An Empirical Research on Inter-firm Capital Relationship in Yokokai Using IDE Spatial Model

Takao Ito, Tsutomu Ito, Katsuhiko Takahashi, Makoto Sakamoto, Satoshi Ikeda, Rajiv Mehta
Corresponding Author
Takao Ito
Available Online 1 September 2015.
Influence, Degree, Effective Size, the IDE model, keiretsu loosening
This paper introduces recent fundamental modifications to the Japanese alliance system known as the keiretsu, and analyses how these changes have affected corporate performance. More specially, the performance of Japanese auto manufacturers, such as Toyota, Nissan and others, has significantly improved due to sophisticated production system technologies, highly productive workers, and recurring transaction relationships with their network family partners. After economic bubble of the 1990s, the strong ties between automobile makers and their supplier partners experienced significant changes, which are known as “keiretsu loosening”. Consequently, what is the status quo of automotive keiretsus? Does cross-shareholding, which is one specific form of capital relationship in keiretsu, still contribute to improving corporate performance? To answer these questions, this research reports the results of a study that collected data on cross-shareholdings to shed light on the relationship between inter-firm capital relationship and corporate performance. The findings of this empirical investigation reveal that: (1) Keiretsu is a flexible, highly adaptive organizational form; its scale changes in response to economic situations; (2) Capital relationships still remain a significant determinant of increasing profits for keiretsu partners even after the bubble burst in the 1990s.

© 2013, the Authors. Published by ALife Robotics Corp. Ltd.
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