," Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 141-161, Spring.
    4. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
    5. Kirzner, Israel M, 1999. "Creativity and/or Alertness: A Reconsideration of the Schumpeterian Entrepreneur," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 11(1-2), pages 5-17.
    6. Herbert A. Simon & Massimo Egidi & Ricardo Viale & Robin Marris, 1992. "Economics, Bounded Rationality and the Cognitive Revolution," Books, Edward Elgar Publishing, number 409.
    7. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, January.
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    Cited by:

    1. Nassimbeni, Guido & Sartor, Marco, 2007. "Sourcing in China: a typology," International Journal of Production Economics, Elsevier, vol. 107(2), pages 333-349, June.

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