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Honesty, Diligence, and Skill: Risk Sharing and Specialization in the Kiryu Silk Weaving Cluster, Japan

  • NAKABAYASHI, Masaki

    ()

    (Institute of Social Science, The University of Tokyo)

Many economies have seen growth in industrial clusters during their industrialization, and the relational contracts between manufacturers and subcontractors are often the organizational basis of clusters. We predict that, if manufacturers form relational contracts with subcontractors and if manufacturers closely collude when trading with subcontractors, then premium subcontractors suffer more from market volatility than ordinary subcontractors and hence it is optimal for manufacturers to shield premium subcontractors against the risk. We then study Kiryu, a kimono weaving cluster that expanded from the late nineteenth century with the development of new synthetic dyeing techniques. We show that premium subcontracting weavers were allowed long-term relational contracts and specialization, which shielded already honest weavers against market volatility and induced them to be diligent and to acquire skills.

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Paper provided by Institute of Social Science, The University of Tokyo in its series ISS Discussion Paper Series (series F) with number f166.

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Length: 42 pages
Date of creation: 23 Dec 2013
Date of revision: 13 Jul 2016
Handle: RePEc:itk:issdps:f166
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  1. Gebreeyesus, Mulu & Mohnen, Pierre, 2011. "Innovation performance and embeddedness in networks: evidence from the Ethiopian footwear cluster," MERIT Working Papers 043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. yamamura, eiji, 2008. "Dynamics of social trust and human capital in the learning process: The case of the Japan garment cluster in the period 1968-2005," MPRA Paper 10251, University Library of Munich, Germany.
  3. Ruan, Jianqing & Zhang, Xiaobo, 2008. "Finance and cluster-based industrial development in China:," IFPRI discussion papers 768, International Food Policy Research Institute (IFPRI).
  4. Guido Buenstorf & Steven Klepper, 2005. "Heritage and Agglomeration: The Akron Tire Cluster Revisited," Papers on Economics and Evolution 2005-08, Philipps University Marburg, Department of Geography.
  5. Vu Hoang Nam & Tetsushi Sonobe & Keijiro Otsuka, 2010. "An Inquiry into the Development Process of Village Industries: The Case of a Knitwear Cluster in Northern Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 312-330.
  6. Ayele, Gezahegn & Moorman, Lisa & Wamisho, Kassu & Zhang, Xiaobo, 2010. "Infrastructure and cluster development," IFPRI discussion papers 980, International Food Policy Research Institute (IFPRI).
  7. Long, Cheryl & Zhang, Xiaobo, 2012. "Patterns of China's industrialization: Concentration, specialization, and clustering," China Economic Review, Elsevier, vol. 23(3), pages 593-612.
  8. Luigi Guiso & Fabiano Schivardi, 2007. "Spillovers in Industrial Districts," Economic Journal, Royal Economic Society, vol. 117(516), pages 68-93, 01.
  9. Tetsuji Okazaki & Masaki Nakabayashi, 2004. ""History of Production Organizations"(in Japanese)," CIRJE J-Series CIRJE-J-120, CIRJE, Faculty of Economics, University of Tokyo.
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