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The Enigma of Toyota's Competitive Advantage: Is Denso the Missing Link in the Academic Literature?

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  • Evelyn Anderson

Abstract

This paper analyses the reasons for the competitiveness of Toyota. It focuses on the company’s unique relationship with one partner supplier – Denso – where contingency loss potential is the greatest. A literature review reveals some gaps between the English and Japanese literature. The author uses resource based view literature, game theory literature, transaction cost literature and the concept of positive external economy to explain Toyota’s success. She also identifies a future research question: might Toyota’s domestic success have arisen partly because its competitors did not understand the way it worked?

Suggested Citation

  • Evelyn Anderson, 2003. "The Enigma of Toyota's Competitive Advantage: Is Denso the Missing Link in the Academic Literature?," Asia Pacific Economic Papers 339, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:csg:ajrcau:339
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    File URL: https://crawford.anu.edu.au/pdf/pep/pep-339.pdf
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    References listed on IDEAS

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    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Yoshiro Miwa & J. Mark Ramseyer, 2000. "Rethinking Relationship-Specific Investments: Subcontracting in the Japanese Automobile Industry," CIRJE F-Series CIRJE-F-70, CIRJE, Faculty of Economics, University of Tokyo.
    3. Clive T. Edwards, 1997. "Japanese Interfirm Networks: Exploring the Seminal Sources of their Success," Journal of Management Studies, Wiley Blackwell, vol. 34(4), pages 489-510, July.
    4. Joskow, Paul L, 1988. "Asset Specificity and the Structure of Vertical Relationships: Empirical Evidence," Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 95-117, Spring.
    5. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    6. Bart Nooteboom & Gjalt De Jong & Robert Vossen & Susan Helper & Mari Sako, 2000. "Network Interactions And Mutual Dependence: A Test In The Car Industry," Industry and Innovation, Taylor & Francis Journals, vol. 7(1), pages 117-144.
    7. Masahiko Aoki, 2013. "Toward an Economic Model of the Japanese Firm," Chapters,in: Comparative Institutional Analysis, chapter 18, pages 315-341 Edward Elgar Publishing.
    8. Steven Tadelis & Oliver E.Williamson, 2012. "Transaction Cost Economics," Introductory Chapters,in: Robert Gibbons & John Roberts (ed.), : The Handbook of Organizational Economics Princeton University Press.
    9. Sako, Mari & Helper, Susan, 1998. "Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 387-417, March.
    10. Kawasaki, Seiichi & McMillan, John, 1987. "The design of contracts: Evidence from Japanese subcontracting," Journal of the Japanese and International Economies, Elsevier, vol. 1(3), pages 327-349, September.
    11. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    12. Button, Kenneth J & Weyman-Jones, Thomas G, 1992. "Ownership Structure, Institutional Organization and Measured X-Efficiency," American Economic Review, American Economic Association, vol. 82(2), pages 439-445, May.
    13. Coase, R H, 1988. "The Nature of the Firm: Origin," Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(1), pages 3-17, Spring.
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    Cited by:

    1. Anderson, Evelyn, 2004. "The Keiretsu Fable - Where does the Truth Lie?," MPRA Paper 8112, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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