This study examines the determinants of inter-organizational trust by using survey data from over 1000 suppliers in the automotive industry. Drawing on transaction cost economics, game theory and sociological exchange theory, we define trust and derive a model of its determinants. Regression analysis results indicate that determinants of trust are different from determinants of opportunism. US–Japanese differences are found in three respects: (i) the way trust is conceptualised by suppliers is more complex in Japan than in the US; (ii) the level of trust is higher in Japan than in the US; and (iii) the factors facilitating trust and those attenuating opportunism differ in the US and Japan.

/pdf/determinants-of-trust-in-supplier-relations-evidence-from-1shlbbsxtk.pdf

Determinants of trust in supplier relations: Evidence from the automotive industry in Japan and the United States

Honda of America has developed a comprehensive approach to teaching the principles of lean production to its suppliers in which Honda and the supplier work intensively on narrowly targeted improvement projects in the supplier's plant. Called BP (for "Best Process," "Best Performance" "Best Practice"), this approach has been quite successful in enhancing supplier performance; suppliers participating in the program in 1994 averaged productivity gains of 50% on lines reengineered by BP. However, Honda has found there is high variation in the extent to which suppliers were able to transfer the lessons taught beyond the line or plant where the BP intervention occurred. Drawing on case studies of three of Honda's U.S. suppliers, this article explores how the BP process interacts with the broader relationship between customer and supplier in terms of organizational learning, technology transfer, and the transplantation of Japanese management practices to the United States. These cases illustrate the dynamics of the learning process and the complex relationship that emerges between the "teacher" (provider) of valuable knowledge and the "student" (recipient).

/pdf/creating-lean-suppliers-diffusing-lean-production-through-57anuk9jpp.pdf

Creating Lean Suppliers: Diffusing Lean Production Through the Supply Chain

Keiretsu Networks in the Japanese Economy: A Dyad Analysis of Intercorporate Ties

Industrial sociology and organization theory suggest that it is difficult to transfer organizations from one environment to another and that organizations that are transferred will take on characteristics of the new environment. We hypothesize that the organization/environment relation works in both directions and that organizations have the resources to alter their environments in light of theirfunctional requirements. We explore these issues in light of recent debates over new models of production organization and interfirm production networks. Japanese automotive assembly plants and their suppliers in the United States provide an ideal case to explore such questions because they represent organizations that are being transferred from a supportive to a foreign environment. We find that these Japanese automotive transplants have effectively transferred both intraand interorganizational characteristics, e.g., team-based work organization and 'just-in-time" supplier relations to the United States. Thus, they have actively transformed their environments to suit their needs.

Transplanted Organizations: The Transfer of Japanese Industrial Organization to the U.S.

Thekeiretsu structuring of assembler-supplier relations historically enabled Japanese auto assemblers to remain lean and flexible while enjoying a level of control over supply akin to that of vertical integration. Yet currently there is much talk of breakdowns inkeiretsu networks. This paper examines some recent developments in Japanese parts-supplykeiretsu.We argue thatkeiretsu relationships are drifting from "hybrid" or "network" (i.e.,keiretsu) governance modes toward the extremes of arms-length contracting and top-down administration. These changes are best understood through a combination of transaction cost and learning perspectives on alliance. Consistent with transaction-cost economics, the shift in purchase-supply relationships can be traced to changes in the nature of parts transactions andkeiretsu-governance structures. A learning perspective on alliance complements and extends transaction-cost theory, providing additional explanation of the sources of change and the specific governance choices being made.Our first two cases document a drift in Toyota'skeiretsu supply network toward a hierarchical form in the management of parts-supply transactions. Toyota has effectively internalized its transactions with Daihatsu by taking a controlling interest. Toyota's strategy toward long-term partner Denso, on the other hand, was very different. Toyota built, from the ground up, an in-house capability in electronic components, thus scaling down its dependence on Denso. A third case considers a general trend in the Japanese auto industry toward greater standardization of parts. With the routinization of quality, reliability, and speed in supply management, the need forkeiretsu-style governance has declined. The withering ofkeiretsu obligations is also traceable to globalization and the continuing weakness of the Japanese economy, which have prompted Japanese firms to question received business practice.

/pdf/keiretsu-governance-and-learning-case-studies-in-change-from-4azv0gczuj.pdf

Keiretsu, Governance, and Learning: Case Studies in Change from the Japanese Automotive Industry

The Automobile Industry in Japan: A Study of Ancillary Firm Development . By Konosuke Odaka, Keinosuke Ono, and Fumihiko Adachi. Hitotsubashi University, Institute for Economic Research, Economic Research Series, no. 26. New York: Oxford University Press, 1988. xvi, 339 pp. $68.00.

Douglas Ostrom

Papers

The Automobile Industry in Japan: A Study of Ancillary Firm Development . By Konosuke Odaka, Keinosuke Ono, and Fumihiko Adachi. Hitotsubashi University, Institute for Economic Research, Economic Research Series, no. 26. New York: Oxford University Press, 1988. xvi, 339 pp. $68.00.