The Kigyo Keiretsu Organization and Opportunism in the Japanese Automobile Manufacturing Industry |
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Authors: | Naoki Tabeta |
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Affiliation: | (1) Faculty of Economics & Political Science, Kokushikan University, 4-28-1 Setagaya, Setagaya-ku, Tokyo, 154, Japan |
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Abstract: | This paper contends that the distinguishing feature of the subcontracting system for the manufacture and distribution of auto-parts in the Japanese automobile manufacturing industry can be explained by the opportunism hypothesis of transaction cost theory. Opportunism may arise when the parts-supplier uses its information advantage to obtain more favorable contract terms with the manufacturer. It is argued that in response to this kind of informational opportunism, the automobile manufacturer institutes a special form of vertical arrangement, called the kigyo keiretsu group. The kigyo keiretsu group consist of an association of vertically related parts-makers held together by a high degree of sales and technological interdependence, by partial stock ownership, by interlocking boards of directors and by long-term contract. This study raises the possibility of mitigating opportunism among the kigyo keiretsu group firms throughout the core automaker's shareholdings of its parts-supplier. |
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