HOW DOES BUSINESS CULTURE AFFECT PERFORMANCE IN THE US-JAPAN BILATERAL AUTO TRADE?: WILL A REVENUE-MAXIMIZER BE THE WINNER?

Naoki Tabeta and Ruifang Wang
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Naoki Tabeta: Faculty of Economics & Political Science, Kokushikan University, Japan
Ruifang Wang: Nanyang Business School, Nanyang Technological University, Singapore

Journal of Enterprising Culture (JEC), 1997, vol. 05, issue 04, 403-421

Abstract: This paper attempts to provide a new explanation of the huge trade deficit of US against Japan based on an analysis of different strategic behaviours between US firms and Japanese firms. More specifically, we intend to answer the following questions: (1) How do business culture and institutional arrangements affect a firm's strategic behaviour? (2) Who will be the winner when a profit-maximizer meets a revenue-maximizer under a simple duopolistic competition framework? (3) What are the policy implications of this analytical framework for the US-Japan bilateral trade? Why does the trade friction cyclically occur between two countries? Using a simple Cournot (quantity adjustment) model for a duopolistic market, we show that a revenue-maximizer will be the winner when it meets a profit-maximizer; that is, it will obtain a larger market share and a higher profit [i.e., in our terminology, the revenue-maximizer dominance hypothesis].

Date: 1997
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DOI: 10.1142/S0218495897000235

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