"Dissolve the Keiretsu, or Die": A longitudinal study of disintermediation in the Japanese automobile manufacturing supply networks

Under unstable global economic conditions and an increasing competition for customers in the emerging markets of lower income countries, Japanese automotive parts manufacturers and assemblers are striving to minimize their procurement costs to remain competitive. Applying stochastic actor-oriented network models to the procurement data of the 100 largest Japanese automobile firms in 2006 and 2011, this study explores (1) the predominant supply chain management strategies in the automobile industry; (2) the dynamics of the manufacturers' revenue; and (3) the interactions between the supply chain structures and revenue. In contrast to supply networks among major companies in other sectors of the Japanese economy, the present results do not reveal a clear tendency to preserve cliquish trading groups. On the contrary, during this challenging economic period, Japanese carmakers sought to bypass traditional intermediary partners in their supply chains and directly access upstream parts manufacturers with lower margins. The firms that pursued this strategy were rewarded with higher revenue. The novel network analytic method specifically discerns that the disintermediation and the diversification of supply chains precede firms' success in sales (rather than vice versa). The results suggest a potential challenge for the traditional keiretsu structure among Japanese automotive manufacturers in the new global economic environment.

Published: Matous, Petr, and Yasuyuki Todo, 2017. "Analyzing the coevolution of interorganizational networks and organizational performance: Automakers' production networks in Japan," Applied Network Science, Vol. 2(1), article 5
https://link.springer.com/article/10.1007/s41109-017-0024-5