| Abstract: | Two contrasting conceptualizations of skills lead one to attributedifferent roles to inter-firm networks. If skills are regardedas a public good, then inter-firm networks are like clubs thatpolice the scope for firms to benefit from skills without payingfor their acquisition. By contrast, if skills are regarded asa distinct and hard-to-imitate asset, then inter-firm networksprovide an essential non-market mechanism for spreading it.The problem in the former conceptualization is market failuredue to the ease of spill-over of knowledge, while the counterpartproblem in the latter conceptualization is the difficulty ofdiffusing tacit knowledge by market mechanisms. This paper describesToyota Motor Corporation's supplier development programmes inthe wider industrial context of Japan. It concludes that ofthe two perspectives, the knowledge-as-a-distinctive-asset perspectiveis more appropriate in understanding the rationale behind theelaborate mechanisms for developing suppliers in the long term. |
