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The vertical keiretsu advantage in the era of Westernization in the Japanese automobile industry: investigation from transaction cost economics and a resource-based view

Genjiro Kosaka (), Koichi Nakagawa (), Seiji Manabe () and Mizuki Kobayashi ()
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Genjiro Kosaka: Sophia University
Koichi Nakagawa: Osaka University
Seiji Manabe: Yokohama National University
Mizuki Kobayashi: Ritsumeikan University

Asian Business & Management, 2020, vol. 19, issue 1, 36-61

Abstract: Abstract Vertical keiretsu are specific buyer–supplier relationships that define the structure of firms in the Japanese automotive industry. However, during Japan’s economic recession, firms started restructuring their relationships, which raised the question of whether automakers maintained transactions with their keiretsu suppliers or pursued new transactions outside of keiretsu. Applying two fundamental theories, transaction cost economics and the resource-based view, we investigate parts transactions in the Japanese automobile industry, and show that keiretsu suppliers maintained business with their keiretsu automakers. Our results suggest long-term vertical corporate linkage endows suppliers with a competitive advantage, even when arm’s length transactions prevail in the industry.

Keywords: Vertical keiretsu; Buyer–supplier relationship; Transaction cost economics; Resource-based view; Automobile industry (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1057/s41291-019-00074-2

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