Marketing theory and practice have focused persistently on exchange between buyers and sellers. Unfortunately, most of the research and too many of the marketing strategies treat buyer-seller excha...

Developing Buyer-Seller Relationships:

Manufacturing is undergoing a revolution. The mass production model is being replaced by a vision of a flexible multiproduct firm that emphasizes quality and speedy response to market conditions while utilizing technologically advanced equipment and new forms of organization. The authors' optimizing model of the firm generates many of the observed patterns that mark modern manufacturing. Central to the authors' results is a method of handling optimization and comparative statics problems that requires neither differentiability nor convexity. Copyright 1990 by American Economic Association.

The Economics of Modern Manufacturing: Technology, Strategy, and Organization

This paper examines some of the forces that can lead to herd behavior in investment. Under certain circumstances, managers simply mimic the investment decisions of other managers, ignoring substantive private information. Although this behavior is inefficient from a social standpoint, it can be rational from the perspective of managers who are concerned about their reputations in the labor market. We discuss applications of the model to corporate investment, the stock market, and decision making within firms. (JEL 026, 522) A basic tenet of classical economic theory is that investment decisions reflect agents' rationally formed expectations; decisions are made using all available information in an efficient manner. A contrasting view is that investment is also driven by group psychology, which weakens the link between information and market outcomes. In The General Theory, John Maynard Keynes (1936, pp. 157-58) expresses skepticism about the ability and inclination of "long-term investors" to buck market trends and ensure efficient investment. In his view, investors may be reluctant to act according to their own information and beliefs, fearing that their contrarian behavior will damage their reputations as sensible decision makers:

Herd Behavior and Investment

The imputation problem is how to account for the sources of the value of the firm. I propose that part of the value of the firm derives from its participation in a network that emerges from the operation of generative rules that instruct the decision to cooperate. Whereas the value of firm-level capabilities is coincidental with the firm as the unit of accrual, ownership claims to the value of coordination in a network pit firms potentially in opposition with one another. We analyze the work on network structure to suggest two types of mechanisms by which rents are distributed. This approach is applied to an analysis of the Toyota Production System to show how a network emerged, the rents were divided to support network capabilities, and capabilities were transferred to the United States. Copyright © 2000 John Wiley & Sons, Ltd.

http://dimetic.dime-eu.org/dimetic_files/KogutSMJ2000.pdf

The network as knowledge : Generative rules and the emergence of structure

In this paper we investigate the relationship between supplier trust in the buyer and transaction costs and information sharing in a sample of 344 supplier-automaker exchange relationships in the United States, Japan, and Korea. Our findings indicate that perceived trustworthiness reduces transaction costs and is correlated with greater information sharing in supplier-buyer relationships. Moreover, the findings suggest that the value created for transactors, in terms of lower transaction costs, may be substantial. In particular, we found that the least-trusted automaker spent significantly more of its face-to-face interaction time with suppliers on contracting and haggling when compared to the most trusted automaker. This translated into procurement (transaction) costs that were five times higher for the least trusted automaker. Finally, we argue that trust is unique as a governance mechanism because it not only minimizes transaction costs, but also has a mutually causal relationship with information sharing, which also creates value in the exchange relationship. Other governance mechanisms (e.g., contracts, financial hostages) are necessary costs incurred to prevent opportunistic behavior, but do not create value beyond transaction cost minimization. Our findings provide empirical evidence that trustworthiness lowers transaction costs and may be an important source of competitive advantage.

The Role of Trustworthiness in Reducing Transaction Costs and Improving Performance: Empirical Evidence from the United States, Japan, and Korea

Kaisha: The Japanese Corporation.

* The Pace Setters: Japans Companies as Competitors * The Dynamic Economy * The Kaisha as Competitor * Pursuit of Competitive Advantage in Manufacturing Competition * Revolutionizing Manufacturing Competition * The Drive to Technological Leadership * Working with Banks and Shareholders for Competitive Advantage * Whose Company Is It? * The Foreign Company in Japan * Multinational Kaisha and Co-Prosperity * The Future of the Kaisha

Kaisha, the Japanese Corporation.

In an excerpt from their new book, Kaisha: The Japanese Corporation, the authors examine the competitive strategies and methods employed by Japanese corporations. First, they show how Japanese corporations compete with each other through relentless pursuit of rapid growth and increased market share. Then they demonstrate how the Japanese corporations then employ these same tactics against Western competitors in Japan and in global markets. Finally, the authors offer advice on anticipating the Japanese in Western markets.

http://cmr.ucpress.edu/content/ucpcmr/28/3/9.full.pdf

George Stalk

Papers

Kaisha: The Japanese Corporation.

Kaisha, the Japanese Corporation.

The Japanese Corporation as Competitor

Kaisha : das Geheimnis des japanischen Erfolgs